65 % of Americans are dissatisfied with the federal government.
When I read this on a Gallup poll, it did not surprise me. President-Elect Trump is proof of this statistic. We know that people are angry and that they do not believe their taxes are being put to good use. While I personally believe in the government’s ability to solve national problems, I understand the frustrations of those 65 % — many government-funded social programs have indeed failed us. This is largely because the federal government implements expensive programs without having had the opportunity to test out whether their proposed project will in fact work. Unlike the private industry, government cannot operate in beta. Implementing projects with such high levels of uncertainty leaves the taxpayer, social program beneficiary, and politician unsatisfied — this is a lose-lose situation.
To address this uncertainty, a new approach to social entrepreneurship is slowly seeping into mainstream government work: Social Impact Bond Initiatives or, put more simply, Pay for Success programs. Pay for Success is a groundbreaking contracting model that drives government resources toward high-performing social programs.
How Pay for Success Works:
PRIVATE FUNDERS such as foundations, banks, and businesses, provide upfront capital to a high-performing social service provider that is helping a specific at-risk target population.
SERVICE PROVIDERS deliver services to key at-risk communities, in an effort to reach or exceed predetermined outcomes for success.
- Pay for Success bonds engage the philanthropic and private sector investors to deliver better outcomes
- Pay for Success bonds can help achieve better outcomes in many program areas.
- Pay for Success bonds minimize risk to the government.
- Special funding provisions will allow existing programs to support Pay for Success bonds
“From a business venture perspective, if we look at the future of our business, with the millennials coming up as clients, we do not want to be our father’s Oldsmobile.”–Surya Kolluri