New collaborations, maximum social impact.
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Social Impact Bonds are a relatively new financing solution in the past decade, bringing together the public sector, the private sector, and the philanthropic community into a partnership that tests a new form of collaboration focused on maximizing shared social impact goals.
We first hear from three communities in the United States: Anchorage, Alaska; Denver, Colorado; and Santa Clara County, California, who are currently pioneering homelessness-focused social impact bonds to learn how the bonds were formed, how the program is working, and what is next in this great collaborative frontier.
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Overview
| City/County | Municipality of Anchorage |
| Size | $12.75 million ($2 million philanthropy, $4.5 million Municipality of Anchorage outcome payments, additional state/federal housing and healthcare funding) |
| Background | Anchorage Assembly authorized the Municipality to enter into a Pay for Success contract, which requires the project to demonstrate success before accessing municipal funding. |
| Mission | Transition persistently homeless population into permanent housing |
| Population Serving | “Frequent users” or “super-utilizers” who cycle in and out of public systems, primarily homeless shelters, criminal justice, and emergency health services. |
| Impact Scope | House 150 individuals |
| Announcement Date | Feasibility phase began in Fall 2017, pilot year began July 2019 |
| Pre-Launch / Pilot Period | 1 year |
| Start Date | October 2020 |
| Anticipated End Date | October 2023 (3 years) |
Overview
| City/County | City and County of Denver, CO |
| Size | $23.7 million ($8.6 million from social impact sources + federal sources) |
| Background | City and County of Denver and eight private investors closed on the city’s first SIB program. |
| Mission | Housing stability and decreased jail stays |
| Population Serving | Fund supportive housing for people who were homeless for more than a year (“chronic homeless”) or had a disabling condition and were frequent users of emergency systems – “frequent users” or “super-utilizers”. |
| Impact Scope | House 300 individuals |
| Announcement Date | June 2014 |
| Pre-Launch / Pilot Period | – |
| Start Date | February 2016 |
| Anticipated End Date | February 2021 (5 years) |
Context Notes
Each year, 250 chronically homeless individuals account for:
o 14,000 days in jail
o 2,200 visits to detox
o 1,500 arrests
o 500 emergency room visits
Each year, the average cost to taxpayers per individual is $29,000, resulting from jail days, police
encounters, court costs, detox, ER and other medical visits.
Each year, the City spends approximately $7 million on 250 individuals to cover the expenses above.
Overview
| City/County | The County of Santa Clara |
| Size | $6.9 million |
| Background | Project Welcome Home is the first of two Pay for Success projects led by the County with support from its advisor, Third Sector Capital Partners. Launched through a Disruptive Innovation grant funded by the Health Trust and awarded to Step Up Silicon Valley. |
| Mission | Provide housing and supportive services for the chronically homeless and aim to improve quality of life and reduce reliance on costly government services. |
| Population Serving | |
| Impact Scope | 150-200 chronically homeless individuals |
| Announcement Date | 2015 |
| Pre-Launch / Pilot Period | – |
| Start Date | September 2015 |
| Anticipated End Date | September 2021 |
Context Notes
A study published in May by the Economic Roundtable, a policy research nonprofit in California, found that more than 2,800 people are chronically homeless in Santa Clara County, and each of them costs about $83,000 a year in public spending. Cortese and the rest of the Santa Clara County Board of Supervisors are betting that as the homeless population drops, some of that $83,000 in spending at local jails, emergency rooms and shelters will drop as well.
Contract Dynamics
| Use of Funds | Supportive services (intensive case management) and flexible housing support for up to 150 individuals |
| Outcome Payor | Municipality of Anchorage |
| “Success” Trigger | Each month individual is stably housed (up to 24 months), with carefully defined exceptions and exclusions for things like jail or hospital stays |
| Outcome Payment Detail | None, all “savings” recycled back into project’s costs |
| Repayment Frequency | Semi-annual |
| Range of Payment | N/A – Started in October 2020, too early for any payments to have been made to date |
| Term | 3 years* |
*Budget is funded for 3-year program, however, there is no obligation for the city/state to keep funding beyond 3 years – longer term program to be funded by City and State if successful outcomes reached.
Contract Dynamics
| Use of Funds | Housing vouchers for 40 existing units, construction financing for 210 new units in Denver |
| Outcome Payor | City and County of Denver |
| “Success” Trigger | Qualifying participants are those who spent at least one year in housing or had a planned exit. (1) Reduction in jail bed days, (2) housing stability |
| Outcome Payment Detail | $15.12 for each day each qualifying participant was stably housed and not in jail |
| Repayment Frequency | Quarterly |
| Range of Quarterly Payment | $188k-$837k/quarter |
| Term | 5 years |
Contract Dynamics
| Use of Funds | — |
| Outcome Payor | The County of Santa Clara |
| “Success” Trigger | Each quarter individual is stably housed, with carefully defined exceptions and exclusions for things like jail or hospital stays |
| Outcome Payment Detail | Payment to Lender per Program Participant Milestone – $1,242/participant housed for 3 months, $6,831 paid for 12 months continuous housing (Table) |
| Repayment Frequency | Quarterly |
| Range of Quarterly Payment | — |
| Term | — |
Partners
| Fiscal Agent / Financial Advisor | Social Finance (financial advisor), no fiscal agent |
| Project Manager | United Way of Anchorage |
| Service Provider 1 | Southcentral Foundation |
| Service Provider 2 | Alaska Behavioral Health |
| Managed Care Organization | |
| Project Development | N/A – scattered site model across many housing projects, no new housing created |
| Independent Evaluators | NPC Research |
| Evaluation Grantor | HUD/DOJ grant* |
| Government Advisor & Transaction Coordinator | Social Finance |
| Technical Partner | The Corporation for Supportive Housing |
| Legal Support | N/A |
| Early Supporters | DOJ and HUD grant* |
Partnership Notes
*In 2016, United Way of Anchorage, in partnership with the Municipality of Anchorage and other community stakeholders, was awarded a $1.3 million grant from the U.S. Department of Housing and Urban Development and U.S. Department of Justice will be used to support the implementation of a program to address homelessness financed via a social impact bond. The grant provides support for feasibility, transaction structuring, and evaluation activities for the project.
Partners
| Fiscal Agent | Enterprise Community Partners, Inc. |
| Project Manager | Corporation for Supportive Housing |
| Service Provider 1 | Colorado Coalition for the Homeless |
| Service Provider 2 | Mental Health Center for Denver |
| Managed Care Organization | Colorado Access |
| Project Development | Social Impact Solutions |
| Independent Evaluators | Urban Institute with local partner the University of Colorado Denver and the Burnes Institute |
| Evaluation Grantor | |
| Government Advisor & Transaction Coordinator | |
| Technical Partner | |
| Legal Support | |
| Early Supporters |
Partnership Notes
Additional Support Provided by:
- Harvard Kennedy School Government Performance Lab
- Colorado Division of Housing and Colorado Governor’s Office
- Colorado Housing Finance Authority
- Denver Housing Authority
- Feasibility Grants: The Piton Foundation, Kaiser Permanente, The Denver Foundation, and the Rose Community Foundation
- Transaction Structuring Grant: Nonprofit Finance Fund and the Social Innovation Fund at the Corporation for National and Community Service
Partners
| Fiscal Agent | Third Sector Capital Partners |
| Project Manager | |
| Service Provider 1 | Abode Services |
| Service Provider 2 | – |
| Managed Care Organization | – |
| Project Development | – |
| Independent Evaluators | University of California, San Francisco |
| Evaluation Grantor | Laura and John Arnold Foundation |
| Government Advisor & Transaction Coordinator | Third Sector Capital Partners |
| Technical Partner | Palantir Technologies (technology platform for data sharing) |
| Legal Support | Fenwick & West and Gibson, Dunn & Crutcher LLP, |
| Early Supporters | Step Up Silicon Valley, Catholic Charities of Santa Clara County, Silicon Valley Community Foundation, Sobrato Family Foundation, The Health Trust, California Pay for Success Initiative (administered by Nonprofit Finance Fund and funded by The James Irvine Foundation) |
Investor Notes
The Rasmuson Foundation and the Alaska Mental Health Trust Authority also contributed funding for a pilot program from July 2019 to September 2020 to help bring the project to scale. The project also received support during the pilot period from the Alaska Community Foundation.
All four funders for the contract term — the Rasmuson Foundation, Alaska Mental Health Trust Authority, Providence Health and Services Alaska, and Premera Blue Cross — have committed to reinvest all qualified ‘success payments’ back into the program’s ongoing expenses, rather than earn a return or get paid back on the investment.
Social Finance’s work on this project has been generously supported by The Kresge Foundation and Corporation for National and Community Service.
Investor Notes
Abode has also committed $500,000 of deferred service fees as additional investment in the project
Resources
- News: Three Years Into Denver’s Innovative Social Impact Bond Program, Independent Report Points to Continued Success
- Urban Institute Overview Page
- Fact sheet (Corporation for Supportive Housing)
- Project contract (via Nonprofit Finance Fund)
- Project page from Nonprofit Finance Fund
- Summary from Sorenson Impact Center
