Social Impact Bonds (SIBs) are a private financing mechanism used to fund social programs. Also termed 'Pay For Success,' and 'Outcomes Based' or 'Performance Based' financing, these partnerships involve private entities funding projects aimed at improving social outcomes. If by the end of the project period, 'success' metrics are met (according to third-party evaluators), investors then profit by being paid interest on top of the reimbursed government funds for the cost of the project. This page includes a collection of updates and critical perspectives on these profit structures and on Blockchain Identity systems, de-centralized online ledger programs, poised to be the data backbone that would provide 'proof' of 'program impact' for investors. For files related to Blockchain, see: http://bit.ly/Blockchain_Files. [Note: Views presented on this page are re-shared from external websites and may not necessarily represent the views nor official position of the curator nor employer of the curator.]
"What happens when capitalism and charity intersect? From Wall Street to life on the street, The Invisible Heart tracks the birth of one of the fastest growing social innovations in modern history: social impact bonds. An unorthodox marriage between government services and private-sector investments, this burgeoning financial model promises to solve society’s most complex problems, from crime to homelessness—but is it delivering? Set in Canada, the U.S. and the U.K, this compelling documentary follows the unlikely people banding together to battle social inequality."
By Alison McDowell "Business executives, government officials, and representatives of non-profits and NGOs from across the globe will gather in New York City this fall to discuss the business of early childhood. These are not people looking to open childcare franchises. No, that is not their “business.” The intent is more sinister, transforming our youngest learners into points of profit extraction under the guise of social justice and equity. Through technology and forms of “innovative finance” they aim to catalyze a speculative market in toddler data, using the lives of young, vulnerable learners as vehicles to move vast sums of social impact venture capital.
ReadyNation, a program of the Council for a Strong America, is hosting the summit, set to take place at the Grand Hyatt Hotel on November 1-2, 2018. Council for a Strong America, a bipartisan coalition of leaders from the law enforcement, military, business, religion, and athletics spheres, has placed influencers guiding early childhood education policy in every state. Their intent is to promote public-private partnerships that will generate investment returns for global finance while shaping children into a compliant citizenry conditioned to accept economic precariousness and digital surveillance while doing the bidding of the power elite.
The rise of pay for success, social impact bonds, development impact bonds, and outcomes-based contracting will usher in privatization of vast new areas of public services, including education and training at all levels from infants through human resource management (lifelong learning, reskilling). This is not merely a phenomenon of the United States; this summit is intended for a global audience, a neocolonial project driven by late-stage capitalism.
Remember the 2007 housing market crash? The fraud Goldman Sachs perpetrated, misleading investors to purchase financial instruments tied to sub-prime mortgage bonds? The $16.65 billion penalty Bank of America had to pay, the largest settlement between the government and a private corporation? Seeing financiers from both companies on stage at a 2014 ReadyNation event promoting early childhood social impact finance should give us pause. Watch the hour-long talk here. The excerpt below is taken from a two-minute clip where the moderator, Ian Galloway, introduces a panel on potential financing structures. Watch that here. . “Christina Shapiro is a vice president at Goldman Sachs. You know, I’ve heard a lot that if you’ve seen one social impact bond, other people may have heard it, too. If you’ve seen one social impact bond, you’ve seen one social impact bond, right? That is true with one exception, and that is that just about every social impact bond out there has Goldman Sach’s fingerprints all over it. They are by far the leaders in the space. They are creating this marketplace out of thin air, and I commend Christina and her colleagues for their hard work on that front.” Ian Galloway, Senior Research Associate, San Francisco Federal Reserve
To dig the hole deeper, the Council for a Strong America has accepted over $10 million from the Gates Foundation since 2006, including a $4.2 million grant in October 2015 to “engage stakeholders around the Common Core and high quality preschool.” Last summer in the run up to the fall 2018 elections, Gates granted the organization $300,000 to “educate potential future governors about the importance of college and career readiness in their state.”
ReadyNation’s speakers range from the World Bank, UNICEF, Omidyar Network, and the Girl Scouts to KPMG, the Massachusetts Business Roundtable, Learn Capital, and Sorenson Media (founded by Jim Sorenson, Utah tech entrepreneur and impact investor). A previous summit launched early-childhood campaigns in Romania, Australia, and Uganda in 2015. ReadyNation Romania and The Front Project (formerly ReadyNation Australia) will be participating. What do summit attendees get for their $200 registration fee? ReadyNation touts the event as “the only training ground in the world for business people from outside the children’s sector to become unexpected and uniquely influential advocates for public and private investments in early childhood…Summit attendees from the U.S. must be business people or public officials; those from outside the U.S. can come from other sectors.”
Children’s advocates and policy experts in early childhood education are specifically excluded from the conference unless they attend with at least four business people. In order to attend, one must to submit an online request.
Why is ReadyNation so emphatic about excluding early childhood educators and policy advocates? Find out in Part 2: Making Childhood Pay: Arthur Rollick, Steven Rothschild and ReadyNation.
## Alison McDowell is a parent of a public school student and a member of the Alliance for Philadelphia Public Schools. Her blog, Wrench in the Gears, seeks to shine a light on the dark corners of education reform. In her May 28th blog, Alison takes a deeper look into ReadyNation's Global Business Summit on Early Childhood happening this Fall. The conference specifically excludes children's advocates and policy experts in early childhood education.
Sesame Street is an iconic brand that embodies humor, acceptance, and humanity. Who doesn’t love a muppet? So, on December 20 when the MacArthur Foundation announced they were giving Sesame Workshop and the International Rescue Committee $100 million to educate young children from displaced Syrian families and help them deal with “toxic stress,” most people…
"Project Amply strives to revolutionize early childhood development in Africa. Combining mobile and blockchain technology to increase impact and accountability of public services and generate real-time data."
Our Mission Amply is a digital identity protocol that builds trust. We provide every child with their own self-sovereign digital identity based on the blockchain. This will enable children to receive benefits and services that they might have previously been excluded from.
In our pilot project, Amply is being used to replace an existing paper-based system to register children for a government funded pre-school subsidy in South Africa. Service providers use a mobile app to verify children’s attendance at classes and to capture other useful information. This will increase trust in the funding mechanism and make funding available to more children who need it. It will save administration time and costs. And it will provide really useful information about how and where services are being delivered.
Amply is unique in that it places each individual child at the centre of their relationships with Early Childhood Development services in a way that is ‘self-sovereign’ and directly beneficial to them. This means that a child’s digital identity and personal data are privately owned and controlled by the individual (with some help from their guardians). Over time, their life records become a rich source of data and value that can be used to receive services and insights that will become more predictive, precise, personalised, preventive, and participatory."...
By Michael J. Roy, Neil McHugh, & Stephen Sinclair May 1, 2018
At first glance, social impact bonds (SIBs) appear to be an ideology-free response to a range of social problems. As public resources are not always made available to adequately fund public and social services, SIBs leverage private investment to finance such services so that providers do not have to front the cost of delivery. Investors are rewarded if providers meet agreed-upon outcomes but lose their investment if providers do not meet those outcomes. On the face of it, SIBs might seem like a win-win for everyone involved."
So it makes some sense that SIBs have become so popular. Since their introduction in 2010, 32 SIBs have been set up thus far in the United Kingdom, addressing diverse policy areas such as homelessness, mental health services, education, and unemployment. The UK Government Cabinet Office has established a Centre for Social Impact Bonds. The government also allocated more than $28 million of public funding to a Social Outcomes Fund in 2012 for the development of SIBs, and augmented this by a further $113.4 million from the UK Government’s Life Chances Fund in 2016—significant amounts of money by any measure. The UK’s Minister for Civil Society has said that SIBs will revolutionize the third sector and social service funding, and that a SIBs market in Britain could be worth $1.4 billion by 2020. Meanwhile, there are at least 10 SIBs operating in the United States and 19 more across 14 other countries, with Goldman Sachs also investing in the model. The development community has also adapted the SIB model in service of so-called development impact bonds (DIBs), primarily for use in the global south.
The ongoing hype around SIBs, their seemingly unstoppable proliferation worldwide, and the significant amounts of money investors are putting into them would suggest that they are widely regarded as the future of impact investing. However, we contend that such uncritical enthusiasm for the SIB model is a worrying trend. There are significant technical challenges to overcome in setting up and operating SIBs, which advocates insufficiently acknowledge. More substantively, however, SIBs fundamentally change the nature of public and social services, effectively reducing citizens to commodities.
Technical Issues with Social Impact Bonds
One rationale for introducing SIBs was that a focus on delivering outcomes would encourage experimentation, thereby stimulating innovation. Conventional public service providers are often criticized as being risk averse and preferring to stick with established practices, while SIBs would lead to new, exciting, and innovative service provision. However, there is almost no evidence that SIBs encourage innovation. In fact, almost all SIB-funded projects are based on well-established models. This should not be surprising: Financiers motivated by a return on investment (as opposed to meeting social objectives) have little incentive to fund risky innovative policy experiments.
The stakeholders who commission SIBs—funders and intermediaries—often assume a substantive role in service design and delivery. As a result, service providers have reported that they have less scope for flexibility than before, and are facing increased oversight and a significantly increased administrative burden.
The complex nature of stakeholders’ contracting arrangements generate considerable transaction costs. In addition, SIBs are technically difficult to commission and require considerable expert input, often (not coincidentally) by the very same experts pushing the model. The scale of operations required to justify these costs means that SIBs tend to be beyond the capacity of many third-sector organizations, such as social enterprises, which tend to operate on a relatively small scale. Few such organizations possess the financial skills or systems required to manage and monitor such investments.
As payment to investors is based on delivering outcomes, contracting arrangements require precise outcome measurement to avoid disputes. This raises numerous issues, including the selection and measurement of outcomes, the attribution of what leads to and who caused changes in selected indicators, and perverse incentives such as “parking” harder-to-serve clients and “creaming” those easier to support. Also, even if it could be proven that SIBs directly contributed to future cost savings, such effects are rarely final outcomes. Rather, they are improvement processes that depend upon sustaining at least some of the effort that brought them about, and not simply cashing out after short-term contractual targets have been met.
The sector might have gained further insight into these issues from the world’s first SIB, at Peterborough Prison, which was originally due to finish last year. However, it was terminated after only three years, due to the introduction of a new national policy. While interim results showed reoffending at the prison initially went down by 8.4 percent, the real success of this SIB is impossible to judge, and issues of attribution remain. This experience highlights another blind spot that seems characteristic among SIB cheerleaders: the determinant influence of the dynamic, extraneous policy environment and political climate on program outcomes.
Qualitatively Changing Service Delivery
These challenges should give SIB advocates cause to reconsider. The fact that they do not take pause reflects the ideological, rather than evidential, basis for SIBs’ popularity. However, we believe of greater concern is the unintentional (or otherwise) effect of introducing the SIB model into the realm of service delivery previously infused with a public-sector ethos. This represents a boundary shift that profoundly alters the character of the service.
The introduction of a profit incentive fundamentally alters the relationship between the service provider and user. The principal client and dominant stakeholder of any given SIB is its financier, not those who receive the services it finances and whose voice rarely figures into any discussion. The motivation propelling private investment in SIBs is profit or return on investment, rather than assisting or changing the circumstances of citizens in need. SIBs reduce this latter feature—which we might regard as the central purpose of social and public policy—to a by-product of investment. This does not seem to trouble SIBs’ many proponents, who blandly assume that the interests of private financiers can be aligned with the needs of service users, and who are content to see the changing fortunes of citizens instrumentalized as payment triggers. SIBs thereby transform citizens into commodities. The inevitably complex contracting arrangements that SIBs entail also transform the nature of policy accountability, with governance and reporting systems geared toward the needs of private funders rather than elected officials. SIBs exemplify the financialization and privatization of social and public policy; they reduce the rights of citizens both as service users and as a polity.
SIBs are undoubtedly an innovative idea. But, leaving aside their considerable technical problems, far more than being a mere technocratic and unideological development, they constitute an ideological shift in welfare service provision. SIBs are both an archetypal “solution looking for a problem” and an illustration of the cultural supremacy of market principles into all aspects of everyday life, including politics and policy.
There are better ways to harness resources for social good. For example, the public sector can still achieve broader policy changes by exercising economies of scale that go beyond the scope of local solutions. The national roll-out of the new recidivism policy that overtook the Peterborough Prison SIB case aptly demonstrated this. With some imagination, we might also devise solutions that are more attuned to underpinning ideals of solidarity and community represented by the third sector. For example, the first Community Bond recently launched in Scotland seeks to attract small scale investments (of around $70 to $7,000) from “community investors” to create a loan fund (of around $105,000 to $140,040), which will look to lend unsecured loans to local social enterprises and community businesses. Such initiatives may be much smaller than a commercial SIB, but they represent a simpler way of increasing and widening sources of finance for public services without sacrificing or altering their essential moral character."...
"Through predatory public-private partnerships, global financiers are in the process of digitizing not only our education system, but many other aspects of public service delivery. This 10-minute video provides an overview of “Pay For Success” and social impact bonds, detailing how their operations hinge on intrusive and oppressive collection of data from our classrooms, homes, jails, and clinics.
By defining “success” in narrow terms suited to outcomes-based contracting, powerful investors will control how public services are delivered. Securitization of debt associated with program operations will turn our lives, including those of our children, into fodder for financial speculation. YouTube categorized this video as a comedy; perhaps based on the whimsical nature of the collages. After watching it, however, I’m confident you’ll see it’s truly a horror show. A slide share version of the video can be viewed here and a PDF of the script is available here."...
"[Social Impact Bonds are] Bonds (that aren’t actually bonds but rather contractual agreements) where private capital is invested in a social program that is supposed to save the government money. If a private data clearinghouse determines money was saved, the “savings” are paid out to investors as profit, instead of going to other programs.
For example saving on special education costs by providing pre-k or reducing recidivism costs by offering prisoners workforce training. We hear governments are interested in education and workforce training SIB opportunities. If the programs we invest in meet the agreed upon measures of “success,” we’ll net a profit. The one wrinkle is that programs that involve success metrics like workforce outcomes require tracking participants for years to determine if our investment was “successful.”
But what’s a bit of surveillance in the name of fiscal accountability and transparency, right?
We’re not sure there is actually profit to be made in the SIB deals themselves. The big money will be in derivatives, bets on the SIBs once we bundle them into asset-backed securities. Then, we’ll be able to trade them in global financial markets; it’s legalized gambling. It worked so well with mortgages we’re definitely bullish on the prospects for a futures market in education data. We just need to get all the devices into schools, the data dashboards online, and Pay for Success legislation approved nationally and we’ll be good to go."
"I’ve been doing a lot of research on social impact investing and digital identity recently and found the above image this morning. To say I’m still reeling from its implications would be an understatement. This venture capital firm, PTB Ventures (Project Trillion Billion) is one of the funders of the MIT spin-off, Learning Machine, which has begun issuing education credentials on the Blockchain (see the Learning is Earning video) through a partnership with Southern New Hampshire University.
Paul LeBlanc, President of SNHU, is an advisor to the education division of the public-private partnership merchant banking firm Ridge Lane, LLP.
My friend Linda, who teaches music in Spokane, shared the insight below, which very much cuts to the chase. I’m grateful she’s allowing me to post it here to share with you. I will be writing more later, so consider this a teaser.
“I hope your DNA, RNA, and basic building blocks of protein, show you have grit and are conscientious. I hope you are measured and ranked and sorted and catalogued by tech companies, and big business, planning to turn individual humans and entire human social networks (called social capital) into a trillion dollar profit market –using the tools of data mining and the big 5 personality identification markers (used by Cambridge Analytica, to sway the election to Trump, but oh well) such that your shelf life is not SHELVED.
I hope the fusion of tech, with the surveillance state doesn’t ever ruin your day. I hope that as technology takes over jobs, and we face the very real possibility of an un-job world, that your value to the corporation, having been reduced to what your online data portals are worth in the new *impact markets*, that REQUIRE ***extensive measurement of humans***, (see Campbell’s law for the corruption that is inevitable) measuring things that can’t even properly be measured, are such that you are considered valuable by the algorithms that define you."...
"Justin Leroy presents on the overlapping histories of race and financial innovation, from slave insurance to social entrepreneurship, in conjunction with Cameron Rowland’s project for the 2017 Whitney Biennial. Leroy teaches nineteenth-century U.S. history at the University of California, Davis; his book Freedom’s Limit: Racial Capitalism and the Afterlives of Slavery, is forthcoming from Columbia University Press."
Kish, Z., & Leroy, J. (2015). Bonded Life: Technologies of Racial Finance From Slave Insurance to Philanthrocapital. Cultural Studies, 29, (5), 630–651
[Note. Re-sharing on this page does not indicate endorsement] ________________________
"Established in mid-2014, Innovation Edge is an innovation catalyst and investment platform with a social impact agenda.
We support the growth of unconventional ideas that seek to transform early life experiences for young children living in poverty.
We provide a variety of customised strategic, financial and hands-on support to help inventors, innovators, change makers, start-ups, entrepreneurs and investors turn brilliant ideas into sustainable solutions."
Abstract On October 21, 2011, the White House Office of Social Innovation and Civic Participation and the Nonprofit Finance Fund convened a meeting, with support from the Rockefeller Foundation, attended by ninety-six representatives from government, nonprofits, philanthropic foundations and academia. The convening aimed to generate interest in “Pay for Success” (PFS) programs funded by “Social Impact Bonds” (SIBs), described by the White House as “A New Results-Oriented Federal Commitment for Underserved Americans.” By the end of 2014, twenty-three states and the District of Columbia had adopted or were considering Social Impact Bond programs or enabling legislation. This scale of interest and activity being directed at PFS and SIBs raises several questions. What is the logic underlying the Pay-for-Success approach and how is it unrolling in practice? Does the accelerating adoption of PFS and SIBs represent an innovative departure in the design and delivery of urban social programs or is it a continuation of longstanding practices? What explains the rapid emergence and diffusion of PFS at this particular historical moment? To what extent does the proliferation of PFS and SIBs reflect the subordination of urban and social policy to the financialization of the economy and with what short- and long-term consequences for the future?
Replacing conventional ideas of governing in and through the state, the financialization of urban policy advances the practice of networked governance involving the finely calibrated interaction of multiple actors spanning the public, private and non-profit sectors and proceeds through the continuous and highly contested negotiation of the elusive boundaries between the market, state and civil society. Once achieved through the confluence of interests enacting the financialization of the economy, the dominance of finance in the sphere of social policy appears irreversible. The resulting reversal of ends and means mobilizes social policy on behalf of profitable investment outcomes and financialization is the process through which seeing like a state means enacting policy as a financial transaction. Most disadvantaged in the resulting policy practice are the client recipients of the social-behavioral interventions funded through the policy mechanism, whose behavioral failures are targeted as the problem to be rectified while the underlying structural and institutional determinants of life chances in a financialized society remain intact.
"Business executives, government officials, and representatives of non-profits and NGOs from across the globe will gather in New York City this fall to discuss the business of early childhood."...
By Emily Talmage "Two years ago, BuzzFeed broke a disturbing story that gained little public attention at the time.
According to a 2015 report, widespread cases of physical and sexual abuse – including multiple deaths of healthy children – took place in homes that were part of the for-profit foster care organization known as the Mentor Network.
The report featured former Mentor caseworkers who accused the company of failing children because of its focus on extracting a profit from them – by cutting corners on expensive services, for example, or forcing social workers to carry extremely high caseloads.
“I went there because I care about services for kids,” said one caseworker. “I eventually became a machine that cared about profits. I didn’t care about kids.”
…
Buzzfeed’s report was thorough enough to prompt a Senate investigation.
But a key power-player, who has since left Mentor to form organizations influencing everything from juvenile recidivism to public education, has thus far been left off the hook.
Tripp Jones, now Principal at a company called 21c that specializes in developing the type of public-private partnerships that allowed the Mentor Network to flourish financially, served as member of Mentor’s executive team for eight years.
According to his company bio, Jones played a pivotal role in “building the systems” that enabled the company to grow from $250 million in revenue to $1.1 billion.
Then, Jones went on to serve as co-managing director at a company called New Profit, where he helped build a “social finance advisory firm” called Third Sector Capital Partners.
And this is where education activists need to pay attention.
New Profit and Third Sector Capital, both major proponents of the controversial and highly unethical “Pay for Success” model of public financing, are now closely linked with powerful education organizations and lobbyists."...
"Benchmarks, testing, drills, rote learning and the absence of play are transforming kids into joyless drones Three weeks after New York City expanded its historic preschool initiative to three-year-olds, Richard Buery held forth on his signature achievement at the Puck Building, owned by Charles Kushner and his son, Jared, Donald Trump’s son-in-law. Bill de Blasio’s deputy mayor of strategic policy initiatives, architect of “PreK for All,” exhaled."
By Sarah Lahm "Will the Minneapolis Public Schools exist in the year 2040? Judging by the Minneapolis 2040 master plan, it won’t.
Minneapolis 2040 is a visioning document, designed to offer a planned-for picture of what the city will look like over the next 22 years (as part of the Met Council’s Thrive 2040 project). It has been in development since before 2014, and is now in the last stages of community input. By the end of 2018, the Minneapolis City Council will vote on the 2040 plan and the vision of Minneapolis it provides. After that, assuming the plan is accepted by the Council, it will be put into action via updates to the city’s zoning laws.
The zoning laws will dictate how, exactly, Minneapolis will morph into the city depicted in the 2040 draft. (Zoning issues tend to really get people’s goat.) The vision is for a city with business nodes in multi-use neighborhoods, full of green space, access to transit, bike lanes, high density housing and…no schools, it would seem. A glance through the guiding principles and priorities behind the Minneapolis 2040 draft reveal virtually no mention of the city’s public education system, or education in general.
The six guiding values for the Minneapolis 2040 will hopefully lead to “An inspiring City growing in equity, health, and opportunity,” according to a 2018 City Planning Commission press release. Those six values center around growth (boosting Minneapolis’s population and its tax base); livability (safe, green, healthy neighborhoods with access to amenities); economic competitiveness (including private/public sector innovation); health; equity and racial justice; and “good government.”
These six values are expanded upon by a list of fourteen priorities, as identified by the Minneapolis City Council. The priorities offer more information about the values guiding the 2040 plan, but again make very little mention of public education and what role, if any, schools will play in this future version of Minneapolis."...
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