Social Finance, Inc.


  • Economic Opportunity, Education

  • United Kingdom | United States

  • Refugees and displaced people, Economically disadvantaged people

  • Non-governmental organization

  • $4,199,681 (2015)

  • 39

Executive Summary

More than ever, our world is interconnected. Yet, the globe has surprisingly sharp edges. In a world where nearly everything-technology, communications, business, even disease-moves across borders, in the global refugee crisis borders become barriers. Refugees face language, economic, and cultural barriers as they struggle to make a new home. Integration systems are overwhelmed and underfunded. We see an opportunity to transform how we integrate refugees into our communities. We propose a Pay for Success incentive fund-the Refugee Support Challenge Fund-as a tool to partner with government agencies: attracting impact investors to fund high quality services, while only paying for those that measurably improve outcomes for refugees. The Challenge Fund would leverage another $200M from government payors, reaching 50,000 80,000 individuals through adapting and scaling the world's most effective programs-a transformative investment to address the unprecedented human crisis we face today and build productive, resilient communities of tomorrow.

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The Problem

More people are forcibly displaced by war, violence, and persecution than at any other time in history. Those forced to leave their homes commonly face arduous journeys, and significant barriers to building full and productive lives in their new communities. In the US, they are four times more likely to require welfare support, and their incomes remain lower even twenty years after arrival, as compared to US born individuals. In the UK, half of new refugees spend time homeless; after two years, only half have been employed. More refugees than ever are admitted to our countries-nearly 130,000 are expected in 2017-but integration funding per refugee has stagnated. Despite significant overall public and private funding, there is just not enough investment in language, workforce, and behavioral health services to support refugees on the path to self sufficiency. The strongest programs to support refugee integration-those backed by experimental evidence and quality research-rarely reach scale; they are often seen as impractical and expensive. Indeed, refugees are seen as an immediate burden, a drain of public resources. Beyond the moral and strategic case for refugees, we can and should develop an economic case. These new citizens represent a powerful and underappreciated opportunity-not only to corroborate our long held democratic notions of decency, but to harness talents and energy to build stronger, diverse, and more productive economies.

Proposed Solution

We will apply the 100&Change grant funds to create a Refugee Support Challenge Fund (RSCF) to incentivize governments to make multiyear investments in refugees. Using Pay for Success, a novel public finance tool we've built over the last decade, the RSCF will match government dollars to pay for positive outcomes. We expect this model will leverage another $200M from governments and philanthropists-supporting 50,000 80,000 refugees and their communities. Pay for Success can catalyze upstream investment in refugees-in improved mental health, sustained employment, educational attainment, and improved language skills-leading to economic self sufficiency and a reduction in safety net spending. Pay for Success ensures taxpayers pay only for measured improvements in positive outcomes, which brings accountability to service providers, while giving them the flexibility to implement their services in the most effective way. Everyone shares in the benefits: refugees, by access to improved education, employment, and healthcare; host economies, via increased tax revenue, economic growth, and lower safety net spend; and communities themselves in their strengthened social fabric. Ultimately, by enabling effective programs to operate at scale-and by agreeing on and carefully measuring the value of the outcomes they produce-we are building the tools needed to integrate refugees now and in the future, demonstrating and disseminating best practices. At the same time, we intend to reinforce a broader point: that enabling refugees to build livelihoods in their new communities makes our society is more dynamic and productive-inverting the current corrosive narrative that refugees are a burden.

Evidence of Effectiveness

Our proposal has three layers: it is (1) an outcomes fund (2) used to catalyze Pay for Success projects (3) to scale a set of evidence based interventions for refugee integration. Each layer has its own evidence: 1) Since the field's inception in 2010, there have been over 60 Pay for Success projects across 15 countries. Twenty four have reported results thus far; all but one have produced positive outcomes. Projects are supported by unprecedented levels of performance management and an accountability framework that accelerates troubleshooting. 2) Outcomes funds have proven effective drivers of change. In 2013, the US Department of Labor's $26M matching outcomes funds catalysed a 1:1 match among US states; in the UK, over 240M of outcomes funding for PFS has been allocated under multiple programs. Similar concepts have been pioneered elsewhere: the $10M Ansari XPRIZE, for example-a competition to send a reusable craft into space-inspired $100M in technological investments. 3) Integration of refugees and migrants is complex. Highly evidence based interventions-particularly in language acquisition, workforce placement, and behavioral health-exist, yet are too often overlooked. We have identified exceptional programs-like Individualized Placement and Support, which supports those with severe mental illness (such as PTSD) find jobs; Per Scholas, which trains low income adults in IT skills; and Kiron, which has emerged from the current crisis and creates blended learning platforms to help refugees gain accreditation-with compelling evidence. The co payor competitions will draw from these programs, which have a record of driving measurable positive outcomes.

Previous Performance

Social Finance is uniquely suited to identify and structure effective PFS projects that achieve positive outcomes for vulnerable people. Social Finance is the global leader in Pay for Success, having pioneered the model, developed nearly one third of the 62 projects worldwide, and provided guidance in many others. We have deep experience implementing every aspect of these projects, including feasibility assessments, intervention due diligence, program design, evaluation structuring, economic and financial modelling, contract development, capital raise, and active performance management. We are already implementing Pay for Success models for refugee integration. In partnership with the Commonwealth of Massachusetts, we structured a project to support employment and post secondary opportunities for 2,000 participants through vocational English and job readiness training. This entailed exhaustive research on promising interventions and their underlying evidence; determining appropriate outcome metrics; and conducting detailed cost benefit analyses demonstrating programs' value. We are no stranger to outcomes funds. Our founding director was seconded to the UK Cabinet Office to design the first 20m Social Outcomes Fund; we were appointed to engage co payors for the 40m Commissioning Better Outcomes Fund; our analysis underpinned the 100m 'Life Chances' outcomes funding; we recently advised the International Commission on Financing Global Education Opportunity to create a global education outcomes fund. Globally, our teams have designed projects across a range of relevant social issues, from behavioral health to job training to homelessness.Our approach is founded in deep analysis of government funding flows, experience in assessing high quality providers, and a commitment to building thoughtful, needle moving projects.

The Team

Team Purpose

Our national investments in long term refugee integration are dwarfed by the scale of the need. Since 2010, Social Finance has pioneered a new mechanism to drive systemic change within government spending. We build three way partnerships-between governments, nonprofits, and impact investors-to drive progress on society's most pressing problems. This mechanism, called Pay for Success (PFS), reorients the way governments contract for services. It ensures that stakeholders quantify and balance value, impact, and risk; carefully define success and how it will be measured; and align incentives to link spending on outcomes with performance in achieving them. PFS influences government funding directly-allowing it to shape large flows of future funds. This proposal builds on our global expertise. Using the Challenge Fund, we can incentivize governments to use redesign the refugee integration system-interventions, knowledge, and relationships-as it should be: driven by research; carefully measured; invested in long term impact.

Team Structure

This project will be run as a collaboration between Social Finance US and Social Finance UK. Though separate legal entities, we have the same mission. Our offices bring together strong networks, expertise and market leadership-and enable ongoing cross fertilization between our national contexts. Day to day management of the integrated project team will be overseen by Jane Newman (International Director) and Jake Segal (Director, US). The team will report monthly to a governing committee of the CEOs of both entities. In addition, it will meet quarterly with an Advisory Council of public leaders, investors, academics, and nonprofit executives (see list, attached), and with their joint Boards of Directors. The project will be staffed by a flexible core team from across the US and UK. The team is expected to range from five members (during the design and launch phases) to ~15 (during peak implementation). In the operational phase, the team will be organized into three workstreams: Co payor engagement: Working with governments to build interest in and capacity to compete for RSCF funds; Transaction structuring: Leading the process of outcomes pricing, contracting and evaluation design; and Learning and oversight: Ensuring providers and intermediaries are collaborating to troubleshoot challenges, and sharing lessons across projects.

Past Funders

  1. Laura and John Arnold Foundation
  2. The Rockefeller Foundation
  3. Omidyar Network Fund, Inc.
  4. The Pershing Square Foundation
  5. Barr Foundation
  6. W. K. Kellogg Foundation
  7. The California Endowment
  8. The Bank of America Charitable Foundation, Inc.
  9. Community Foundation of Greater Memphis
  10. The Nathan Cummings Foundation

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