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Like most partnerships, one of the most critical ingredients is empathy. We have to be able to understand one another's incentives and find the common ground that aligns our work together. We shouldn’t just invite our partners to our meetings. (Who has time to attend someone else’s meetings?) We need to make “my” meetings “our” meetings. To do so, we have to work to understand what is important to our partners and create a space for honest dialogue and mutual understanding about where our efforts should support one another. We have to show that this is not only a good use of their time, but that we are focused on helping our partners succeed at their mission. And that, of course, is how together we succeed at our mission.
Several pilot programs in the United States have recently begun using social impact bonds, or Pay-For-Success bonds, to finance initiatives aimed at solving entrenched social problems like homelessness. First implemented in the United Kingdom, social impact bonds are an innovative way that some American cities can work with established private and non-profit partners to create real change. So what are social impact bonds and what are the new projects in the United States that use this model of financing?
Social impact bonds (SIBs), or pay-for-success bonds, are a new financial instrument that utilizes the typical structure of a municipal bond, where bonds are used to procure funds from private sector investors who are then paid back with interest if the project can achieve required outcome targets. As distinct from municipal bonds, SIBs invest in social innovation programs that range in focus from the justice system to homelessness and can therefore be used to incentivize change in both public and nonprofit systems working on these issues.