The and the have announced the launch of a social impact bond initiative in California with $2.5 million in initial funding.
The will provide funding and support to help nonprofit and government leaders in the state structure social impact bond agreements — under which private investors provide funding for preventative or interventional services and receive a return on their investment from the government only if results are achieved — over the next two years.
NFF will select and support through an initial round of funding up to eight leaders in the state, with additional funding available as their plans progress. Those selected will form an active learning cohort and will have opportunities to share experiences, challenges, and results, with the aim of further testing the model and expediting the development of additional social impact bond agreements.
"Pay for success has generated tremendous interest and excitement as a concept," said Don Howard, executive vice president at the Irvine Foundation. "But these are complex agreements that are difficult to develop because they require multiple partners to do business in new ways. That's why so few pay for success agreements exist nationally, with none yet in place in California. Our goal is to catalyze the creation of these agreements so that the promise of pay for success can be realized for the benefit of all Californians."
"Social problem-solving requires creativity as well as perseverance. Leaders pursuing pay-for- success agreements need both," said NFF chief executive Antony Bugg-Levine. "Ultimately, we're committed to supporting services that serve communities. Beyond the benefits to Californians, we expect that the experiences of participants will be instructive elsewhere as we explore new ways to address pressing issues and fund social good."