May 18, 2011 | Read Time: 1 minute
Massachusetts is considering a financing approach for social-service projects that would require charities and philanthropists to obtain private financing and show results before getting state money, Reuters writes.
The state has issued a request for information to explore the “social-impact bond” approach being tested in Britain on a program to reduce the number of criminals who return to jail. The U.S. government is also interested in the approach, with President Obama allocating $100-million for pilot projects in his 2012 budget.
Investors in social projects could reap healthy returns if governments adopt and begin financing the programs but would lose their stakes if the efforts do not meet predetermined benchmarks.
Jay Gonzalez, the Massachusetts secretary of administration and finance, said the state is seeking “smarter ways to deliver services more cost-effectively and to stretch every taxpayer dollar as far as possible.” Responses to the request for information are due in June.
Read two new Chronicle of Philanthropy opinion columns on the potential pros and cons of social-impact bonds.
