Social Currency

Though just .003% of the 2012 federal budget, President Obama’s $100 million allocation to “Pay for Success” projects could significantly alter the way our government funds the social sector. Eager to explore impact investing, specifically Social Impact Bonds/Pay For Success projects, NFF is working with the Rockefeller Foundation to examine their feasibility in communities across the United States. (For a quick primer, my colleague, Jessica LaBarbera, gave a concise overview of the project and key ideas here.) As part of this work, NFF has established a hub of information on Social Impact Bond (SIB)/Pay For Success (PFS) projects for stakeholders nationwide, which we hope will spur a dialog that informs and enables their implementation. But that’s just where the challenge starts.

In theory, SIBs allow the government to focus limited resources on social programs that are proven to work through “reliable, objective outcome-measurement methodologies.” But how will nonprofit practitioners prove it? Outcome measurement has long-stymied nonprofits and their funders, but as the field seeks to build a model that can work for the long term, defining and measuring what constitutes a “successful program” is key.

In the blogosphere, there is ample debate on measuring SIB outcomes. While reading recent posts at Tactical Philanthropy by Sean Stannard-Stockton and others, I was surprised at how often the commenting fray simply rehashes the basic pros and cons surrounding nonprofit outcomes measurement. It’s a well-worn argument: “Data will revolutionize the sector!” vs. “Nonprofits can’t afford to track this information!”