Fourth Economy’s President and CEO, Rich Overmoyer, and Social Innovation Strategist, Chris Ellis, recently co-authored an article for Green Building Alliance’s annual publication, Viride. The article, titled Social Change: Refinanced, discusses the origin and recent growth of impact investing. Communities around the country have begun to prioritize triple bottom line benefits and partner across sectors to achieve a greater social impact for their citizens. This new focus has resulted in an impact investment market that currently stands at $74 billion* with projections of $2 trillion in growth over the next decade. The article discusses the origin of this field, highlights how impact investing was used to expand access to high-quality early childhood education, and considers how this financing tool can be utilized to support communities throughout Western Pennsylvania. Click here to read the article.
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Fourth Economy’s Social Innovation Strategist, Chris Ellis, recently had a contribution published in a Robert Wood Johnson Foundation (RWJF) book, Knowledge to Action: Accelerating Progress in Health, Well-Being, and Equity. This book is the inaugural volume of a publication series from the RWJF intended to catalyze discussion, engage new partners, and inspire action to build a Culture of Health in America. Chris’ contributions are included in a chapter that focuses on public, private, and nonprofit partnerships. The chapter examines the impact of these partnerships by highlighting Utah’s Pay for Success transaction that expanded access to high-quality preschool services for low-income children; a program that Chris managed before working at Fourth Economy. More information about the book, including ways to purchase it, can be found here.
By Chris Ellis and Sara Blumenstein
At Fourth Economy, we are interested in—and experts in—a new generation of funding mechanisms that are enabling the expansion of interventions with proven results. (See these posts from last year introducing Social Impact Bonds and Three Questions to ask to demonstrate impact.)
The key stakeholders involved in a Pay for Success transaction
The Fourth Economy team strongly believes in the power of partnerships in improving community and economic development outcomes. Through our work, we have managed numerous collaborations and identified four keys that lead to effective partnerships.
Patience, Participation, and Partnership
Effective collaboration can be difficult and often takes time. Therefore, it requires that all stakeholders have patience throughout the process of building partnerships and developing solutions. As partnership groups face challenging times, it is critical that they overcome these difficulties together and remain engaged in the effort. One difficulty that may arise is that as individuals and organizations collaborate to further a common purpose, they are typically guided by their own self-interest. These motivations are not always negative and can often support the success of collaborative groups when they are aligned with the goals of the larger partnership. In addition to acknowledging these self-interests, during initial conversations, these groups should identify outcomes and boundaries to focus their work. The group should allow for some flexibility in these areas as issues can change, but too much flexibility will impede the group’s ability to effect change and could cause stakeholders to leave the group. Continue reading “The Four Keys to Effective Collaborations”
A new generation of innovative funding tools is enabling change agents to expand programs that are meeting their community’s needs. Pay for Success (PFS) transactions, or Social Impact Bonds, represent an emerging financing mechanism that is driven by cross-sector partnerships, robust data, and a commitment to outcomes.
PFS utilizes upfront private investment to expand social programs that have proven results. In order to encourage this type of investment in their programs, service providers must be able to use data to show that their proposed intervention measurably improves outcomes for their clients and leads to an avoidance of cost. Additionally, these transactions depend on the collaborative efforts of a diverse set of stakeholders. PFS engages partners from the public, private, and nonprofit sectors in five critical roles: an investor who funds the expansion of the program; a service provider who administers the program; an independent evaluator who measures the effectiveness of the program; a public entity, or other outcome payer, who repays the investment based on the success of the program; and an intermediary who facilitates the partnerships and ensures that the project operates effectively and efficiently. Continue reading “Innovative Financing: Paying for What Works”