Part 4 in Orchid's Series "Making Reform Easy":
Look @ establishing a special unit in State Gov't to Evaluate, process & submit social impact bond proposals.
Orchid's Social Impact Bond Page
Social Impact Bonds: State of Play & Lessons Learnt (OECD 2016)
The capacity needs for commissioners are significant
63. Few public authorities currently have the skills required to draw up complex results based contracts that are required for SIBs.
This is true whether they are designing a fund model using rate cards or individual transaction models.
The call for tender needs to be specified in such a way to be generous enough to incentivise bidders while not over-rewarding success.
Specific legal skills in drawing up contracts, accounting skills in calculating financial rates of return, and policy skills in achieving goals are all required and need to be integrated.
Few investors have detailed understanding of the types of social outcomes that are needed to address complex social challenges or of the barriers that need to be overcome to achieve better results.
People who look at the world through a financial lens may think that everything can be fixed through incentive structures. Focusing too much on narrow metrics may lead to unintended consequences and gaming in fields where cooperation and holistic approaches may be required.
The considerable cost of capacity building, investment readiness and other measures to stimulate and support the SIB market may be daunting for national actors.
There is a major opportunity for coordinated support and capacity building actions by the EU, charitable foundations and other philanthropic funders to develop the market for SIBs investments (OECD, 2014b).
The US does have the Pay for Success HUB to assist entities wanting to embark on Pay for Success/Social Impact Bond endeavors.
Our understanding is that Denver has used it and so has the State of Colorado.
Having said that, it takes time and energy to do this and it is an expertise of its own.
On the other hand, Colorado has huge unmet federally legally required service needs and is particularly ham-strung because of various state funding restrictions that may promote various lawsuits.
One way to explore leap-frogging over some of that -- is with the use of Pay for Success or Social Impact Bond endeavors.
To do that effectively and as legally needed, the State may need additional bandwidth.
None of this is to say that counties, cities and towns shouldn't consider their own pay for success proposals and special units--
We are focusing on the State, because it has had significant problems meeting its obligations to Coloradans with disabilities for services and housing under the Americans with Disabilities Act and the US Supreme Court's 1999 Olmstead decision, and this may help the State meet those obligations.
We certainly have no objection to collaborative efforts with other entities.