mst on facebook mst on twitter mst on vimeo mst on youtube mst on google+

MST & Social Impact Bonds

As countries around the world spend time and resources getting serious about ways private investors can tackle deep-rooted societal issues, they are coming up with some innovative ideas. One concept in particular that has gained significant traction is social impact bonds, or pay-for-success contracts, as they are commonly known in the U.S.

Social impact bonds or pay-for-success contracts (SIB/PFS contracts) are based on a commitment from the government to use a portion of the savings that result from improved social outcomes to reward non-government, private individuals and venture capital investors who fund the early intervention activities.

sib mechanics figure
 

Prior to social impact bonds, the organizations that benefit from this type of financial arrangement would usually become the first to fall victim to government program cuts. Instead of dealing with budget cuts and/or
spending money on ineffective remedial
programs, organizations can fund their programs through social impact bonds.

This multifaceted partnership takes on a financial risk based on results and expanding proven social programs. Being a results-based treatment model, MST is available to address societal issues related to juvenile offenders as part of a social impact bond project.

The ambition of social impact bonds is to create positive government spending cycles that enable significant taxpayer savings through improved social outcomes. MST’s ambition is to create positive family environments by keeping kids in school, at home and out of trouble. Together, MST and a social impact bond project would create a win-win scenario for all involved – private investors, government leaders, taxpayers, families and youth.

MST offers an ideal template for application of this creative approach to financing government services. Compared to the alternative of locking kids up, MST produces better outcomes than incarceration at significantly less cost, saving taxpayers money while improving public safety. Implementing MST to a specific return on investment can provide the basis for a private sector investment opportunity.

For example, if a private investor wanted to fund a project that would keep kids in school, at home and out of trouble with the social bond structure, the government would use a proportion of the savings that result from improved social outcomes because of MST to reward the investors. Everyone wins with better outcomes for the youth and families served, government systems and taxpayers who traditionally bear the responsibilities and costs and the private investors who carry the initial financial risk.

The potential range of applications for social impact bonds/pay-for-success contracts are still being examined but the interest in the United States continues to grow. The Social Finance Group believes that this approach is broad enough to enable change in four key ways, including:

Unlocking an unprecedented flow of social finance

  • Creating an 'evidence incentive'
  • Creating an 'innovative incentive'
  • Changing the role of government

While this area is still being explored, it is becoming clear that financial and social goals need not be mutually exclusive. If we can break through traditional boundaries of "socially responsible investment" and implement properly with integrity and efficiency, this exciting and innovative concept of impact investing has the potential to completely change our definition of 'public-private partnerships.'

MST is poised and ready to make a positive impact for juvenile offenders within the arrangement of a social impact bond.

social impact bonds nextcity

Source: NextCity.org

 

To speak with someone at MST Services about the possibility of including the MST treatment model into a social impact bond project, contact:
Keller Strother at (925) 247-0700 or via email keller.strother@mstservices.com.

Using SIBs to Fund MST in Essex, England. Watch to learn more.

Resources

Interested in learning more about social impact bonds?


Pay for Success Activity Map Unveiled at White Convening. The map will be updated regularly as new activity occurs, so please check back often.

“Social Impact Bonds: Using Impact Investment to Expand Effective Social Programs,” Federal Reserve Bank of San Francisco, April 2013

“A Technical Guide to Developing Social Impact Bonds,” Social Finance UK, January 2013

“White House Budget Drives Pay for Success and Social Impact Bonds Forward,” Center for American Progress, April 2013

“Social Impact Bonds in Nonprofit Health Care: New Product or New Package?” National Bureau of Economic Research, April 2013

“Social Impact Bonds: Planting for Future Growth,” KPMG, April 2013

“Social Innovation in Acceleration: Building the Social Impact Bond Ecosystem,” Forbes, April 2013