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Investors May Profit On Social Programs' Gains25:59

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City Year corpsmembers paint a mural in East Boston.(cityyear/Flickr)
City Year corpsmembers paint a mural in East Boston.(cityyear/Flickr)

Improve the future — the economy, jobs, quality of life — by putting money into the present. That's a refrain we've often heard by people advocating funds for education, health care or social services.

But when politicians say "invest," the presumption has always been that they're talking about the government investing taxpayer dollars in such programs. But Massachusetts is on the cusp of becoming one of the first states in the country to try something different.

The state is is considering raising money for social services by offering private investors a chance to earn profits on the programs they fund. That is, if and only if the programs actually work.

The idea is known as "social financing" or "pay for success" and it got its start in the U.K. where it has won a lot of supporters that advocate marrying market efficiencies and innovation to social programs.

On the other hand, putting the words "profit" and "social services" in the same sentence, makes many other people nervous.

Clearly, there are both merits and drawbacks of bringing a private-sector, profit-based approach to social-sector challenges.


  • Tracy Palandjian, CEO, Social Finance
  • Jay Gonzalez, Secretary for Administration and Finance, Commonwealth of Massachusetts
  • Joe Kriesberg, president, Massachusetts Association of Community Development Corporations

This segment aired on July 6, 2011.

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