Bank of America and Social Finance Inc. Study Reveals Potential to Expand Services for Military Veterans Through Innovative Pay for Success Programs

February 18, 2015

New Research Identifies Opportunities to Increase Funding and Collaboration to Scale Effective Services That Measurably Improve the Lives of Veterans and Their Families

NEW YORK – Bank of America today announced the results of a first-of-its-kind study exploring opportunities to use pay-for-success (PFS) programs and other innovative forms of social financing and impact investing to expand social service programs for U.S. military veterans. The study was conducted in partnership with Social Finance, a nonprofit intermediary organization dedicated to mobilizing investment capital to drive social progress through innovative funding models, with the findings now published in a new report, “Improving Outcomes for Veterans: Assessing Pay for Success Opportunities.”

Findings from the study were shared today with senior government and military officials, corporate leaders and veteran-focused service organizations at the George W. Bush Institute’s Military Service Initiative Summit in Dallas. During the event, Bank of America also shared plans to collaborate with the Wounded Warrior Project and Social Finance to further examine the potential for a PFS program to expand workforce development services for veterans, based on findings from the study. These services are vitally important as veterans reenter civilian life and seek employment.

“Thanks to this research, we’ve identified several areas where innovative forms of social finance could help expand services greatly needed by our growing military veteran population,” said Andy Sieg, head of Global Wealth and Retirement Solutions for Bank of America Merrill Lynch. “Providing investors the opportunity to direct capital to services proven to produce positive outcomes gives them the chance to invest in accordance with their values and improve the lives of those who have protected ours.”

Potential to scale veterans services for greater impact
With more than 22 million veterans living in the U.S. today, and as many as 300,000 additional service members expected to leave the military annually over the next five years, services for these men and women will increasingly require additional resources. For this reason, Bank of America engaged Social Finance to help assess the viability of using PFS programs to scale the operations of organizations proven to be effective but that lack the funding needed to have an even greater impact. The availability of sufficient metrics to establish the effectiveness of these services is what makes a measurable PFS program possible.

“There are many effective organizations providing veteran services across the nation, however most need greater and more reliable funding to grow their programs,” said Tracy Palandjian, CEO and co-founder of Social Finance Inc. “Our research has helped identify interventions and programs ready to scale to help more veterans stay healthy, be productive and enrich their lives. At the same time, we hope that these insights will serve as a catalyst to help drive government resources toward programs that measurably improve the lives of veterans and their families.”

The study reflects input from more than 80 interviews with leaders across multiple sectors including military, finance, government, academia, nonprofits and philanthropy – and the screening of more than 70 veteran-serving organizations. Through this study, Social Finance analyzed five key factors for potential PFS programs, including specific veteran populations, evidence-based programs, social service providers, economics and metrics, and outcomes for payors. Among a number of opportunities identified through this research, three have been highlighted where PFS programs could play a role to scale much-needed services:

  • Employment and wellness: Veterans aged 18 to 34 experience unemployment rates higher than those of civilians in the same age group. Findings from the report show potential for a PFS project to support organizations that provides supported employment with mental health services to veterans who are unemployed and have a mental-health diagnosis, such as depression or post-traumatic stress. According to the report, these services increase employment and earning potential, while decreasing reliance on health care services and generating greater tax revenues from increased lifetime earnings.
  • Chronic disease management: The fastest-growing segment of health care spending for veterans comes from those with one or more chronic diseases, including diabetes, chronic obstructive pulmonary disease, heart conditions, renal failure, dementia, and stroke. The report notes that a PFS demonstration project may provide home-based transitional care to prevent hospital re-admissions for pre-9/11 veterans over the age of 65 who are diagnosed with chronic disease. By improving health outcomes and helping veterans become more self-sufficient, according to this report, savings could be achieved by reducing re-hospitalizations and hospital stays.
  • Housing support for female veterans: Female veterans are overrepresented within the homeless population, with their numbers increasing even as overall veteran homelessness is decreasing. Current estimates of homeless female veterans range from 4,000 to 11,000. The report highlights that a philanthropically-funded initiative may reduce or eradicate homelessness for post-9/11 female veterans not currently served by the U.S. Department of Veterans Affairs. According to the report, such an initiative could help reduce the reliance of female veterans on county-level services, and improve the health and educational outcomes for children of female veterans.

“This study helps us understand some of the most important needs of our nation’s veterans and the potential to develop impact investment opportunities that could benefit them, the public sector, private investors and service organizations alike,” said Lewis Runnion, director of military affairs for Bank of America Merrill Lynch.

Click here to download “Improving Outcomes for Veterans: Assessing Pay for Success Opportunities” and read about other promising initiatives and recommendations on steps that could be taken to make them PFS-ready.


An Intern’s Perspective: My Summer at Social Finance

This summer, I had the privilege of serving as the first [Harvard University Institute of Politics] Director’s Intern at Social Finance (SF), a Boston-based nonprofit organization dedicated to mobilizing investment capital to drive social progress.

Central to SF’s work is an innovative financing tool called the Social Impact Bond (SIB), a public-private-nonprofit partnership that has the potential to scale evidence-based social interventions, create taxpayer efficiencies, and generate financial returns for investors. SF structures and manages SIB transactions, and also helps governments and service providers develop the capacity to become stakeholders in these initiatives.

Today, there are four SIBs operating in the United States—directing $50 million in capital to the social sector—and over two dozen additional states and counties actively pursuing SIBs in their respective jurisdictions. These projects are aimed at addressing a diverse array of issues in areas such as health, education, homelessness, criminal justice, and workforce development.

The work I was assigned at SF was engaging and informative, providing me the opportunity to gain real insight into the emerging field of Pay for Success and Social Innovation Financing. In my role as a communications intern, I updated SF’s social networking outlets, marketing materials, and website on a regular basis and took on ad hoc responsibilities as they materialized. The most challenging and rewarding projects I worked on this summer involved constructing a comprehensive database of SIBs in operation and development around the world and writing a post for the SF blog that was later picked up and circulated by the global daily SIB Newsletter.

When I first walked into the office, I was surprised (as most visitors are) by the conspicuous absence of cubicles or partitions. Everyone—from Associates to the Vice President, Managing Director, and CEO— sits side by side at adjoining desks. As I bounced between temporarily available seats over the course of the summer, developing a deeper understanding of different projects and closer relationships with my fellow coworkers, I quickly realized the value of the open floor plan. This unique layout facilitates a collaborative work environment and speaks to the firm’s people-centric culture.

Throughout the summer, I received constant guidance and support from my supervisors, who were just as willing to answer questions in my seventh week as they had been on my first day. The team members, universally inspiring in their knowledge and passion, were always open to sharing their experiences and offering advice. Bonding occasions ranging from impromptu coffee breaks to newly instituted “Food Truck Fridays” were highlights of the internship.

I am incredibly grateful to the SF staff for taking a genuine interest in my development and making me feel like part of the team. I would also like to thank the IOP for coordinating what was truly a fantastic internship experience.

This summer marked a particularly exciting period of growth for this nascent sector with the introduction of bipartisan federal Pay for Success legislation in Congress (the Social Impact Bond Act in the House of Representatives and the Pay-For-Performance Act in the Senate), the publication of the United States National Advisory Board on Impact Investing’s recommendations for supercharging the industry, and the launch of the Social Innovation Fund’s $11.2 million Pay for Success grants competition.

Though I will no longer be held accountable for remaining informed of such advances in the field, I fully anticipate following the evolution of this exciting space to a mature and established industry trusted to tackle society’s most complex challenges.

Entry by Maddie Sewani, Harvard University ’16

This post was also published by Harvard University Institute of Politics here.

Social Finance CEO Tracy Palandjian Rings NYSE Closing Bell with Members of U.S. National Advisory Board to the Global Task Force on Social Impact Investing


On April 21st, Social Finance CEO Tracy Palandjian and other members from the 27-person U.S. National Advisory Board (NAB) rang the closing bell at the New York Stock Exchange (please find the video here). The NAB is tasked with recommending policy changes to the Global Task Force on Social Impact Investment, which grew out of the June 2013 G8 gathering of world leaders.

Launched by UK Prime Minister David Cameron, the Social Impact Investment Task Force—chaired by Sir Ronald Cohen, co-founder of Social Finance UK, US, and Israel—was formed to create a policy framework to accelerate impact investing and raise awareness about the role of innovation and public/private collaboration in solving some of the most vexing challenges, both social and environmental, of our time.

Palandjian, who co-chairs the U.S. NAB with Omidyar Network’s Matt Bannick, noted that “Our society faces challenges that cannot be solved by government and philanthropy alone, spurring innovative approaches that harness the efficiency and discipline of markets. Impact investments deploy private capital for public good and are intentionally designed to deliver social or environmental benefits as well as financial return.” Social Finance has driven impact investing through the use of a particular financing mechanism, Pay-for-Success, also known as the Social Impact Bond.

The U.S. cannot afford to leave both capital and talent underutilized during a time of economic distress. Consequently, the NAB will issue a report this summer to offer policy recommendations aimed at advancing impact investing in the U.S.

Entry by Daniel Rubin, Associate