Here's the WSJ some months back with more on Goldman-Sachs's earlier foray into "social impact bonds" with the Riker's Island correctional institution:

The new financing approach is designed to fund prevention programs that require significant upfront investment but could save the government money in the long run. While it offers cash-strapped governments a new source of capital, it also raises questions about the role of the private sector in public programs, and how a profit-driven model might affect social services.

Critics say that the model could motivate service providers to manipulate data to get paid, or prompt them to focus solely on the metric for success and ignore other contributing problems.

"There's the worry that we are privatizing and commercializing the way we care for each other," said Michael Edwards, a distinguished senior fellow at Demos, a New York think tank.

Edit: In addition to this concern that service providers might "focus solely on the metric for success," a larger concern would seem to exist in that service providers might actually define the metric for success. After all, it's their money, not ours?

And here's Johnathan Greenblatt in the HuffPo fully two years back, touting the earliest "social impact bonds" solicited by U.S. governments:

Late last week, Governor Deval Patrick and the Commonwealth of Massachusetts quietly released a Request-for-Information (RFI) on an esoteric new public financing concept. The state cautiously issued its RFI without much fanfare. No trumpets or flags, just an understated press release announcing its interest in the issuance of a Social Impact Bond.

Don't miss this in Greenblatt's column, either:

Even the White House has recognized this wide-reaching potential. President Obama staked out $100mm in his proposed FY2012 budget for the instrument, described by the administration as "pay-for-success" bonds, potentially to be used by five different federal agencies.

And do be aware that Greenblatt infiltrated HuffPo by way of the Aspen Institute, where he is a Henry Crown Fellow (and where David Koch sits on the board).

If all this is sounding vaguely familiar, it's because we here at KV stumbled and lurched through a very similar investigation, namely growing support for legislation to enact a new legal entity called the "benefit corporation," about a year ago, here.

Lawdy if Eli Broad wasn't right when he announced that "the stars are aligned" for privatization of public functions...

Sigh. It looks like the Goldman Sachs foray into public ed financing wasn't the only news tidbit I (you?) missed last month.

Per the HuffPo on June 17:

Social impact bonds have their origins in the U.K., where policymakers have been admirably forward-looking in their embrace of these and similar innovations. To his credit, U.K. Prime Minister Cameron has leveraged his G8 chairmanship to bring impact investing to the next level. On June 6, in London, Cameron assembled leaders from civil society, government and the private sector to flesh out exactly how it can be incorporated more systematically into the G8's problem solving toolbox, as they gather at Lough Erne.

Further, per the same article:

And, earlier this month, the United Nations High-Level Panel identified impact investing as a viable "third way" for post-2015 sustainable development.

No, the article's authors Omidyar and Bannick do not, in the above linked article, explicitly reference for-profit "social investing," but that's part of what their Omidyar Network (ON) does.

In this article, also written by Bannick and prepared for the Aspen Institute, the authors do make clear that "ON provides grants to nonprofit organizations and invests debt and equity capital in for-profit ventures" ("Learning from Silicon Valley," scroll to page 8 of the entire study linked to see article).

As to the basis on which ON will make such investments, Bannick says (also "Learning from the Silicon Valley," scroll to page 10 of the entire study linked):

For ON to consider investing in a for-profit company, the critical first filter is its potential for positive social impact, and the second is its ability to profitably and quickly scale up. We look at financial metrics that are standard for a profit and loss statement, such as revenue, operating margin, and net income. In particular, operating income is a leading indicator of impact because it demonstrates a company’s ability to deliver value to customers above cost.

In the for-profit organizations that ON funds, financial metrics are indicators of financial sustainability and social impact. A company’s revenue and margins are driven by the number of customers served and how highly those customers value the product, both of which provide a quantitative measure of the opportunities a company is creating.

To supplement standard profit-and-loss measures, ON uses metrics captured by the company—typically, key performance indicators that a for-profit company tracks to understand the underlying drivers of its financial performance. At Bridge International Academies, a Kenyan startup that operates a franchise-like network of low-cost, for-profit private schools, these metrics include the number of schools, the number of students and trained teachers, academic performance, and the turnover rate of students and teachers.

It seemed to me that maybe the UK's Prime Minister Cameron made more headway with the G8 last month than he made with this United Nations High-Level Panel, the latter group appearing less enamored with the for-profit component in Cameron's proposal.

Anyway, if you had told me five years ago that liberals the world over would fall for privatization of public services the minute the privatizers adopted some euphemistic term like “social impact investing” to describe what they’re doing, I would have answered “Nah, liberals are smarter than that.”

Sooo...here is the enthusiastic announcement from the White House during last month's G8 summit.

In short, Obama says "full steam ahead:"

Looking ahead, the Obama Administration will continue to expand the NII by advocating policies that support the continued growth of impact investment and social enterprises. Such efforts will be guided by a clear set of principles that combine a market-oriented approach with a strong focus on the public interest.

As to the authors of this announcement, two are Feds in charge of the SBA and USAID respectively (although I'm unsure yet where they were before those posts) and a third, Elizabeth Littlefield, Prez and CEO of Overseas Private Investment Corporation, I'm spotting at...wait for it...the Aspen Institute.

See her video, Impact Investing: A Framework for Policy Design and Analysis, here.

One last thing I wanted to point out this aft pertains to that "social impact bond technical assistance lab" being conducted by the Rockefeller Foundation, per my initial post.

According to the Foundation's site, it's working like this:

The SIB Lab, which was established with support from The Rockefeller Foundation, has helped Massachusetts and New York become the first states to develop pay-for-success projects over the past year. The six winning state and local governments of the SIB Lab Competition are Colorado/Denver, Connecticut, Illinois, New York, Ohio, and South Carolina. The SIB Lab will supply them with pro bono technical assistance to help design, procure, and implement these policy initiatives as well as a full-time Government Innovation Fellow to be based for one year in each receiving government agency.

This solicitation by the Rockefeller Foundation of governments they'd like to "help" is exactly the same approach the Gates Foundation took when it conducted a competition among states wanting that foundation to oversee and pay for the states' professionally written grant apps for Race to the Top money. You recall the outrage among competition losers that in making this solicitation, Gates was effectively picking and choosing the winners in a federal grant competition?

And this practice by the Rockefeller Foundation of providing "a full-time Government Innovation Fellow to be based for one year in each receiving government agency" is exactly the same approach the Broad Foundation continues to take in placing first an urban school superintendent, then a resident fellow, in virtually every urban school system in the nation.

Meanwhile, it's getting lonely over here, talking to myself like I am...

It sure does look to me like the usurpation of governments both foreign and domestic is well underway via these devices.

Isn't anybody as alarmed about this as I am?

Thank you for posting this information. Yes, I am very alarmed that for-profit entities are being encouraged to provide social services that have traditionally been provided by local, state, and federal governments. I was just reading someone talking about the company who does background checks saying, "you can't outsource national security." Well, I think you can't outsource education, the arts, the military, etc.

Thanks for the affirmation, Treehouse.

Meanwhile, it looks like there could be a privatization push a little closer to home today...

I just created a blog to link Sandra Clark's story in today's Shopper about McIntyre's anticipated push to hire The Parthenon Group. He'd like to purchase a study from them on our "resource allocation," using a Gates Foundation grant he's nabbed. Take a look at the thread?

"investment opportunities"

At one point in our history corporations were only allowed if they were for the public good.