Reps. Todd Young (R-IN9) and John Delaney (D-MD6) introduced H.R. 4885, the Social Impact Bond Act, on Wednesday, legislation that would foster the creation of public-private partnerships that harness philanthropic and other private-sector investments to scale up scientifically-proven social and public health programs. Joining Young and Delaney in introducing the bill were Reps. Tim Griffin (R-AR2), John Larson (D-CT1), Tom Reed (R-NY23), Jared Polis (D-CO2), Dennis Ross (R-FL15), Joe Kennedy (D-MA4), and Aaron Schock (R-IL18).
Under the proposed legislation, the federal government would establish desired outcomes to pressing social challenges that, if achieved, would improve lives and save government money. State and municipal governments could then submit proposals to work towards those outcomes—such as increasing adoption rates of teenagers in foster care, or improving the health and mortality rates of infants born into low-income families—by scaling up existing, scientifically-proven interventions. Private sector investors would provide the capital needed to expand the existing programs, and, if an independent evaluator were able to validate that the desired outcomes were met and money was saved, the investors would be paid back their initial investment plus a small return from the realized government savings.
"Social Impact Bonds have the potential to transform our nation’s social safety net by shifting the focus of such programs from inputs to outcomes," said Young. "In other words, instead of arguing about how much or how little we are spending, policymakers should reward what works based on actual evidence. Whether you think government ought to do more to help our fellow Americans in need, or you think government needs to save money wherever possible, social impact bonds provide a solution on both counts. I’ve been honored to work on this idea with a bipartisan group of colleagues, chief among them Congressman John Delaney, and I look forward to our continued cooperation on these efforts."
"This bipartisan legislation harnesses the power of the private sector to improve government services while saving taxpayer dollars," said Delaney. "Best of all, it moves our government to be more evidence-focused, so we can pay for achieving desired outcomes rather than paying for services regardless of the outcome. This is a true win-win for our constituents and for our taxpayers. The Social Impact Bonds already being implemented in the States prove it can be done, and if we want federal savings, we need to get the federal government involved. I have a been a strong supporter of Social Impact Bonds and the Pay For Success model, and I want to thank Congressman Todd Young for his leadership on this issue. He and his staff have been a pleasure to work with, and I look forward to continuing to work with him as we push to advance this legislation in Congress."
"By establishing end goals and using proven results to evaluate social and public health programs, we can more effectively measure ways to improve these programs to help Americans in need and save hardworking taxpayers money," said Griffin. "This legislation enables public and private sector collaboration to better serve individuals in need and prevent government waste. I recently met with UK officials about the successful use of social impact bonds in the United Kingdom and how real savings can be achieved if we implement them at the federal level here in America. I thank Congressman Young for his work on this issue, and I will continue efforts to promote this legislation and find cost-effective solutions to combat poverty in America."
"Government is most effective when it combines the best our public sector has to offer with the entrepreneurial spirit and innovation of the private sector. By utilizing those partnerships to cultivate better outcomes for the American people, we can strengthen our efforts on social issues and ensure more effective use of tax-payer dollars,” said Larson. “This legislation will help create a pathway for the development of evidence-based initiatives designed to address some of the most difficult issues we face. I am proud to join Representative Young on this measure and look forward to continuing our efforts to produce more effective outcomes in Connecticut and across the nation."
"Social Impact Bonds and Pay-for-Performance financing will bring investment capital off the sidelines to help state and local governments tackle the most pressing, persistent challenges they face," said Kennedy. "By breaking down traditional barriers between the public and private sectors, these tools expand our capacity to address everything from unemployment to child welfare to substance abuse treatment. Most importantly, they promote public policy deeply grounded in evidence and positive outcomes. The nation’s largest Social Impact Bond project, working to reduce recidivism and give juvenile offenders a second chance, is well underway in Massachusetts. I’m proud to join my colleagues in introducing legislation that will expand upon this increasingly important work."
Already in widespread use in the United Kingdom, thus far social impact bonds have only been utilized on a very limited scale in the United States. The Social Impact Bond Act is the first detailed proposal to adapt the social impact bond model for broad use at the federal level, and the first proposal to incentivize the realization of savings across multiple layers of government (i.e., federal, state, and local).