Overholser Speech $1 Billion Social Investment Fund

Envisioning a $1 Billion Social Investment Fund A Speech Delivered by George Overholser at America Forward’s “Gathering of Leaders” on February 12, 2007 Introducing the concept of pay-for-success financing, Overholser proposes that a $1 billion investment fund be created to advance proven interventions that provide a combination of social returns to beneficiaries and fiscal returns to government. He suggests that private dollars be to provide “money back guarantees” to government for social programs with evidence-based outcomes. Investors would pay back government in the event that a program did not achieve targeted outcomes, making government-led social investment more politically viable and opening up vast new financial resources for nonprofits. Introduction Good afternoon! My assignment today is to engage with you—some of the world’s great social innovators—and to facilitate a conversation about the possibility of creating a billion-dollar Social Investment Fund. Now this is likely to be a humbling experience for all of us –very smart people have been working on this problem for more than a hundred years, often with far more than a billion dollars at their disposal, I might add. And we’ve got about two hours! $1 billion does seem like a lot of money, but of course we all know that compared to the social problems we hope to address, it is a very small amount of money. Did you know, for example, that America’s public schools spend a billion dollars every 192 minutes? Not a new idea, but to have any real impact at all, we’re going to need to influence how other people allocate their financial resources. In particular, we’re going to need to influence how our government allocates its vast sums of social outlays. How else could we make a significant difference with our “mere” $1 billion? We also need staying power. The problems we face can’t possibly be solved overnight. Traditionally, philanthropic staying power comes in the form of an endowment. Create a billion dollar bank account, and that throws off $50 million a year that we can deploy, forever. OK. How many minutes of school does that buy? (about 9.5 minutes) Today, we’ll be discussing a different approach – getting our staying power not from an endowment bank account, but rather from using our money to build social purpose institutions that have staying power of their own. Question is, how do we do that? And how could we possibly use them influence truly large sums of government resources?