Social impact bonds offer results for social service investments

Tuesday, May 20, 2014

Paying for initiatives in public education has traditionally required a tax levy or issuance of bonds backed by government entities, but a new experiment in Utah involving a public-private partnership is attracting national attention as an innovative means of alternative financing.

The Granite School District has partnered with the investment firm Goldman Sachs to issue the first so-called “social impact bonds” to pay for a public education program — in this case, the expansion of the district’s successful early child education program. An article in the Deseret News National Edition points out the partnership is nearly unprecedented and will be observed as an experiment of sorts in the use of private capital for financing a public policy venture.

Goldman Sachs and investment partner J.B. Pritzker committed to invest $7 million in the Utah High Quality Preschool Program, which provides targeted curricula for 3- and 4-year-olds in hopes of preparing them for academic success. The United Way of Salt Lake, also a partner in the venture, will oversee the influx of money.

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