Social Impact Bonds... in Pittsburgh?

For our last blog, and our last class, I wanted to explore an idea from class that I found especially interesting (and that members of the class seemed to be particularly intrigued by too): social impact bonds.

Though Wikipedia is sometimes derided by people as being unreliable (and sometimes for good reason), I've found that it's a great way to get an overview of a topic before delving into further, confirming research. The following are interesting facts that I learned about social impact bonds as they pertain to the U.S. from the corresponding Wikipedia article: in the U.S., these bonds are commonly referred to as a Pay for Success Bond, they are most similar to equity investments (this we could surmise from our conversations in class), an organization in Boston is offering social impact bonds in the U.S., Barack Obama's proposed 2012 budget stated that up to $100 million would be freed up to run Social Impact Bond pilot schemes, and there is a debate about whether or not public bodies could or should be potential investors (Young Foundation's definition of Social Impact Bonds versus Social Finance's definition of social impact bonds). A report from the Center for American Progress, released in February 2011, analyzes the potential of Social Impact Bonds, here:http://www.americanprogress.org/issues/2011/02/social_impact_bonds.html.

Here's a link to the wikipedia article: http://en.wikipedia.org/wiki/Social_impact_bond

We learned in class and from our readings that recidivism (or re-offenders) is currently being used as a social impact bond pilot in the U.K. As an interesting parallel in our own community, this is the RAND study about Allegheny County's Mental Health Court and recidivism I mentioned in class a couple of weeks ago: http://www.rand.org/pubs/technical_reports/TR439.html. There is a two-page summary PDF of their findings at the bottom of the page. In short, the court system basically breaks even on providing mental health services for the first year to offenders in danger of recidivism but stands to achieve a net gain due to decreased recidivism with long-term treatment for these offenders. This treatment also reduces the risk of psychological hospitalization - a very costly action for the state.

The UK is also exploring the potential impact of Social Impact Bonds to support early childhood education initiatives and family support services.

What do you think - could social impact bonds work in Pittsburgh?

-Whitney Coble