The past couple of years have been a roller-coaster for Maurice Cushinberry – first of homelessness, substance abuse and legal trouble, and then of sudden stability. 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. The investors – most of them philanthropic organizations and entrepreneurs – provide upfront capital to deliver social services and only get a return if the program achieves predefined results.
The approach, also known as, is motivated by a simple set of questions: how can public services ensure they are accomplishing what they set out to achieve, and can prove they are effective to prompt more investment?
Since 2010, the idea has started catching on across the globe. This week, the Social Finance Global Network announced 108 social impact bonds are now in existence, in 24 countries.
“Because it’s so complicated and involves so many sectors, bringing these uncommon partners around a common goal, I would never have projected how swiftly it went from concept to reality,” said Tracy Palandjian, co-founder of the U.S. arm of Social Finance, a London-based pioneer on the issue.
Social Finance UK spearheaded the world’s first social impact bond in 2010, raising 5 million pounds ($7 million) for a program aimed at reducing reoffending among former inmates of Peterborough prison in England.
Read more: https://www.reuters.com/article/us-usa-finance-social/cities-experiment-to-reduce-homelessness-with-pay-for-success-finance-idUSKBN1FL65R