Nonprofit Finance Fund Receives Grant from Rockefeller Foundation to Determine Feasibility of Social Impact Bond in U.S.
NFF to Conduct Research on New Approach to Financing Social Solutions in U.S. Market
New York, NY – February 15, 2011 – Nonprofit Finance Fund (NFF) has received a grant from the Rockefeller Foundation to explore the feasibility of an innovative new approach to social finance – the "Social Impact Bond." A Social Impact Bond is a concept that aligns the interests of the public, private and philanthropic sectors around a shared vision of desired social outcomes. Instead of creating compensation based on the number of services delivered, incentives are tied to positive results. Social Impact Bonds have the potential to save taxpayers money while concentrating investment in proven, high-impact interventions that create measurable social benefit.
The Social Impact Bond was piloted in the U.K., where investment is focused on a program designed to reduce re-offending rates among released prisoners. The U.K. government will make payments to investors based on the program's measurable success stemming returns to prison. If the Social Impact Bond model is moved beyond a pilot and brought to scale, it is expected that the payout to investors will cost the government significantly less than housing re-offenders in prison – thus saving the tax payer money in the end and providing a sustainable, long-term solution to a social problem. Adapting the Social Impact Bond model for the U.S. could have tremendous implications for the way social needs are funded.
"We've long known that funding prevention or intervention is typically far more cost-effective than dealing with social issues later in their evolution," said Rockefeller Foundation Managing Director Antony Bugg-Levine. "As governments face tough cuts and economic troubles continue, we need to be open to fundamental change in the way we address society's needs. The Social Impact Bond is a promising, innovative, results-based approach – worthy of deep study into how it might be adapted for the U.S."
In exploring the adaptation of a Social Impact Bond model for the U.S. market, NFF will partner with several organizations in the social sector, including Social Finance, the organization that developed the first Social Impact Bond in the U.K.
This undertaking will include data gathering, a feasibility assessment, proposed models for the U.S. market and a review of implementation requirements.
NFF also just launched a new open, online community for any organization interested in exploring this topic and sharing resources. The group will host its first in a series of web chats on February 23, 2011 at 1:00 pm EST. The first chat will feature expert panelists on the topic: 'The Federal Government's Role in Implementing the Social Impact Bond in the United States'. All are invited to join the group and the web chat, which are designed to facilitate idea-sharing around this new concept. Visit www.nonprofitfinancefund.org/SIB for details.
"The experiment that's been undertaken in the U.K. is exciting and promising," said Kristin Giantris, vice president of Nonprofit Finance Fund's northeast region. "However, the U.K.'s approach can't be applied wholesale to other markets. The Rockefeller Foundation, as a leader in innovative social finance, is playing a crucial role in funding the work that needs to be done in order to investigate the feasibility of applying this concept in an effective and responsible way in the U.S."
The timeframe for this grant is from January 1, 2011 through August 31, 2011. NFF invites anyone interested in the topic to participate in its online forum, available by visiting www.nonprofitfinancefund.org/SIB.
About Nonprofit Finance Fund (www.nonprofitfinancefund.org)
Nonprofit Finance Fund (NFF) is a national leader in nonprofit, philanthropic and social enterprise finance. Founded in 1980, NFF provides loan financing, access to capital and direct advisory services that build the capacity and the financial health of nonprofits. A leading community development financial institution with over $80 million in assets, NFF has provided over $235 million in loans and access to additional financing via grants, tax credits and capital in support of over $1 billion in projects for thousands of nonprofit clients nationwide. NFF has a staff of more than 75 serving nonprofits nationally from offices in Philadelphia, New York City, Newark, New Jersey, Boston, Detroit, Washington, D.C., San Francisco, and Los Angeles.
About Rockefeller Foundation (www.rockefellerfoundation.org)
The Rockefeller Foundation fosters innovative solutions to many of the world's most pressing challenges, affirming its mission, since 1913, to "promote the well-being" of humanity. Today, the Foundation works to ensure that more people can tap into the benefits of globalization while strengthening resilience to its risks. Foundation initiatives include efforts to mobilize an agricultural revolution in Sub-Saharan Africa, bolster economic security for American workers, inform equitable, sustainable transportation policies in the United States, ensure access to affordable and high-quality health systems in developing countries, accelerate the impact investing industry's evolution, and develop strategies and services that help vulnerable communities cope with the impacts of climate change. For more information, please visit www.rockefellerfoundation.org.