First ‘pay-for-success’ project for veterans launches in US, as impact bond pioneer expands to five countries

Social Finance has announced a first-of-its-kind initiative that will see $5.1m in impact capital fund a ‘pay-for-success’ project to improve employment outcomes for US veterans with post-traumatic stress disorder (PTSD).

The social impact bond pioneer has also announced the launch of Social Finance Netherlands, as its global network expands to five countries, as well as a new CEO for Social Finance India.

Veterans CARE project

With research showing that veterans with PTSD face significant barriers to employment, the US Department of Veterans Affairs (VA) and several state, city and non-profit organisations joined forces to create the Veterans Coordinated Approach to Recovery and Employment (Veterans CARE) project.

The initiative will serve 480 Veterans over three years in New York City; Boston and Brockton, Massachusetts; and Central and Western Massachusetts.

“This project demonstrates that supporting veterans depends on networks of collaborative partnerships, as well as great research and innovative ideas,” said VA Secretary Robert Wilkie. “Research and innovation are fundamental to improving the health care and benefits for our nation’s veterans.”

According to research, PTSD interferes with a person’s ability to thrive in the workforce, and has been found to impact sustained employment and income negatively. In addition, a negative cycle exists between unemployment and PTSD – persistent unemployment often is linked to negative health conditions, including depression, which can exacerbate PTSD symptoms.

Further, VA research noted that up to 20 percent of Veterans from recent tours of duty have PTSD, and a 2015 analysis found that Veterans’ labor force participation had declined over the previous 35 years, in close correlation with a growth in service-connected disability.

The Veterans CARE project will involve local VA medical centers to deliver Individual Placement and Support (IPS), an evidence-based approach to supported employment, to participants. The Tuscaloosa VA Medical Center (TVAMC) will oversee and monitor the project.

“The Veterans CARE project will take our work from the research arena into real-world settings where we plan to achieve the highest level of impact of IPS at full scale,” said Veterans CARE Study Chair Dr. Lori Davis. “Sustained meaningful work is a key part of the recovery plan for Veterans living with PTSD.”

So-called ‘pay-for-success’ is a public finance model that harnesses the power of the capital markets to address critical social and environmental challenges and improve the lives of those in need. In this project, BNP Paribas, Northern Trust, The Dakota Foundation, Deutsche Bank and Robin Hood Foundation provided the $5.1m in impact capital.

“We are excited to launch the first pay-for-success project globally to support Veterans, who have served our nation so honorably,” said Tracy Palandjian, CEO and co-founder of Social Finance US. “The Veterans CARE project is about bringing the public, private and social sectors together to help Veterans with PTSD secure meaningful employment and lead healthier, happier lives.”

The Veterans CARE project is about bringing the public, private and social sectors together to help Veterans with PTSD secure meaningful employment and lead healthier, happier lives.

VA’s Center for Innovation and the Corporation for National and Community Service’s Social Innovation Fund are providing $3m, which is matched by local government partners, to repay project investors if the project achieves measurable results for Veterans.

“Massachusetts is committed to improving employment opportunities for our veterans, and we look forward to working with our partners on the Veterans CARE project to advance this shared objective,” said Massachusetts Governor Charlie Baker. “This project will help secure meaningful job opportunities and a more stable future for veterans with PTSD and help us repay the debt the country and Commonwealth owe veterans.”

Bob Simonovich, a Veteran who received Individual Placement and Support services, said: “The IPS treatment helps you get the work you want and also the type of work you can handle. That’s so important for guys like me.” He added: “Ryan, my IPS specialist, is like my agent. He works for you and with you. He cares for you. You have someone on your side. This is one of the best things I’ve ever done. It has been a game changer for sure.”

The IPS treatment helps you get the work you want and also the type of work you can handle. That’s so important for guys like me.

Connie Lindsey, Head of Corporate Social Responsibility and Global Diversity & Inclusion at Northern Trust, said: “As an active investor in projects that directly benefit our communities, Northern Trust is pleased that our fifth pay-for-success impact investment provides employment assistance to veterans using a finance tool that aligns repayment with their success.” 

Bart Holaday, Founder and Chairman of the Dakota Foundation, said: “The Dakota Foundation is a proud partner in the Veterans CARE project, which effectively demonstrates how to improve mental health support and employment opportunties for our Veterans through evidence-based services.” 

Social Finance network expands to five countries

Meanwhile, the Social Finance Global Network has welcomed Social Finance Netherlands as its fifth member alongside its organisations in the UK, US, Israel and India.

It has also announced Govind Sankaranarayanan, formerly of Tata, as the CEO of Social Finance India.

Social Finance Netherlands has been involved in six of the eleven Social Impact Bonds launched in the Netherlands. 

Founders Ruben Koekoek and Björn Vennema said: “The Netherlands is a frontrunner in Impact investment and sustainable finance. With 11 social impact bonds we have successfully experimented with Social Finance methodologies. Now it is time for us to accelerate and with Social Finance NL we will further grow the social finance ecosystem to enable more results-based funding partnerships.”

With Social Finance NL we will further grow the social finance ecosystem to enable more results-based funding partnerships.

Govind Sankaranarayanan, CEO Social Finance India, said: “It’s a great privilege to be a part of this global organisation, and take forward Sir Ronald Cohen's vision of using finance at scale as an agent for good. Social finance India will catalyse different types of financial instruments and financial intermediaries to amplify social impact. An important part of this effort in India will be the sharpening of our focus on outcomes, supporting models that work and improving the sophistication of impact measurement using many of the tools developed by other Social Finance entities.”  

Social Finance India is launching its first two products – India Impact Fund of Funds (IIFF) and India Education Outcomes Fund (IEOF) – this year. IOEF will target multiple programmes that focus on numeracy and learning outcomes for children in grades 1-3, technology aided interventions for older children, higher school completion rate for girls and successful transitions from school to the workforce. The $150m impact fund will form part of a $1bn fund raise to expand debt capacity for organisations serving communities closer to the bottom of the pyramid.

The Social Finance Global Network is a collaboration between independent non-profit organisations “who share a common and compelling approach to help rethink the ways in which society tackles chronic social problems”. It looks at where the system is failing and develops new models to improve the lives of vulnerable people around the world, using diverse skills such as collaboration, data analysis and investment.

The group held the first meeting of its enlarged network in Delhi earlier this month to discuss strategies to leverage its global experience and insights.

David Hutchison, CEO, Social Finance UK, explained: “Social challenges are rarely limited to one place. Poverty, unemployment, ill-health, exploitation and poor life chances are global issues. Social Finance brings together a range of diverse skills, experience and insights from its international partners to build a fairer and kinder society, especially for those who are most vulnerable. What defines us is the combination of rigour and passion, heart and head, to bring about real change.”

Social Finance UK pioneered Social Impact Bonds in 2010 to address the chronic underinvestment in prevention and early intervention. Since then, 121 programmes have launched in 27 countries, investing in interventions to tackle issues as broad as health and employment, homelessness, addictions, and infant mortality. 

Follow the links for more information about the Veterans CARE project, and for the Social Impact Bond database.