Students bring social impact bonds to Massachusetts, developing countries

Social impact bonds have recently come into favor in the public sector as a means of financing projects that will impact communities where government funding is typically scarce. Social impact bonds allow governments to contract with a third party to fill gaps in available services, but unlike a standard procurement arrangement, these contracts are only paid if they achieve the desired outcome. In the US, federal, state and local governments have been examining social impact bonds as a means of improving their local communities during tight budget cycles through a pay-for-success framework.

Instiglio is a Harvard student organization that is working to adapt the social impact bond model to emerging market contexts. Members of the team have published research on social impact bonds and worked with state governments on applications of this model. They plan to combine their knowledge of the social impact bonds, their Kennedy school training, and partnerships with donor organizations such as the World Bank, to address challenges faced by developing world governments.

“We wanted to help the government focus on funding outputs rather than inputs,“ says Michael Belinsky, CEO of Instiglio. “Look at the social impact bond work happening in Massachusetts.  Of the people leaving prisons there, about two-thirds go back to prison within three years. That’s bad for everyone—for society, for taxpayers. And current systems are not helping enough. But if you can pay service providers on outputs, pay them for each person that doesn’t return to prison, that helps the government provide the support these individuals need as they re-enter society.”

With their work in Massachusetts and their experience in developing countries, Instiglio applied for and won the Harvard Public Sector Innovation Award, a new $10,000 award offered this year as part of the public sector track of the Harvard i3 Innovation Challenge. The challenge is put on by the Technology and Entrepreneurship Center at Harvard (TECH), part of the Harvard School of Engineering and Applied Sciences.

Instiglio’s proposed plan to take social impact bonds to emerging markets, made them the winners of this year’s Public Sector Innovation Award which was given out on March 29in Cambridge, Massachusetts.  Instiglio is comprised of six 2012 masters candidates at the Harvard Kennedy School of Government – Michael Belinsky, Michael Eddy, Amanda Alexander, Madalina Pruna, Avnish Gungadurdoss, and David Patton. Belinsky is a candidate for the Master in Public Policy, and the others are candidates for Master in Public Administration/International Development.

“I was pleased to announce Instiglio the winner of the first annual Harvard Public Sector Innovation Award. Instiglio represents the innovative thinking that will help solve some of the world’s most difficult problems,” said David Wilson, Managing Director, State, Provincial & Local Government for Accenture – the main sponsor of the award.

The team wants to pilot its program by helping the government of Botswana, and other governments in sub-Saharan Africa, move from costly treatment of HIV/AIDS to cheaper upstream prevention. Instiglio hopes to use investors capital to fund prevention services in Botswana, reducing the government’s health expenditure and getting paid from the healthcare savings their prevention work generates.

“The social impact bond model will bring needed resources to social challenges that most governments can’t address alone, and in the future, the model will be part of every human services organization’s strategy,” said Antonio Oftelie, Fellow, Technology and Entrepreneurship Center at Harvard and competition judge.

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