Category Archives: Social.Impact.Bonds/Pay.For.Success

Who Is Making Money from ICE in Your State?

Source: Alex Kotch and Josefa Velasquez, Sludge, July 6, 2018

… ICE contractors have pulled in billions of dollars over the years. Sludge analyzed all ICE contracts that were ongoing as of July 5 or ended that day. The data—over 6,000 transactions—include contracts with no listed end date. While the Trump administration has made the southern border a priority, ICE contractors operate all over the country. Use the interactive map below to identify where ICE contractors’ operations occur, and how much these operations cost. Use the magnifying glass on the map to search by city or state. The first year of Trump’s presidency, 2017, saw the largest sum of monetary obligations from ICE to contractors since 2008: $1.7 billion, according to usaspending.gov. This year appears to be on track to easily eclipse that total. …Some well-compensated contractors face abuse allegations. The second-highest total went to Virginia-based private security contractor MVM. The company, which flies unaccompanied children to temporary shelters, is facing a sexual harassment lawsuit and paid a fine last year for racial and religious discrimination against a Muslim security guard. Since its inception, ICE has faced a torrent of abuse and misconduct allegations, including sexual abuse and “inhumane conditions.” The agency has also faced allegations of endangering public safety by arresting immigrants who report domestic abuse and other crimes. …

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Some Contractors Housing Migrant Children Are Familiar to Trump’s Inner Circle
Source: Ben Protess, Manny Fernandez and Kitty Bennett, New York Times, July 4, 2018

Many of the nonprofits, corporations and religious groups watching over migrant children detained at the southwest border have been in this business for years — and they have a history of political connections, donating millions of dollars to Democrats and Republicans alike. Now, as new federal policies greatly expand the number of migrants held in detention, it is also becoming clear that some of the players in this billion-dollar industry have particularly strong ties to the Trump administration. The president’s education secretary provided funding to one of the groups. His defense secretary sat on the board of another. Mr. Trump’s own inauguration fund collected $500,000 from two private prison companies housing detained migrant families. And some of the contractors employ prominent Republican lobbyists with ties to Mr. Trump and his administration, including someone who once lobbied for his family business. …

Trump’s Immigrant-Detention Plans Benefit Private Prison Operators
Source: Zusha Elinson, Wall Street Journal, July 2, 2018
 
The Trump administration’s new push for more federal detention facilities for immigrants awaiting asylum hearings or deportation has brightened the outlook for the country’s two largest private prison operators.  Tennessee-based CoreCivic Inc. and Florida-based Geo Group had already been helped by higher federal spending on Immigration and Customs Enforcement. Now, the Trump administration is seeking $2.8 billion in the 2019 budget year to increase the number of beds in immigration detention centers to 52,000—49,500 adult and 2,500 family beds—from about 40,000 now, a spokeswoman said.  Shares in both companies rose last month after ICE issued a notice that it may seek 15,000 new beds for families. An ICE official said it made the request for information on potential facilities and providers “in anticipation of the potential need to house a large number of family units” after Mr. Trump ended his policy of separating children at the southern border. So far this year, Geo’s shares are up 14%, while CoreCivic’s have risen 4.8%, according to FactSet. …

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Cities experiment to reduce homelessness with “pay for success” finance

Source: Carey L. Biron, Reuters, February 1, 2018
 
Although he had tried to find a home during that time, he was discouraged by the paperwork and process. But shortly after Easter last year, a social worker contacted him and said he had been selected to participate in a new housing program.  “Within two weeks, I had a place to stay,” Cushinberry told the Thomson Reuters Foundation from Denver. “They gave me housing first, and then we tried to work out all the other kinks in my life.”  The program is one of a rising number of initiatives around the world bringing together government departments, service providers, foundations, banks, pension funds and more to address complex social problems.  The key innovation is how they these programs are financed.  Rather than rely on handouts by cash-strapped governments, private investors step in to provide money through a financing tool known as a social impact bond. …

Pay for Success Feasibility Tool Kit

Source: Office of Planning, Evaluation and Policy Development, U.S. Department of Education, October 2017

The U.S. Department of Education’s (ED) mission is to promote student achievement and preparation for global competitiveness by fostering educational excellence and ensuring equal access. ED supports initiatives to help expand opportunities and improve education for students from early childhood to adulthood, particularly approaches that are based on evidence of potential or actual success. Pay for Success (PFS) can be used to support evidence-based approaches by leveraging private investment to address societal problems and challenges while typically using government funds to pay only when measurable, positive outcomes are attained. This tool kit is an introductory guide for state and local governments and other stakeholders interested in exploring the possibility of a PFS project for education or related societal issues. It provides information to support stakeholders in determining if PFS is a viable financing strategy for them; it lays out steps usually involved in conducting a feasibility study and highlights critical questions and important safeguards to consider in using PFS. The Appendix includes tools that may be useful for PFS projects, including definitions of terms used throughout the document. …

Full Pay for Success Feasibility Tool Kit.

Social Impact Bonds wrong direction for Manitoba’s social services

Source: CUPE, July 6, 2017

Today the Manitoba government announced the opening of a request for proposals for Social Impact Bonds, a scheme in which private companies profit off social service delivery. “There was a time when the private sector would simply make philanthropic donations as part of their corporate responsibility to the community” says Terry Egan, President of CUPE Manitoba. “Social Impact Bonds take that corporate philanthropy and turn it into a private money‑making scheme.” While Pallister claims that Social Impact Bonds would foster “private-sector innovation,” these companies will seek to invest in only the non‑government agencies that would see profitable outcomes, rather than programs that seek to address long‑term root causes of many of societies deep and complex issues, including poverty. …

Expanding the Fight for Education

Source: Michael Fiorentino & Jessica Wender-Shubow, Jacobin Magazine, March 24, 2017

Except for some pockets of suburban activism around standardized testing, education policy debate in recent years has centered on cities. In places like Chicago and Boston, grassroots coalitions of teachers’ unions and community organizations are struggling to wrest control of their public schools back from the privatization program backed by hedge-funder owners and their lackeys. Suburbs have distanced themselves from those debates. Even in the recent successful campaign against charter school expansion in Massachusetts, the suburban districts often limited their arguments to protecting their funding. In Brookline, Massachusetts, however, the discussion around schools has been changing. A campaign for fair contracts has drawn attention to how corporate education reform is seeping into the day-to-day operations of affluent schools. …

… More striking has been Brookline’s growing awareness of the composition of its school committee, which is dominated by employees of Bain Capital’s pro-charter, pro-privatization venture philanthropy arm, Bridgespan. Bridgespan’s flagship “Billionaire Dollar Bets” eschew local democratic oversight of family intervention and community development, preferring to enlist billionaires to address poverty directly. Meanwhile, wholesale economic and political dispossession of marginalized communities continues. …

Impact Investing Is a Distraction from Improving Government Performance

Source: Matt Tyler, Kennedy School Review, March 3, 2017

I thought impact investing was central to curing social ills. Government was secondary, in my mind. I was wrong. Over the last 18 months, working with governments in the United States and Australia, I have focused on how to improve social outcomes for the most vulnerable. … I have come to realize that hype surrounding impact investing distracts our brightest minds from a pursuit with greater potential—improving government performance. For those who strive to make a social contribution in their careers, the word “impact” may be an attractive but ultimately misleading lure. … Essentially, they seek to do good while making a profit. But these dual objectives cannot always be achieved simultaneously. At its worst, impact investing is the epitome of putting lipstick on a pig. Consider TPG, a private equity firm accused of collusion and fraud that settled out of court in both cases. In December 2016, supported by U2 front-man Bono, they launched their Rise Fund that seeks to achieve “social and environmental impact alongside financial returns.” Concurrently they invest in gambling, fast food, and fossil fuels including coal. In contrast, government investment takes place unencumbered by a profit motive. The overarching objective of government is improving people’s lives.

… One exception to the above critique is impact investment that aims to improve government performance. Under a Social Impact Bond, for example, private financiers are paid by the government upon delivery of social outcomes such as decreased recidivism, homelessness, and unemployment. To measure these outcomes, rigorous data collection and evaluation, are needed; both vital ingredients to reforming government. A government payer holding the purse strings—instead of private or hybrid investees—means purpose is likely to be prioritized over profit. That said, achieving scale remains a challenge. …

Toward the Efficient Impact Frontier

Source: Michael McCreless, Stanford Social Innovation Review, Winter 2017

For many years, the field of impact investing played host to great debates that involved seemingly irreconcilable positions: Was it possible to achieve both market-rate financial returns and meaningful social impact? Could philanthropic funding coexist effectively with commercial investment? Now, as the field reaches a new stage of maturity, leading social finance organizations are developing models that bring greater sophistication to the work of evaluating investment options. These models, like the investors that create them, vary widely. But they reflect a shared commitment to moving beyond simple either-or choices—and to moving from broad questions to specific solutions. At Root Capital, leaders are using ideas from mainstream financial analysis to calibrate the role that subsidies play in their investing practice.

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Across the Returns Continuum
Source: Matt Bannick, Paula Goldman, Michael Kubzansky, & Yasemin Saltuk, Stanford Social Innovation Review, Winter 2017

For many years, the field of impact investing played host to great debates that involved seemingly irreconcilable positions: Was it possible to achieve both market-rate financial returns and meaningful social impact? Could philanthropic funding coexist effectively with commercial investment? Now, as the field reaches a new stage of maturity, leading social finance organizations are developing models that bring greater sophistication to the work of evaluating investment options. These models, like the investors that create them, vary widely. But they reflect a shared commitment to moving beyond simple either-or choices—and to moving from broad questions to specific solutions. Omidyar Network has built a framework for pursuing investment opportunities that takes into account not only firm-level impact but also market-level impact.

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Paying for success

Source: Jason Axelrod, American City and County, February 6, 2017

Several local and state governments are pioneering a new investment model to finance projects in their areas that uses success as a payment benchmark. Social impact bonds (SIBs) — also known as pay-for-success models — involve public-private partnerships (P3s) in which private entities invest in public projects that are overseen by governments, organized by nonprofit intermediaries, executed by service providers and are ultimately evaluated by independent entities. Such projects generally tackle social issues like homelessness or family welfare, and they aim to reduce government dollars spent on existing measures. Unlike a municipal bond, an SIB has no fixed rate of return for investors. An SIB’s ROI yield depends entirely on the project’s success, based on outcomes defined in the SIB contract. At pre-defined points in the project’s execution, a study of the program’s effectiveness will be carried out, and the government will accordingly pay funders pre-defined amounts based on how certain benchmarks are met. …

… The Denver Social Impact Bond program provides up to five years of supportive housing and Assertive Community Treatment for 250 homeless repeat offenders who cost taxpayers over $7 million per year in legal and health care-related expenses, city documents show. … In 2013, the Connecticut Department of Children and Families (DCF) sought and obtained technical assistance from the Harvard Kennedy Government Improvement Lab in constructing and executing an SIB project to address its greatest unmet service need at the time— parent and caregiver substance use, according to DCF Chief of Staff Elizabeth Duryea. … In 2015, Cuyahoga County, Ohio, became the first U.S. county to institute an SIB-funded program with a similar mission to Connecticut’s SIB-funded project. The county’s Partnering for Family Success Program seeks to reduce the amount of days children spend in foster care, which was one of the more expensive items in the county’s budget. …

How Goldman Sachs could pay for Minnesota’s public preschools

Source: Josh Verges, Pioneer Press, January 10, 2017

In its push for high-quality preschool, Minnesota could turn to investment bankers and philanthropists for the upfront capital that lawmakers have been reluctant to provide. If preschool later proves to save the government money, whether on unspent special education services or by other markers, the investors would get back their seed money and potentially much more. The model, known as Pay for Success, was pioneered in Salt Lake City, where the investment bank Goldman Sachs and the Pritzker Family Foundation received their first preschool payouts in 2015. Sen. Orrin Hatch, R-Utah, succeeded in inserting the concept into the federal government’s new education policy law. The Minnesota Department of Education recently was awarded one of the first grants, worth $397,000, to explore the feasibility of using Pay for Success to fund early-childhood education. … Minnesota is looking to Pay for Success not for expanding preschool but for boosting the quality of existing public preschools that serve mostly low-income students. Officials are proposing a broad expansion of the so-called Pyramid Model, now used in only about 100 Minnesota classrooms. The framework offers increasing levels of support to children who need it and has been shown to boost social-emotional and academic skills. By training teachers and providing classroom materials and expert coaching, the department hopes to start thousands of 4-year-olds on a path for lifelong success. … The Minnesotans involved in the project also are looking at a long list of markers of success. Besides special education placement, they said they might track attendance and suspension rates, scores on social-emotional assessments and third-grade reading tests, and even teacher retention. Temple said that Pay for Success programs are administratively complex, and that it will be difficult to assign a monetary value to each outcome they intend to track. … The greater challenge, Forsberg said, will be figuring out who will pay those investors back. Quality preschool would figure to benefit many levels of government. Individual school districts and the state would save money if fewer students needed special education services. And if those students succeed in school and life, they won’t burden counties with the costs of incarceration or various social services. …

Illinois Launches Pay-For-Success Initiative For Dually-Involved Youth

Source: Open Minds, January 3, 2017

On November 18, 2016, the Illinois Department of Children and Family Services (DCFS) announced the launch of a four-year, pay-for-success pilot project for youth dually involved with the child welfare and juvenile justice systems. The goal is to reduce or prevent time in institutional care, discourage repeat criminal behavior, and foster successful transitions to adulthood. Outcomes of the treatment group will be compared to a control group. To launch this project, DCFS contracted with Conscience Community Network LLC (CCN), a network of six Illinois non-profit provider organizations to deliver intensive care coordination and timely access to . . .