Today is a day for me to get out of the way and let you read – three cracking articles, don’t miss the pair from the NYU Journal of Law & Business in particular…happy reading:
Another Record SIB, Another Feature for Foundations
Alex Parkinson – The Conference Board
As quickly as the buzz surrounding New York State’s record SIB has diminished, another record-breaking SIB has been launched to fill the void. Not to be outdone by its neighbor, Massachusetts sealed a deal in early February that will bring private investment to help 929 high-risk young men stay out of prison. The SIB could potentially return $27 million to investors.
Yet again, this contract features a number of global firsts for SIBs, but two in particular stand out:
In 2013, the U.S. Department of Labor gave Massachusetts a first-of-its-kind grant of $11.7 million to help promote pay-for-success programs. This will allow the state to extend the program, should it prove successful after seven years, to an additional 391 young men in two subsequent years.
Both the deal’s intermediary, Third Sector Capital Partners, and the nonprofit service provider, Roca, have a stake in the contract through deferred service fees—portions of their fees that will only be paid if the program meets its social impact goals.
The first point is an acknowledgement of the government interest in SIBs and “pay-for-success” (the term many practitioners, particularly in the United States, prefer to use) initiatives. The $11.7 million is part of a $24 million grant that the Department has awarded to Massachusetts and New York State to improve employment outcomes for formerly incarcerated individuals. (Incidentally, New York Governor Andrew Cuomo just last week announced four nonprofit finalists that will enter negotiations to launch new contracts this year.)
Globalizing Social Finance: How SIBs And Social Impact Performance Guarantees Can Scale Development
Deborah Burand – N.Y.U. Journal of Law & Business
Effecting Progress: Using SIBs To Finance Social Services
Rebecca Leventhal – N.Y.U. Journal of Law & Business
The Rise Of Social Impact Investment
Naomi Rainey – Professional Pensions
After years of niche status, environmental, social and governance (ESG) factors are becoming increasingly central to pension fund investment.
Following the financial crisis and the Kay Review of equity markets, institutional investors have come to realise the power they have to move markets – and the responsibilities that brings.
The Law Commission’s review of fiduciary duty explicitly considered ESG compatibility with protecting members’ interests, with the aim of removing perceived barriers to the strategy.
As ESG investment moves centre stage, a more radical investment style is waiting in the wings: social impact investment.
Once considered a philanthropic pursuit, impact investing is becoming more prominent, both in appetite from pension funds and in the investment funds available. So can social impact investing follow ESG into the mainstream?