Omidyar Network and The Pershing Square Foundation Grant Social Finance, Inc.
$4.0 Million to Accelerate Growth of Pay-for-Success Financing
Flexible Funding Will Expand Opportunities and Driver Further Innovation of PFS Nationally
Boston, MA, December 4, 2014 — Social Finance announced today, at a White House Pay for Success Summit in Chicago, grant awards totaling $4.0 million from Omidyar Network and The Pershing Square Foundation to support its operations over the next three years. The flexible funds will be used to expand Social Finance’s transaction and advisory teams, as well as accelerate the flow of Pay-for-Success (PFS) financing (or Social Impact Bond) transactions in the United States. The grants represent funding renewals from Omidyar Network and The Pershing Square Foundation, which were founding supporters of Social Finance.
The funding comes as interest in PFS has increased dramatically across the nation. PFS financing is an innovative funding model that drives government resources toward social programs that prove effective at providing results to the people who need them most. The model enables federal and state governments to draw in greater resources to tackle social problems by tapping private investments for the up-front costs of the programs. PFS ensures that taxpayer dollars are being spent only on programs that actually work. As interest in these projects has accelerated, so too has demand for experts that can evaluate PFS feasibility for various interventions, structure transactions, and manage performance.
Social Finance’s CEO and Co-Founder, Tracy Palandjian, emphasized the value of this funding to the organization’s ability to support the growth of the PFS market. “The flexibility of this financial support is critical,” she stated. “It will allow us not only to strengthen our internal infrastructure but also to pursue high-quality projects, including those that might not otherwise get off the ground due to lack of funding. Our ability to work on high-impact projects in various geographies and issue areas will go a long way toward positioning PFS for long-term success and ultimately helping people in communities across the U.S. gain access to better services. We are grateful to our partners at Omidyar Network and The Pershing Square Foundation for their stewardship and guidance since our early years.”
With these grants, Social Finance will be able to expand its PFS feasibility and transaction development services to execute a greater number of high-quality projects as well as speed innovation by exploring new issue areas. Over the next 12-18 months alone, Social Finance expects to close five projects that are currently in development in Connecticut, Massachusetts, New York State, South Carolina, and Washington, DC. Its advisory team is now evaluating PFS opportunities to benefit veterans, first-time mothers, and the long-term unemployed as well as vulnerable communities in geographies from Tennessee to California and anticipates working with more stakeholders in the coming years.
The Pershing Square Foundation has been a champion of the PFS approach since its introduction to the US in 2011. “Market-based models, such as PFS financing, have tremendous potential to solve longstanding social challenges because of their ability to align incentives among parties that don’t normally collaborate and bring sustainable funding to the table, and we are proud to support Social Finance’s pursuit of this approach,” stated Paul Bernstein, Chief Executive Officer of The Pershing Square Foundation.
A leading advocate of impact investing, Omidyar Network has supported PFS as a way to bring private capital to proven solutions. “PFS financing has the potential to connect the social sector with a vast pool of capital for the good of society. From chronic disease management to adult basic education, we believe that PFS can finance greater access to prevention and early intervention programs that can generate positive outcomes for our society. We are excited to continue our support of Social Finance as key leaders in this space” stated Amy Klement, Partner at Omidyar Network.
Since its founding in 2011, Social Finance has collaborated with stakeholders throughout the United States to assess PFS feasibility for various interventions and develop projects in support of at-risk populations. Last year, it launched one of the first PFS financing projects in the US to improve employment and recidivism outcomes in New York State.
About Social Finance, Inc.
Social Finance, Inc. is a 501(c)(3) nonprofit organization that is dedicated to mobilizing investment capital to drive social progress. The organization focuses on structuring and managing impact investments that unlock capital to finance effective solutions to persistent social problems and drive an outcomes-focused social sector. The firm develops Social Impact Bonds, innovative multi-stakeholder partnerships, that help more people gain access to better services by scaling performance-driven social programs, creating taxpayer efficiencies, and generating financial returns for investors. For more information, please visit www.socialfinanceUS.org.
About Omidyar Network
Omidyar Network is a philanthropic investment firm dedicated to harnessing the power of markets to create opportunity for people to improve their lives. Established in 2004 by eBay founder Pierre Omidyar and his wife Pam, the organization invests in and helps scale innovative organizations to catalyze economic and social change. Omidyar Network has committed more than $735 million to for-profit companies and non-profit organizations that foster economic advancement and encourage individual participation across multiple initiatives, including Consumer Internet & Mobile, Education, Financial Inclusion, Government Transparency, and Property Rights. To learn more, visit www.omidyar.com, and follow on Twitter @omidyarnetwork #PositiveReturns
About The Pershing Square Foundation
The Pershing Square Foundation is a private family foundation, based in New York, founded in December 2006 by Karen and Bill Ackman. The Foundation has committed $250 million in grants and social investments to support exceptional leaders and innovative organizations that tackle important social issues and deliver scalable and sustainable impact. Bill is the CEO and portfolio manager of Pershing Square Capital Management, L.P. For more information visit: www.pershingsquare.wpengine.com.
Director of Communications, Social Finance