Request for Expressions of Interest: Social Impact Investments. (Social Impact Bonds and Pay for Success)

Transcription

1 Request for Expressions of Interest: Social Impact Investments (Social Impact Bonds and Pay for Success) Background The City of New York is exploring an innovative model of pay for performance contracting in order to improve outcomes on key social issues. This Request for Expressions of Interest (RFEI) is to invite interested organizations to submit information to the Mayor s Office for Health and Human Services and the New York City Human Resources Administration regarding programs that can be implemented in New York City (NYC) using this type of performance contracting model. Many of the social services made available to NYC residents (for example child care, homeless shelters, and senior centers) are provided by nonprofit organizations under contract with city agencies. While the government currently funds prevention work in a number of disciplines and evaluates success, the proposed model will provide a secure funding source for increased prevention work and ensure accountability for performance. By using nongovernmental funding to seed the intervention that will be repaid by the government based on outcomes, it creates an upfront mechanism to establish the criteria for compensation to be paid upon success of the intervention. The model s approach includes analytic rigor, a commitment to evaluation and outcomes, and allows for scalability of programs. This RFEI seeks input on how to identify promising interventions that would be best suited for a Social Impact Bond (SIB) or Pay for Success (PFS) contract in New York City. There are many types of pay for performance contracting in which the government agrees to pay based on agreed upon outcomes. SIBs and PFS are two ways of categorizing this type of contracting. The concept builds off the ideas in impact investing, which combines the creation of both a potential financial return (in this case, a return to government in the form of cost savings and a return to the investor above the initial investment) and social value. The Social Impact Bond model is currently being implemented in the United Kingdom and focuses on private investors providing the upfront capital. During his administration, Mayor Bloomberg has been committed to ongoing innovation to solve social challenges and to strengthen the nonprofit sector. The Bloomberg Administration has been implementing initiatives that will improve contracting procedures, strengthen nonprofits and reduce costs. In 2011, NYC agencies providing client and community services relied on over 1,000 service providers to deliver $4 billion worth of services through more than 4,000 different contracts. This initiative will help to strengthen the nonprofit sector by providing a secure funding stream to scale up successful interventions and test promising innovations. How it Works Social Impact Investments (Social Impact Bonds and Pay for Success) Social Impact Investments (also known as both PFS and SIB contracts) are an innovative take on traditional forms of financing by raising nongovernmental money to support programs and services delivered by nonprofit organizations that require successful outcomes for payment. There are numerous variations on how to structure these types of contracts. In exchange for investing in an intervention, funders receive their initial investment plus a possible added amount if the program or service achieves a pre-determined outcome associated with the savings of tax payer dollars. The added amount in other 1

2 words, the rate of return on investment is determined by the cost savings that accrue as a result of the intervention achieving the desired outcome. The benefits are threefold: the nonprofit provider receives a predictable committed funding stream not subject to government cuts to provide services and scale up successful interventions; government is able to preserve public resources for successful interventions while encouraging innovation in new solutions from non-governmental partners; the investor earns a return on a successful investment while achieving a social good. Sample Social Impact Investment structure below: Social Impact Investments reduce the risk of public funds being utilized for ineffective interventions. They allow public programs to have clear, established goals aimed at tackling the most pressing social concerns of New York City and consequently, for taxpayer money to be directed at the most promising interventions. New York City is currently in the process of launching a Social Impact Bond in the area of criminal justice. Because of the high cost of incarceration, a program that can be shown to reduce future jail time is a good candidate for this type of financing. A private investor will fund the intervention, nonprofits will deliver the services, an evaluator will evaluate the results and the city will pay back based on outcomes. Information Requested Through this Request for Expressions of Interest (RFEI), NYC government is seeking information on how a Social Impact Investment might be structured in New York City, including identification of 2

3 programs and services suitable for this type of contracting. Specifically we are looking for programs or interventions that can demonstrate a positive social outcome which can be measured and translated into cost savings. Many interventions are funded through a mix of city, state, and federal funding. This RFEI is looking for information concerning interventions funded by all three sources, but with a priority on achieving cost savings in city funding. If New York City decides to proceed with this approach, submitted information will be reviewed to identify prospective applicants to help launch additional Social Impact Investment initiatives in NYC. Specifically, the City is requesting information and proposals that answer the following questions: Feedback on Social Impact Investments (SIBs and PFS) 1. If implemented, is the model described above an effective method for financing governmentfunded services? Please provide feedback on how it would positively and/or negatively affect the following: a) Government b) Service providers c) Private investors d) Foundations 2. Is an intermediary organization essential for success or will service providers be able to take on the risk of a pay for performance contract? 3. In NYC, what social concerns and interventions are best-suited to be addressed through a SIB/PFS structure? 4. Are there interventions outside of social services that should be considered for this type of model? Responses must include the following information: I. Scope of Service: 1. What intervention can help improve outcomes and if successful decrease government spending at least equal to the cost of the intervention? 2. Please outline a plan for delivering one or more intervention(s) through a SIB or PFS success model. Your idea can focus on scaling up small programs that already have a demonstrated record of success or implementing new interventions with a strong evidence base. Your plan should include: a. A description of the intervention including program design, target population, service needs of the population, setting for the intervention, supports and aftercare b. Evidence to support its success producing outcomes c. Detailed analysis of cost projections and savings with assumptions on number served, cost of intervention, projected outcomes and cost savings i. Including whether savings accrue to the city, state or federal government 3

4 ii. If the savings exist at the state or federal government, your organization s ability to negotiate and recover those savings d. Timeframe for implementation e. Deliverables and expected benefits to program participants f. Your organization s ability to raise private funding to support the intervention i. Include any partnerships or funding commitments you have with investors as applicable g. Any partnerships needed to successfully execute the intervention and your organization s ability to foster those partnerships II. Organization Overview 1. Your organization s experience and capacity providing the type of service proposed a. What is your organization s goal and mission? b. Does your agency already provide this service? c. If not, what is your capacity to start providing it? 2. Describe your organization s experience working in a collaborative environment across government and nongovernmental entities. a. Does your organization have previous experience collaborating with public and/or private entities to implement evidence-based programs? b. What is your organization s ability to raise, leverage or provide funding to cover operating costs (if applicable to your proposed design)? 3. Your organization s capacity and infrastructure to track outcomes and measure results. a. Does your organization have the capacity to track and analyze program performance? b. Does your organization have experience with performance-based contracting and achieving milestones and targets? c. What challenges have you faced trying to measure results? 4. What role will your organization play in delivering the intervention? III. Evaluation and Metrics: 1. Please discuss how you would monitor program success. a. What interim benchmarks would you use? b. What outcome measures would you use? 2. Please discuss the type of evaluation needed to ascertain outcomes (implementation evaluation, quasi-experiential, randomized control, etc.) 3. How would an outcome evaluation factor into payments? 4

5 Submission Instructions Please submit responses electronically to: by 5pm on May 31, All questions and requests for additional information concerning this RFEI should be directed to Kristin Misner, the Authorized Agency Contact Person, at: Telephone: Fax: Other Information This Request for Expressions of Interest is issued to inform interested parties and stakeholders of New York City government s potential plan to create, implement, and administer a Social Impact Bond or Pay for Success contract. This document is not intended as a formal offering for the award of a contract or for participation in any future solicitation. New York City government reserves the right, at its sole discretion, to withdraw the RFEI; to use the ideas or proposals submitted in any manner deemed to be in the best interests of the New York City government, including (but not limited to) negotiating with one or more respondents or undertaking the prescribed work in a manner other than that which is set forth herein. New York City government likewise reserves the right, at any time, to change any terms of the RFEI. This RFEI was created to understand which organizations would have the capabilities to implement a Social Impact Bond for Pay for Success contract and which organizations would benefit the most from such a change in the City s structure for funding social interventions. Replies will be considered and reviewed. Key factors that will be considered include whether the proposal focuses on a a priority issue facing the Human Services Agencies of the City of New York, the length of time it will take to start the intervention and show results, whether the proposed intervention is a priority area for the affected agenc(ies), the evidence of success of the intervention and likelihood of achieving those results, ability to measure outcomes, successful demonstration of the information requested above, and the feasibility that savings can be utilized to pay back the investment. In addition, an organization s capacity to negotiate and manage multiple partners and history of delivering programs in New York City will be taken into consideration. In its sole discretion, the City and HRA reserve the right to choose to discuss various approaches with one or more respondents (including those not responding to the RFEI). In addition, the City may, upon discussion of the approaches, proceed with respondents who show that it can proceed with one or more interventions and undertake a demonstration project in accordance with the New York City Procurement Policy Board Rules. The innovation and the length of the innovation s demonstration shall be determined by the City and HRA. 5