This document summarizes the 2nd Annual Social Finance Forum. It discusses key trends in social finance like public-private partnerships and social impact bonds. It provides examples of social finance programs in the US and other countries that use performance-based contracts and measure social impact. The document emphasizes the importance of partnerships between various stakeholders like governments, financial institutions, non-profits and foundations to facilitate the growth of social finance through the development of intermediaries, common metrics, and an overall community of practice.

1. LEVERAGING PARTNERSHIPS:
STAKEHOLDERS WORKING TOGETHER
2ND ANNUAL SOCIAL FINANCE FORUM
Michael G. McMillan, Ph.D., CPA, CFA
Director, Ethics and Professional Standards
Twitter: @M_G_McMillan
http://blogs.cfainstitute.org/investor/author/michaelmcmillan/

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“The way we invest creates
the world we live in.”
Amy Domini , Socially Responsible Investing

3.  Social Finance: The Future of Finance
 KeyTrends
 Measuring Social Impact
 Public Private Partnerships
 Social Finance in the United States
 Developing a Network of Intermediaries
 Moving Forward
 Role of Government
 Program Characteristics
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4. To lead the investment profession
globally by setting the highest
standards of ethics, education, and
professional excellence for the
ultimate benefit of society.
Ethical Decision Making

5. Social
Finance
Partnerships
Financial
Tools
Innovation
Financial
Instruments
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6. Greater
Accessibility
Increase in
Funds and
Managers
New Metrics
to Assess
Impact
Broader
Group of
Investors
Growth in
Investible
Capital
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7. Global Impact
Investing Rating
System (GIIRS)
Impact Reporting and
Investment
Standards (IRIS)
IRIS Data Briefs
Global Impact
Investing Network
(GIIN)
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8. Governments officials are turning to the private
sector to provide services that:
• they have not been able to provide;
• they can no longer afford to provide;
• the private sector can provide more efficiently
and effectively.
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9. • White House: Pay For Success
(PFS)
Federal
Government
• Human Capital Performance BondsMinnesota
• Social Innovation FinancingTrustMassachusetts
• Rikers Island- First US Social
Impact BondNewYork City
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10. 2012 Budget: $100 Million for workforce
development, education, juvenile justice, and care of
children with disabilities.
2012: Departments of Justice and Labor: launched
PFS programs in criminal justice and workforce
development.
2013 Budget: $109 million to test PFS in a broader
range of program areas including education and
homelessness
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11. Pay for Performance
Act – authorized the
sale of $10 million of
bonds.
Proceeds create a
pool to pay service
providers when
they perform.
Financial benefits
earned by state pay
interest, amortize
principal, and cover
administrative
costs.Risk borne by service
provider, who can
earn higher payouts
through better
performance.
Sold to private
investors
Population:
chronically
unemployed.
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12. Holds outcome payments for the duration of a social
impact deal.
Funded through annual appropriations.
Focus: Homelessness (stable housing) and juvenile
justice (reduction in recidivism)
State will select service providers and intermediaries.
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13. Goal: 10%
reduction
of juvenile
recidivism
over four
years
MDRC: will
manage 2
service
providers.
Goldman
Sachs:
provides
$9.6
million in
working
capital to
MDRC as a
loan.
Bloomberg
Philanthropies:
guarantees
$7.2 million of
the loan
through a
grant to MDRC
Goldman
can earn a
maximum
of $2.1
million if
recidivism
is reduced
by more
than 10%
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14.  Facilitate the responsible and effective
replication, diversification, and scaling of SIB
models
 Educate and communicate to all stakeholders
what SIBS are and are not.
 Develop a cross sector “Community of Practice”
to provide:
1. Centralized communication vehicle
2. Comprehensive best practice tool box
3. SIB forums and conferences
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15. Social
Finance
Social
Enterprises
Governments
Financial
Institutions
Consultants
Universities
Foundations
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16. Performance
Based
contracts
Measuring
Impact
Foundational
Support
Safety Nets
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17.  Potential for high net benefits
 Measurable outcomes
 Well defined treatment population
 Meets the needs of a sizeable population
 Reliable comparison (counterfactual) group
 Focuses on prevention
 Safeguards against harming the treatment population
 Have a multi year track record (at least 5 years)
 Have a demonstrated record of rigorous evaluations
 Deliver statistically significant results
 Be replicable and scalable
 Deliver taxpayer benefits in 5 years or less.
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“The gratification of wealth is not
found in mere possession or in
lavish expenditure, but its wise
application.”
Miguel Cervantes