A US bill which would create a $300m federal fund to catalyse social impact bonds has been passed by the US Congress, and will now move to the US Senate.
The Social Impact Partnership Act is co-sponsored by Republican Congressman Todd Young and Democrat Congressman John Delaney. It seeks to foster private sector investment into proven-social programmes and proposes a $300m federal fund to kick-start this.
Social impact bonds, or pay-for-success models as they are known in the US, see private investors fund the delivery of a social intervention, such as reducing teen pregnancy, in the hope of a financial return if measured outcomes are met.
Last week, the House of Representatives approved the legislation. Congressman Young said: “Rather than measure our compassion by how much or how little we spend, social impact partnerships reward what works based on actual evidence. By adopting this bipartisan outcomes-based approach, we help more Americans overcome the root causes of poverty while guaranteeing taxpayers only pay for real results.”The bill will now move to the US Senate, where Senators Orrin Hatch and Michael Bennet are lead sponsors of similar companion legislation. The next step for the bill will be to pass the Senate Finance Committee, which Hatch chairs. In May, Hatch held a hearing on the bill.
The idea for federal funding to catalyse social impact bonds is also supported by the US National Advisory Board on Impact Investing, a high-level group including Morgan Stanley, Goldman Sachs and Bloomberg.
It has made a number of recommendations to support the development of impact investing, including establishing a funding mechanism to accelerate pay for success projects nationally.
Meanwhile, across the border, Canadian province Ontario has unveiled a five-year plan to scale up social enterprises, including piloting social impact bonds and establishing a Centre of Excellence in Social Enterprise and Social Finance.
It is scoping the viability of two social impact bonds – one to support homeless people into housing and the other to prevent at-risk young people worsening their condition.