DC Social Impact Bond Leadership Part of National Impact Investing Agenda

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Today, Social Finance US announced an innovative new impact investment initiative to address the challenge of high teen pregnancy rates in the District of Columbia. This initiative is one of more than twenty new commitments made public at yesterday’s White House Roundtable launch event for the U.S. National Advisory Board report, Private Capital, Public Good: How Smart Federal Policy Can Galvanize Impact Investing – and Why It’s Urgent. The study was produced by the U.S. National Advisory Board (NAB) on Impact Investing, which is co-chaired by Matt Bannick, Managing Partner of Omidyar Network, and Tracy Palandjian, Co-Founder and CEO of Social Finance US.

The NAB’s work grew out of an international effort at the G-7 level to explore the role that impact investing can play in accelerating economic growth and addressing some of society’s most important issues. The report helped to catalyze today’s commitment, which aims to direct more capital into impact investment that intentionally generates financial returns, as well as measurable social or environmental impact.

The report found that the impact investing field is currently at an inflection point, enlivened by new energy but yet to realize its full potential. The authors write, “For impact investing to reach massive scale – bringing private capital to bear on our greatest problems – it will require a more intentional and proactive partnership between government and the private sector.”

In particular, the study highlights strategies and reforms that the government can undertake to “unleash new capital, talent, and energy for social, economic, and environmental good.” These policies, many of which do not require any additional government spending, include: removing regulatory barriers and providing incentives to spur additional private impact investment; increasing the effectiveness of government programs; encouraging and supporting innovative impact-oriented organizations and impact investment opportunities; and improving data capture methods to facilitate accurate, transparent impact measurement.

As the report makes clear, the impact investing industry in the U.S. is not new, but recent years have featured an impressive acceleration of the pace, forward momentum, and innovative thinking in the sector. Social Impact Bonds (SIBs), like the District of Columbia initiative announced today, are one such innovation. In this project, Social Finance is partnering with the District of Columbia government and Wyman Center’s Teen Outreach Program to develop the first ever Social Impact Bond focusing on teen pregnancy prevention. A diverse collaborative of community organizations will deliver this proven, evidence-based program to reduce the incidence of teen pregnancy and improve educational outcomes for thousands of young people in the District. Social Finance and the District of Columbia will work with other stakeholders in the SIB partnership – the Wyman Center, local service providers, investors, and at-risk youth – to craft a rigorous, data-driven project based on Wyman’s nationally recognized, evidence-based intervention.

This program is a prime example of the exciting momentum in the impact investment sector. This SIB-funded initiative will help the government tackle a persistent social challenge by mobilizing investment capital to drive social progress and directing resources toward what works. As a multi-sector collaboration where investors benefit if and only if society does too, this project embodies a fundamental principle of impact investing.

Entry by Lara Metcalf, Managing Director, and Jane Hughes, Director of Knowledge Management

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

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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