1. 2/15/2011 Rockefeller Foundation Sees Social-Cha…
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NY CULT URE FEBRUARY 15, 2011
Rockefeller Foundation Sees Social-Change Dividend
By SH EL L Y BAN JO
The Rockefeller Foundation is banking on paying for social change that works.
To that end, the foundation will this week announce a $400,000 grant to the Nonprofit Finance Fund, a
nonprofit financing organization, for a number of projects that will help bring the concept of so-called social-
impact bonds to the U.S.
Originating in the U.K., social-impact bonds encourage private investors and
philanthropic foundations to fund privately managed social programs in areas
such as health care and prisoner recidivism. If the programs succeed in reaching
previously set targets—and social outcomes improve—investors receive so-called
success payments from the government. If the programs don't work, the
government pays nothing. In these scenarios, investors take on all the risk and the
government pays only for programs that work.
"When money is tied to outcomes, rather than inputs, it increases the efficiency of
how taxpayer money is used and steers more money toward nonprofits that are
successful," says Antony Bugg-Levine, a managing director at Rockefeller.
ANTONY BUGG-LEVINE
In January the Rockefeller Foundation closed on a $500,000 investment in a
social-impact bond structured by Social Finance Ltd., a UK-based organization
that launched the first social-impact bond in the criminal-justice sector in order to reduce the rate in which
prisoners go back to prison.
Ideas behind these bonds have since begun to garner attention in the rest of the world: Currently, the White
House is working on a $100 million pilot program to launch social-impact bonds.
After working with U.K. based organizations, the Rockefeller Foundation wants to help bring these ideas to the
U.S. as part of two initiatives the foundation began in 2007 and 2008 with more than $54 million to find ways
that for-profit investors can put their capital to work to address social and environmental challenges.
"There simply isn't enough money in philanthropy and government alone to solve the problems that need to be
solved," Mr. Bugg-Levine says. "There's $80 trillion in for-profit capital markets and we believe there's huge
potential in unlocking some of that money and deploying it to solve social problems."
The Nonprofit Finance Fund, a community-development financial institution that's lent more than $200
million to nonprofits and provided $26.5 million in loan guarantees and grants to charities, will be tasked with
the research and development of how social impact bonds could work in the U.S.
This month the group launched a new online platform for funders, nonprofits and educators to share ideas
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2. 2/15/2011 Rockefeller Foundation Sees Social-Cha…
about the bonds. After gathering research and opinions, they will conduct a feasibility study of the bonds in the
U.S. and identify opportunities where the financing structure could work.
"We're talking to local governments, nonprofit providers and philanthropists—a three-legged stool of what you
need on the ground to launch these models," says Kristin Giantris, Vice President of the Northeast Region at
the Nonprofit Finance Fund.
Write to Shelly Banjo at shelly.banjo@wsj.com
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