‘Social impact bonds’ sought to aid homeless
FRAMINGHAM, Mass. (AP) — A plan that calls for using charitable donations and private-sector investment to ease chronic homelessness in Massachusetts was unveiled Monday by Gov. Deval Patrick.
The “Pay for Success” initiative aims to create 500 units of housing for up to 800 homeless people over the next six years.
The program will leverage $1 million in philanthropic funding and $2.5 million in private capital from Santander Bank, the Corporation for Supportive Housing and United Way of Massachusetts Bay and Merrimack Valley, state officials said.
“It is critical that we reduce the reliance on emergency services and provide individuals safe and stable housing that will help strengthen our communities and last for generations to come,” Patrick said in a statement announcing the program.
Under Pay for Success contracts, also known as social impact bonds, investors provide upfront funding and are repaid only if an outside evaluator finds the program has achieved a goal that benefits society and saves taxpayer dollars.
The maximum return on investment would be just over 5.3 percent.
Secretary of Administration and Finance Glen Shor said the contracts represent an innovative and costs effective approach by government toward solving long-term societal problems.
“We only pay for programs that work, helping us improve the well-being of those served while saving the commonwealth money,” Shor said.
State law allows Massachusetts to authorize up to $50 million for social bonding. The first was a $27 million juvenile justice program announced in January that aims to reduce the rate of incarceration among young men.