Social Finance (US non-profit organization)

This article is about the US non-profit organization. For its UK counterpart, see Social Finance Ltd.

Not to be confused with the eponymous US for-profit company known as SoFi.

Social Finance US

File:Social Finance US Logo Smaller.jpg
Founded	2011
Headquarters	Boston, MA
Leadership	Tracy Palandjian, Co-Founder and Chief Executive Officer Lara Metcalf, Managing Director Jeff Shumway, Vice President of Advisory Services
Board of Directors	Bracebridge H. Young, Jr., Chair Mariner Investment Group Sonal Shah, Vice Chair Case Foundation, Harvard Institute of Politics David Blood, Treasurer Generation Investment Management Pamela Dippel Choney Former Wellington Management Company Sir Ronald Cohen Big Society Capital, G8 Social Impact Investing Taskforce Alexander Friedman UBS Wealth Management Luther M. Ragin, Jr. Global Impact Investing Network Sandra A. Urie Cambridge Associates Nancy Zimmerman Bracebridge Capital
Website	www.socialfinanceus.org

Social Finance, Inc. is a 501(c)(3) non-profit organization based in Boston, Massachusetts, USA, that provides advisory, transaction development and project management services to governments, service providers and impact investors engaging in Pay-for-Success (PFS) and Social Innovation Financing (SIF). Core to the firm’s work is the Social Impact Bond (SIB), a tool that draws upon private capital to fund evidence-based social interventions at scale.

History

David Blood, Sir Ronald Cohen and Tracy Palandjian founded Social Finance in January 2011 as a sister organization to the UK non-profit Social Finance, Ltd., which launched the world’s first SIB in 2010. Social Finance Israel was established in 2012.

The three organizations work closely together, but are independently funded and managed.

Core activities

• Advisory Work: Feasibility studies, consulting assignments and development and implementation of proof-of-concept demonstration programs.
• Transaction Execution: Financial structuring, cost-benefit analysis, metrics and evaluation design, capital raising and contract development.
• Post-Transaction Support: Performance and fiscal management of projects, accounting and compliance and investor relations.
• Field Building: Market education, thought leadership and research.

Social Impact Bonds

In a SIB partnership:

• Private investors fund a social service program focused on prevention.
• Government repays investors based on the program's success in achieving pre-determined social outcomes.
• If outcomes are achieved, investors can recoup their principal plus a rate of return.
• If the program does not achieve those outcomes, then government is not obligated to repay investors.

Under a successfully deployed SIB:

• Government only pays for the results, as the SIB shifts performance risk from government to investors.
• Service providers receive upfront funding to serve larger populations.
• Communities and people in need receive quality services.
• Investors generate both a positive social impact and a potential return on their investment.

Leadership

• Tracy Palandjian, CEO and co-founder: Before co-founding Social Finance, Palandjian was a managing director for 11 years at The Parthenon Group where she led the Nonprofit Practice. Her work experience also includes Wellington Management Company and McKinsey & Company.
• Lara Metcalf, managing director: Metcalf leads the capital markets team and financial operations. Prior to joining Social Finance, Metcalf was the chief financial and administrative officer at Harvard University’s John F. Kennedy School of Government. Her private sector experience includes 18 years on Wall Street at Credit Suisse, Goldman Sachs and Morgan Stanley.
• Jeff Shumway, vice president of advisory services: Shumway works to increase the firm's capacity to help service organizations pursue pay-for-success. Before joining Social Finance, Shumway spent nearly a decade with the Bridgespan Group. His professional experience also includes the Monitor Group and the Metropolitan Housing and Communities Policy Center at the Urban Institute.

Selected engagements

New York State
In mid-2012, the New York State Department of Labor selected Social Finance as its Intermediary partner in structuring an application for federal funding for a SIB. In 2013, New York approved $30 million in its budget to support SIBs over the subsequent five years. In September, New York State received a $12 million grant from the United States Department of Labor to fund a PFS project designed to increase employment and reduce recidivism among 2,000 formerly incarcerated individuals in partnership with Social Finance US and the Center for Employment Opportunities.

Fresno, California
With grant funding from The California Endowment, in April 2013 Social Finance and Collective Health launched an asthma management demonstration project in Fresno, California. This two-year project is designed to prove the effectiveness of up-front investment in asthma management. Central California Asthma Collaborative and Clinica Sierra Vista will work with the families of 200 low-income children with asthma to provide home care, education and support in reducing environmental triggers ranging from cigarette smoke to dust mites.

Key supporters

Social Finance receives founding operational and grant support from The Boston Foundation, the Omidyar Network, the Pershing Square Foundation and the Rockefeller Foundation. The Parthenon Group provided office space and support during Social Finance's first two years of operations. WilmerHale and Jones Day also provide pro bono legal counsel.

Publications

A New Tool For Scaling Impact: How Social Impact Bonds Can Mobilize Private Capital To Advance Social Good, Social Finance, Inc.

From Potential To Action: Bringing Social Impact Bonds to the U.S., McKinsey & Company Social Sector Office

Harvard Business School Case Study, by Shawn Cole, Rawia Abdel Samad, Matt Berner, Raluca Dragusanu. December 5th, 2011.

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

Further reading

• "Rethinking the Role of Capital Markets in Enabling Social Progress", Forbes, April 19, 2012
• Jeffrey B. Liebman,"Social Impact Bonds", Center For American Progress, February 2011
• "What Are Social-Impact Bonds?", New York Times, February 8, 2011
• "Pay for Success: A New Results-Oriented Federal Commitment for Underserved Americans", The White House Blog, January 24, 2012
• "Pay For Success: Investing in What Works", Annual Report, January 2012, The White House and Nonprofit Finance Fund
• "Private Risk, Public Benefit: Are Social Impact Bonds the Way of the Future?", Forbes, October 15, 2013
• "Everything You Need to Know About Social Impact Bonds", US News and World Report, November 5, 2013
• "Social Finance: A Primer", Center for American Progress, November 5, 2013

External links

• Press Release: Global Social Impact Investment Task Force Appoints Members of U.S. National Advisory Board
• From Potential to Action: Bringing Social Impact Bonds to the US, McKinsey & Company, May, 2012
• Social Finance: A Primer, Center for American Progress, November 5th, 2013
• Social Impact Bonds: Building a Financial Market for Social Outcomes, Forbes, October 29, 2013
• Cuomo Announces $12 Million Federal Grant for 'Pay for Success'
• Press Release: The California Endowment Awards Grant to Social Finance and Collective Health