Innovative Financing ModelsElizabeth GainesVice President, Policy SolutionsThe Forum for Youth Investment

April 24, 2014

AGENDA

1. Introductions

2. Social Impact Bonds

3. Social Impact Bonds at Work

4. Special Taxing Districts

5. Q & A

OUR EXPERTS

• Rebecca LeventhalDirector, Business Development Team

Social Finance, Inc.

• Djibrane LarrabureGovernment Innovation Fellow

Social Impact Bond Technical Assistance Lab

Harvard Kennedy School

• Sue GallagherDirector of Research & Planning

Children’s Services Council of Broward County (Fla.)

SOCIAL IMPACT BONDSOverview & Application to Youth Development

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SOCIAL IMPACT BONDS AS ONE SOLUTION

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CosttoGovernment

$100

CosttoGovernment

$40

Cost of Intervention

$30

Safety Net SIB-Funded Prevention

Impact of SIB

Public Savings and Value

$30

Cost to Public$100

Cost to Public$40

Status Quo SIB-Financed Intervention

SocialImpactBondsprovideinvestmentcapitaltofundevidence‐basedprogramsdeliveredbyhighlyeffectiveserviceproviders.Governmentrepaysinvestors’principalandprovidesareturn,butonlyifprogramsachievepredefinedmetrics.

Improving Social Outcomes While Reducing Public Cost

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INTERMEDIARY(e.g., Social Finance, local foundations, local service

provider coordinators)

OUTCOME PAYORS(e.g., government, foundations, corporations)

INDEPENDENT VALIDATORS(e.g., evaluation firm, academics, consultants)

POPULATIONS IN NEED(e.g., homeless, formerly incarcerated, at-risk youth,

aging seniors)

SOCIAL SERVICE PROVIDERS(e.g., nonprofits, B-corps, for-profits)

INVESTORS(e.g., recoverable grants, CRA investments,

institutional assets)

INVEST1

STRUCTURE, COORDINATE, MANAGE RISK

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DELIVER3

ACHIEVE OUTCOMES4

MEASURE AND VALIDATE5

PAY FOR SUCCESS6

RETURN7

AN INNOVATIVE MULTI-STAKEHOLDER PARTNERSHIP

NEW YORK STATE – CEO, BANK OF AMERICA, SOCIAL FINANCE TRANSACTION

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Funds Flow and Structure

Outcome PayerState of New York / USDOL

Evaluator /ValidatorDOCCS Research /

Chesapeake Research Associates

Service ProviderCenter for Employment

Opportunities

Investors

Investors invest $13.5mm 1

Deliver employment

services

Achieve outcomes (recidivism,transitional jobs, and

employment)

Measure and validate outcomes

Pay if – and only to the extent that –outcomes are achieved

Receive performance-

based payment

Social Finance NYS Workforce Re-entry 2013

LLC

Rockefeller First Loss Guarantee FacilityRockefeller provides

10% first loss protection*

*The firstlossprotectionisonlyavailable totheClassA‐1investors

IntermediarySocial Finance Inc.

Social Finance structures,

coordinates, and manages the project

Fund operations

Target Population2,000 High-Risk Formerly Incarcerated Individuals

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3

4

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6

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© Social Finance 2013 8

SocialImpactBondApplicationCriteria

Addressapressingsocialneedwithanevidence‐basedprovider• Policypriorityforgovernment

• Reputableserviceproviderswithproventrackrecord• Interventionwithmeasurableoutcomes

AchieveapositiveROIforGovernment• Financingneedscurrentlynotserved

• Netgovernmentbenefitsexceedcostsofintervention• Acceptableinvestmenttimehorizon

Maintainqualitymetrics&data• Programimplementationdata

• Administrativedata• Externalevaluation

Donoharm

SOCIAL IMPACT BOND ASSESSMENT CRITERIA

Aligns withmost assessment criteria Aligns with some assessment criteria

Evidence‐basedIntervention

Sufficient NetBenefits withinTime Horizon

Replicable andScalable

Vulnerable Population Potential Intervention

Justice‐Involved Adultsand Youth

Post‐incarceration support and jobtraining toreduce recidivism

At‐Risk YouthCommunity‐based wraparoundservices to reducesubstance abuse, out‐of‐home placements, andother problems

Low‐Income Mothers Prenatal and early childhood support forfirst time,low‐income mothers to improve family success

Low‐Income Seniors Supportive housing and carecoordinationto reduceout‐of‐home healthcareusage

Individuals with ChronicConditions

Preventative careand management ofchronicdiseases, e.g. education and homeretrofits to reduceasthma‐related emergencies

Chronically HomelessPersons

“Housing first” supportive housing to reduceemergency healthcareand shelter usage

Hard to EmployIndividuals

Jobtraining forhard‐to‐employ populations to fillskill gaps

0 – 5Year Old Children Providing all childrenwith the toolsnecessary tobegin school ready tolearn

K‐12 Students Support educators working to restart chronicallyunder‐performing schools

PROMISING APPLICATIONS

SOCIAL IMPACT BONDS AT WORKSIB Technical Assistance Lab

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THE SIB LAB

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TheHarvardKennedySchoolSocialImpactBondTechnicalAssistanceLab(SIBLab)conductsresearchonhowgovernmentscanfostersocialinnovationandimprovetheresultstheyobtainwiththeirsocial

spending.Animportantpartofourresearchmodelinvolvesprovidingprobonotechnicalassistancetostateandlocalgovernmentsimplementingpay‐for‐successcontracts

usingsocialimpactbonds.

THE SIB LAB

Assisting10StateandLocalGovernments

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• Ohio•Michigan• South Carolina• Colorado• Illinois• Connecticut•Massachusetts• New York• Chicago• Denver

RECENT DEVELOPMENTS

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SPECIAL TAXING DISTRICTSFlorida Children’s Services Councils

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Children’s Services Councils

• The creation of a local Children’s Services Council begins with the vision and commitment of citizens of a county.

Children’s Services Councils

• A Children’s Services Council is a local government body that oversees funding for programs and services that improve the lives of children and their families.

Creating Florida’s Children’s Services Councils

• ACSCisagovernmententitycreatedbythecountycommission(localordinance)orapprovedbytaxpayers(specialtaxingdistrict)tofundchildren’sservicesinthecountywhereitexists.

• Chapter125ofFloridaStatutes governs thecreationandoperationofaChildren’sServicesCouncil,commonlyreferredtoasaCSC.

• Florida’sspecialtaxdistrictlegislationisalawenablingcommunitiestocreatealocalgovernmentwiththesolepurposeofinvestinginchildren’s services.

About Children’s Services Councils

• Their governing boards are representative of the community, including local elected officials, gubernatorial appointees, local leaders and state employees.

• Subject to the same rules and requirements that apply to city and county governments, CSCs operate with multiple levels of accountability.

• CSCs are a proven investment, not only because they leverage local dollars to secure millions in state and federal matching money and private donations, but also by investing local resources in evidence‐based services and supports for children, youth and families.

FLORIDA COUNTIES WITH CSCS

The CSC Landscape in Florida

• In 8 counties, voters have approved a CSC with “independent” taxing authority to ensure that a dedicated funding source is available for children’s programs and services. • Pinellas, Miami‐Dade, Okeechobee, Broward, Palm Beach, Martin, 

St. Lucie, Hillsborough Counties. 

• Several others operate as a “dependent” district under local ordinance. They rely on funding from the county government, and other sources, to pay for children’s programs and services 

• Examples:  Duval, Orange, Manatee, Volusia, Lake, Charlotte, Highlands, and Indian River. 

Independent Vs. Dependent CSCs

Independent CSCs: 

• Special taxing districts established by vote of county electors pursuant to Florida law (Chapter 125.901). The governing board is not under the authority of the county commission. 

• Single‐purpose local governments with ad valorem taxing authority up to .5 mill. Voters in 2 counties have authorized up to 1 mill for their CSC – Pinellas and Palm Beach.

• Independent CSCs  ‐ Pinellas, Miami‐Dade, Okeechobee, Broward, Palm Beach, Martin, St. Lucie, Hillsborough counties. 

Independent Vs. Dependent CSCs

Dependent CSCs: 

• Perform similar functions as independent CSCs; however, funding comes from the county’s property tax revenues and falls under the 10 mill‐cap for county services. 

• The governing board of the dependent CSC district is appointed by, and operates under, the authority of the county commission.

• Dependent CSC  example ‐ Duval county. 

A Shared Mission

Whether independent or dependent, Florida’s CSCs share the same mission… to invest in primary prevention and 

early intervention programs.

Focus of CSCs

CSCs invest in programs  that focus on early childhood development (typically birth‐8 yrs) and positive youth development. Specific programs depend on the community. Common areas include: 

•Programs promoting healthy families and healthy births

•Programs supporting quality early care and education, special needs, youth aging out of foster care, summer youth employment

•After school and summer programs

Examples of programs funded by CSCs

• Easter Seals – Early Steps• Early Learning Coalitions• Healthy Start Coalitions • Kids at Hope• Home Visitation Programs• Boys and Girls Clubs• Take Stock in Children• PACE Center for Girls• The ARC• Safe Families Project• Help Me Grow 

• Healthy Beginnings• Home Safe• Sickle Cell Foundation• YMCA• The Village Youth Services• Forever Family• Children’s Harbor• United Cerebral Palsy• Career Source Florida• Hispanic Unity of Florida• Children’s Hospitals

CSC Roles & Functions

• Provides funding for children’s programs within the county

• Makes data‐driven investments in local children’s programs

• Seeks to maximize local revenue and develop resources

• Ensures accountability of funded programs and evaluates program performance

• Provides leadership in convening partners for collective impact

• Advocacy

Considerations for Creating a CSCInitial Steps

• Conduct a needs assessment documenting specific issues and trends affecting children in your local area.

• Identify bi‐partisan champions outside the typical advocacy circles. 

• Determine level of support among county commissioners.

• Gauge public support and awareness.

• Other considerations include other issues on ballot and timing.

Florida Children’s Councils 

•The Council works with any and all counties interested in initiating the creation of either a dependent or independent CSC.

Contact InformationBrittany Birken 

New website:  www.flchildrenscouncil.comFacebookTwitter @ FLChildrensCounEmail:  bbirken@floridacsc.orgPhone:  (850) 425‐8472  

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