1. Mark S. Innocenti Mark.Innocenti@USU.EDU
Using Social Impact Bonds to Fund Programs for People with Disabilities
Mark S. Innocenti
AUCD Annual Meeting
Washington, DC
December 6, 2016

2. Social Impact Bonds (SIBs) or Pay for Success (PFS)
An approach to contracting for intervention programs
Payment tied to measurable outcomes
Ensures high-quality, effective services for individuals and communities
Other names: Development Impact Bonds, Payment by Results

3. PFS Analogy – The Transaction Resolution
Results if successful
For you
Total cost: $150
Total savings: $200
Net benefit: $50
Longitudinal benefits: $?
For me
Total cost: $120
Total income: $150
Return on investment: 25%
Results if unsuccessful
Back to the old bulbs
Stuck with new bulbs and costs

4. How does PFS work?
Business and other organizations work with government and community agencies to:
identify evidence-based programs
Identify the outcomes they produce
assign costs to program implementation and outcomes
Investors provide capital to get started
Bond is developed
Program implemented
Payments made to investors when outcomes are met

5. Impact Bond Mechanics EBP Identified Bond Developed
Gustafsson-Wright & Gardiner, Using Impact Bonds to Achieve Early Childhood Development Outcomes In Low- and Middle-income Countries.
Global Economy and Development Program – Brookings Institute

6. Types of currently funded PFS programs
Recent review by Brookings Institute
Social welfare (21 programs)
Employment (17)
Criminal recidivism (4)
Education (4)
Health (2)
Being used across the globe
What is missing?
Gardiner & Gustafsson-Wright (2015). Brookings Institute

7. Why PFS?
Federal Legislation – Social Impact Partnership Act (H.R passed, S introduced)
Senator Hatch discussed impact investing for people with disabilities in a Senate Finance Committee Meeting
White House OMB – Brief on PFS
Since 2013 – 26 states have introduced or passed legislation allowing or encouraging PFS transactions
Corporation for Supportive Housing brief on SIBs for meeting Olmstead
U.S. DOE RFP competitions focused on PFS
U.S. DVA–PFS RFP on employment rehabilitation
Illinois DHS-PFS RFP focused on supportive housing, community capacity, workforce (all disability focused)

8. Benefits of PFS
Encourages business and other investors to become more involved in social prevention programs
Increased focus on program outcomes rather than process
Programs can focus on what works and not on paperwork compliance
Builds a culture of monitoring and evaluation
Drives performance management
Foster collaboration
between the for profit, nonprofit, and government sectors collaboration
across government agencies, levels of government, and political parties
Government only pays for programs that achieve outcomes; risks are borne by the investors.
Communities are able to provide more successful options for children and families
Outcomes that matter!

9. Example: Utah High Quality Preschool Program (Utah PFS Program)
First Preschool PFS project in the U.S.
Involvement beginning with conceptualization
Basic idea – improve outcomes for low-income children who come from families with multiple risk factors

10. Utah PFS Program Facilitating Factors
Granite School District (GSD) serves a low-income demographic with families who have multiple-risk factors
GSD history of providing preschool for low-income families
Approximately 25% of children receiving preschool services score 2 standard deviation below the mean on the Peabody Picture Vocabulary Test
Few identified for special education
Consistent with Baby FACES findings
Evidence for program success
Immediate
Longitudinal

11. Utah PFS Program Bond Considerations
Evidence based model in place
Large percentage of children scoring very low on standardized language measure
Language skills are one of the best predictors of later school success
Poor academic performance in kindergarten best predictor of later special education placement (Hibel, Farkas, & Morgan, 2010)
Very low performing preschool children more likely to need special education once in school

12. Utah PFS Program Bond Development
Enroll group of children in evidence-based preschool model
Identify 20 to 25% with very low performance on language measure (payment cohort)
Provide high quality preschool to all children
Pay for special education avoidance
Follow children through 6th grade

13. Utah PFS Program Participants
Goldman-Sachs
JB Pritzker Foundation
United Way of Salt Lake
United Way (initially)
State of Utah
GSD
Other preschool providers
Utah State University
Low income, high risk preschoolers
Gustafsson-Wright & Gardiner, Using Impact Bonds to Achieve Early Childhood Development Outcomes In Low- and Middle-income Countries.
Global Economy and Development Program – Brookings Institute

14. Utah PFS Program Implementation
Enroll: low income, at-risk 3 and 4-year old children
Investors pay for these preschool program slots
Evaluate: All children at pre and post
Identify payment cohort: Approximately 20 to 25% at high risk (2 SD below mean)
Longitudinally follow: Payment cohort for special education placement - K through 6th grade
Payment: Pay for each payment cohort child who does not enter special education

15. Utah PFS Program Benefits
Increased collaboration between government, investors, and nonprofit organizations
Funds quality preschool for some low income children in Utah
Led to increased funding by the state legislature for low income Utah children
Outcome focus included in legislation

16. What’s next for the disability field?
Identify disability intervention programs that have measurable outcomes
Transition, housing, health and wellness, community support
Identify costs for the intervention and costs saved
Identify investors – government or private
Develop a bond
Start the process
Resources are available for feasibility studies, for developing bonds, for identifying investors
University of Utah Sorenson Center, Harvard Kennedy School of Government
Third Sector, Institute for Child Success, Nonprofit Finance Fund