Two-year Commitment to Provide $100 Million in Social Impact Bonds to Fund Solutions to Some of the Most Pressing Social Issues in the U.S.
NEW YORK, Sept. 22, 2011 /PRNewswire-USNewswire/ -- Social Finance, Inc., along with several other leading impact investment organizations, was highlighted on stage today by President Clinton at the Clinton Global Initiative Annual Meeting in New York City. Social Finance announced its two-year commitment to develop and launch $100 million in Social Impact Bonds (SIBs) in the U.S. Founded in January 2011, Social Finance is a nonprofit organization working to connect the social sector with the capital markets by structuring and managing innovative investment instruments that generate both social benefit and financial returns.
The Social Impact Bond, also known as a Pay-for-Success Bond, is at the core of Social Finance's current efforts. The SIB is a new financial instrument that aligns the interests of private investors, nonprofit service providers, and governments in an effort to improve the lives of individuals and communities in need. SIBs raise private capital to fund nonprofit prevention programs aimed at achieving improved social outcomes that generate government savings. If an independent evaluator determines that the pre-defined outcomes have been achieved, the government repays investors their principal and a rate of return that account for a share of the savings. If the pre-defined outcomes have not been met, the government owes nothing.
"There has never been a more opportune time to rethink the role of the capital markets in solving persistent social problems," said Tracy Palandjian, CEO of Social Finance. "At a time when our cities and states face growing budget deficits, Social Impact Bonds provide an opportunity for the private, nonprofit, and public sectors to collaborate and attract much-needed investment capital to improve the lives of the disadvantaged. I am grateful to President Clinton and the CGI community for recognizing Social Finance's work and look forward to working with our partners to fulfill our commitment to develop and launch Social Impact Bonds in the U.S."
The Pershing Square Foundation, a CGI member, is a partner in Social Finance's commitment to launch Social Impact Bonds. "Social Finance is well-positioned to manage the complexities of originating, structuring and executing Social Impact Bonds," said William Ackman, CEO and Portfolio Manager of Pershing Square Capital Management and founder of The Pershing Square Foundation. "We are delighted to work closely with Social Finance on their commitment as they pioneer this innovative financing solution."
Social Finance is currently working with policy makers in a number of states who are considering launching Social Impact Bonds. In May, Massachusetts became the first state in the nation to formally explore implementing this new financing tool for effective nonprofit organizations. In its work in Massachusetts, Social Finance has highlighted a number of proven nonprofit preventive programs that could be considered for a SIB, including permanent supportive housing for chronically homeless individuals; housing-based support for homeless families; home- and community-based aging-in-place programs for elders; community-based alternatives to juvenile detention; and alternative community corrections for adult offenders.
About Social Finance
Social Finance is a nonprofit organization working to connect the social sector with the capital markets and finance effective nonprofit organizations driving social change. Social Finance is independently funded and managed, and leverages the innovative work of its UK-based sister firm, Social Finance, Ltd., which, along with others, pioneered the concept of the Social Impact Bond and offered the first SIB in September of 2010 with the goal of reducing prison recidivism. By structuring and managing innovative investment instruments that align the interest of private investors, entrepreneurial nonprofit service organizations, and governments, Social Finance works to improve the lives of individuals, families and communities in need. Founding partners include The Boston Foundation, The Pershing Square Foundation, and The Rockefeller Foundation. For more information about Social Finance, visit www.socialfinanceus.org.
About the Clinton Global Initiative (CGI)
Established in 2005 by President Bill Clinton, the Clinton Global Initiative (CGI) convenes global leaders to devise and implement innovative solutions to some of the world's most pressing challenges. Since 2005, CGI Annual Meetings have brought together nearly 150 current and former heads of state, 18 Nobel Prize laureates, hundreds of leading CEOs, heads of foundations, major philanthropists, directors of the most effective nongovernmental organizations, and prominent members of the media. These CGI members have made nearly 2,000 commitments, which have already improved the lives of 300 million people in more than 180 countries. When fully funded and implemented, these commitments will be valued in excess of $63 billion. The 2011 Annual Meeting will take place Sept. 20-22 in New York City.
This year, CGI also convened CGI America, a meeting focused on developing ideas for driving economic growth in the United States. The CGI community also includes CGI U, which hosts an annual meeting for undergraduate and graduate students, and CGI Lead, which engages a select group of young CGI members for leadership development and collective commitment-making. For more information, visit www.clintonglobalinitiative.org.
Media Inquiries: Lara Cote, Social Finance, 617-791-4829, email@example.com
SOURCE Social Finance, Inc.