How Social Impact Bonds Close the Funding Gap

An article by J.B. Wogan explains the ins and outs of social impact bonds, a financing tool that, as defined in the article, taps the "private and philanthropic sectors for early investors for otherwise cost-prohibitive public programs." Wopgan notes that the tool is also sometimes known as a "pay for success" program, and even though it's called a "bond," it's actually "more of a public-private partnership for experimental and expensive interventions in human services."

The social impact bond model also recently launched a new, ambitious effort in Santa Clara County, California, with Project Welcome Home. According to Wogan, over the next six years, "a nonprofit called Abode Services will provide housing and support services to between 150 and 200 long-term homeless people."

Wogan adds: "The nonprofit will assign small caseloads to a multidisciplinary team with training in psychiatry, substance abuse, social work, nursing and vocational rehabilitation. The approach represents a combination of evidence-based practices, and is backed by academic research and recommended by the U.S. Department of Housing and Urban Development."

Wogan also notes that Project Welcome Home follows shortly on the heels of the demise of the "first and most famous" social impact bond in the country—a program providing group therapy for juvenile inmates. Project Welcome Home will also allow project funders to discontinue the program if it proves ineffective.