Why did Social Finance sign the 100% Talent Compact?
Social Finance was proud to sign the 100% Talent Compact because we believe in its mission and we live its principles every day. For us, the ideas behind the 100% Talent Compact – that women are one of the region’s greatest assets and that when women thrive, communities thrive – are ever present. We have been fortunate to attract top female talent throughout every level of our firm – and have built a senior team that is three-quarters female, a statistic that also holds true for the company as a whole.
You helped bring the “Pay for Success” and “Social Impact Bond’ models to the US. Can you explain those briefly, as well as how Social Finance uses them to create a more impactful non-profit sector?
Pay for Success projects – known internationally as Social Impact Bonds - help governments do more with less, allocating tax dollars to programs that have been shown to work. The first Social Impact Bond was launched in 2010 by our sister organization Social Finance UK; since then, more than 85 projects have launched in 19 countries.
A Pay for Success project begins with a challenge the government is trying to address. Government partners with high-performing nonprofits, who scale their services with up-front capital from private investors. An independent evaluator measures the impact of the project on pre-determined outcome metrics. If the project successfully improves outcomes, the payor repays investors with a modest return. If the program does not achieve its target results, government pays nothing.
A recent example is the MA Pathways to Economic Advancement Pay for Success project which we launched this June in partnership with the Commonwealth of Massachusetts and Jewish Vocational Service (JVS). Over the next three years, JVS will expand its vocational training to serve an additional 2,000 immigrants and refugees in Greater Boston, with $12.43M in capital from 40 impact investors. As the project achieves outcomes for participants, including increased earnings and the transitions to higher education, the Commonwealth of Massachusetts will repay investors based on the level of success.
Social Finance uses Pay for Success projects such as this one to mobilize capital and drive resources toward effective social programs. By leveraging data and focusing on outcomes rather than outputs, we are able to contribute to a more impactful nonprofit sector.
In addition to being the co-founder of Social Finance, you also have a history of serving on philanthropic boards. Where did your dedication to helping others come from?
I came to this country as an immigrant from Hong Kong and was given many opportunities because of the generosity and kindness of others. That kindness ingrained in me a desire to reciprocate and to pay it forward.
Social entrepreneurship and impact investing are rapidly growing fields. Are the demographics of these fields similar to others in financial services, i.e. largely dominated by white males, or do you see greater gender or racial parity?
There are a lot of women in leadership positions in both social entrepreneurship and impact investing. It’s really exciting to see – and to be a part of! The impact investing movement has really taken root over the last decade and in that time we have seen such diverse thought leadership emerge. We are seeing it in the leadership for the field, and we are also seeing it at all levels as the field grows – talented, driven women who are committed to this work.
Social Finance works to address a number of social dilemmas, like education and workforce development. How would pay equity, even at a regional level, affect these issues and the work Social Finance does?
Economic disparity is a driver of many of the social issues we face in our communities. Core to our work – and to Pay for Success – is increasing access to economic opportunity. Whether the programs we scale are working with young, low-income mothers in South Carolina or female immigrants and refugees participating here in Massachusetts, improved employment opportunities and pay equity are an important part of that equation.
The MA Pathways to Economic Advancement Pay for Success project, which is actually the first Pay for Success project to value outcomes not just for costs avoided, but for potential future revenue for the Commonwealth of Massachusetts. By supporting programs that increase incomes for program participants, we grow not only their quality of life but the tax base for the commonwealth, as well. In this scenario, pay equity would have a very real impact on the region and in our work.