Connecticut, South Carolina Launch Social Impact Bond Programs

The governors of Connecticut and South Carolina have announced the launch of new social impact bonds — also known as pay-for-success programs — coordinated by nonprofit organization Social Finance to help underwrite efforts to address complex social challenges.

In South Carolina, the $30 million South Carolina Nurse-Family Partnership Pay for Success Project will work to improve maternal and child health outcomes among low-income families in the state by pairing an additional thirty-two hundred first-time mothers and their babies with registered nurses over the next four years. Funders of the effort including the Duke Endowment ($8 million), the BlueCross BlueShield of South Carolina Foundation ($3.5 million), the Boeing Company ($800,000), Greenville First Steps ($700,000), and the Laura and John Arnold Foundation ($491,000) will provide $17 million of the upfront capital, with Medicaid providing an additional $13 million. J-PAL North America, a research center based at the Massachusetts Institute of Technology, will evaluate health outcomes for participants in the program, and the state will reimburse funders only if the program meets its goals, which include reducing preterm births, reducing child hospitalization and emergency department visits due to injury, improving healthy spacing between births, and increasing the number of first-time mothers served in the poorest communities.

"Expanding Nurse-Family Partnership is momentous for South Carolinians and for the pay-for-success field," said Tracy Palandjian, CEO and co-founder of Social Finance. "This project will increase opportunity for mothers and children and unlocks private capital to advance public good. It's a testament to what we can achieve when diverse leaders think creatively and work together."

In Connecticut, the $12 million Connecticut Family Stability Pay for Success Project aims to scale an intensive in-home family-based recovery program to an additional five hundred families struggling with substance use. Treatment teams will make regular visits to families involved with the state's Department of Children and Families, with the goal of ensuring family stability and keeping children with their parents and out of foster care. The project will be carried out in conjunction with the Family-Based Recovery (FBR) program at the Yale Child Study Center, the University of Connecticut Health Center, the Harvard Kennedy School Government Performance Lab, and Jones Day. While no funder has yet committed to the initiative, officials told the Washington Post that several are interested.

"At both the state and local levels, we're facing the tough reality that we can't afford to ignore issues like the effect of substance abuse on child welfare, yet public resources are stretched thin," said Hartford mayor Luke Bronin. "The pay-for-success model that Connecticut is piloting in partnership with the Obama administration brings private resources to the table to support smart, cost-effective investments in family and child welfare that will make our communities stronger and safer, and save money in the long run."