Social Impact Bonds and Baltimore
What is a SIB?
In an era of tight public budgets, private and philanthropic organizations increasingly are underwriting public services through impact investments, which support a social good while also generating a financial return. In one form of impact investing, pay for success (PFS), an organization (typically a government) sets specific targets that another organization, such as a service provider or intermediary, must meet in return for payments. Private and philanthropic investors supply the upfront capital that service providers use in exchange for a capped rate of return derived from the payments. The payments, however, are released only if the desired targets are successfully met, which must be verified by an independent evaluator.
Or put another way: Social impact bonds, which many are now calling pay for success programs, work like this: Private funders pay a government to establish a preventative social program aimed at achieving a certain measurable result. The only way investors get their money back is if the program meets those results.
Sounds great. What could go wrong ….right?
Well for starters, the logic of Campbell’s Law (after Donald T. Campbell): “The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.”
Watch this video by Alison McDowell for a full explanation of how social impact bonds will harm children and communities. McDowell writes: “Many cities are considering using Social impact bonds or pay for success programs to expand access to universal pre-k. As a result pre-k programs are becoming increasingly data-driven and technology dependent. Intrusive programs like TS Gold are building student “growth” profiles that could ultimately be used to evaluate social impact bond deals by third parties. Access to imaginative play, manipulatives and physical activity will be reduced as more and more device- mediated activities come into classrooms. Education is remade to serve the needs of big data.”
SIBs can be found as part of the new federal legislation ESSA Title I, Part D, (“Prevention and Intervention Programs for Children and Youth Who Are Neglected, Delinquent, or At Risk”) and in Title IV, Part A, (“Student Support and Academic Enrichment Grants,” section 4108, “Activities to Support Safe and Healthy Students”) of the new bill.
Strive Together and Baltimore’s Promise are a key example of how Social Impact Bonds and Pay for Success models will seep their way into the Baltimore infrastructure. Baltimore’s Promise website says, “To this end, we utilize a Collective Impact model in which stakeholders from different sectors have made a long-term commitment to support comprehensive solutions to complex issues through structured collaboration. Service providers, policy makers, funders, and community leaders are building upon the success of individual organizations to collectively improve education and health outcomes for Baltimore City’s youth while also creating broader, sustainable impact.”
Collective impact is code for social impact– just in case you weren’t sure.
According to their website: “Baltimore’s Promise is a member of the StriveTogether Cradle to Career Network, a national network of communities working to improve education success for every child through a data-driven, quality collective impact approach.”
According to Emily Talmage: StriveTogether also favors the use of Social Impact Bonds, which allow investors to lend money for social programs with repayment contingent upon highly questionable and easily manipulated monetized outcomes. In Salt Lake City, for example, a Social Impact Bond initiative led by StriveTogether resulted in a drastic and highly controversial reduction in the number of kindergarten children receiving special education services. Like all corporate ed reform ideas, it’s not difficult to see how these “cradle to career” experiments will benefit investors at the expense of local community members.
One cite says “Rallying non-profit, government, business, and philanthropic leaders around one community issue is a complex task that often requires its own set of preconditions. A trigger event – whether a community crisis, the release of new data, or a new funding opportunity – can generate a sense of urgency and motivate leaders from multiple sectors to take action.”
Yes…a trigger event in the form of a crisis does create urgency. Milton Freidman, the godfather of free market privatization said “never let a good crisis go to waste.” Naomi Klein illustrates the playbook toward privatization and colonization in The Shock Doctrine. But first, the very billionaire moguls now promising to “rescue” communities are the same corporate billionaires of lobbied and carried out economic practices that destroyed these communities in the first place. Please do not lose sight of who is being defined as the “hero” in this narrative. Yet we are willing to believe they actually portend good? I’ve got a bridge in Brooklyn for you.
Privatization is happening in Baltimore already, especially in other public sectors such as housing.
In addition to working directly with Baltimore’s Promise, Annie E Casey Foundation has left a trail of privatization and colonization of Baltimore’s urban spaces in its wake. This how they work, It’s how they will continue to treat people in these same communities. One blog writes:
Similar to the way the DAPL planned its route through indigenous peoples’ land without consulting with them, the Johns Hopkins Medical Institutions planned its recent 88-acre Bioscience Park without consultation with the neighbors who would be displaced to make room for the development. After acquiring the land and demolishing buildings through the support of government, the Annie E. Casey Foundation, and its proxy East Baltimore Development Inc (EBDI), the shiny new buildings and facilities are slowly being erected- two new biotech buildings, a bioethic institute, a new school, a new hotel, a 7-acre park, luxury and moderate-income ownership housing, and moderate and low-income rental housing.
The members of directors Baltimore’s Promise have as their ideology a belief in the value of transferring public good into private (profit driven) hands. For example Ron Daniels 2014-present Member, Baltimore’s Promise Board of Directors, writes research with titles such as: “Private Provision of Public Infrastructure: An Organization Analysis of the Next Privatization Frontier,” Ronald J. Daniels and Michael J. Trebilcock (Summer 1996) 46 University of Toronto Law Journal 375-426.
SIB’s mean greater surveillance. Speaking to the impact investing in Philadelphia, Alison McDowell writes: “Central to this method are outcomes-based government contracts that employ Pay for Success and Social Impact Bonds to extract profit from those enmeshed in oppressive social systems. Technology is key to this strategy, as “impact” data must be seamlessly collected for cheap, scalable deal evaluation. This, along with the rise of IoT monitoring, Big Data, behavioral science (economics-nudge) interventions, gamification, and blockchain digital ID (many of which are being researched at UPenn) will lead to the platform delivery of human services, including but not limited to public education, over the next decade. See also tele-health, tele-therapy, VR counseling, prescription video-gaming, etc.”
Of course, Baltimore schools and communities need help. They need support. There are existing inequities and oppressive systemic problems that must be eliminated. However, Pay for Success, Social Impact Bonds, and corporate colonization are not the solutions. They are the bait and switch. As McDowell says “Needing help should not mean you have to be digitally profiled for someone’s profit. MBA impact venture capitalists should not get to benefit from the deep poverty so many experience.”
Dr. Schneider agrees.
“Pay for Success — a name that has ‘do whatever it takes to garner a profit’ in its shadow– is an open door for the exploitation of students, particularly subgroups of students who do not usually score well on tests,” she said. “It is just another testament to the nouveau status quo that market-based reform will drive up testing metrics, and that America should entrust its children to that market.”