Almost two years ago, the U.S. National Advisory Board on Impact Investing made a series of federal policy recommendations to catalyze impact investing. Through actions taken at US Treasury Department and US Department of Labor, we have seen great progress over the past year and are pleased that the federal government has adopted several of the Board's top priorities. We are optimistic that Congress will adopt one of our remaining key recommendations to establish a funding mechanism that will accelerate Pay for Success projects across the country.
Pay for Success is a simple but profound approach to impact that is increasingly gaining traction. Typically, government will set a goal to achieve a positive outcome in people's lives and a service provider rises to meet the challenge through better results. Impact investors provide the capital needed to finance the intervention upfront, earning a return only once people or communities have benefitted. Taxpayers then pay back these investors only when evaluators determine that the service provider achieved the goal. This approach seeks to create more positive impact for the lives of families and communities everywhere while utilizing scare public resources more effectively.
Today, the U.S. Senate is hosting a hearing to discuss the promise of Pay for Success across issue areas, including the opportunity to create funding mechanisms that the National Advisory Board has long recommended. I am glad to see the attention paid today to Pay for Success as an innovative model to bring the sectors together for social good and look forward to the Senate's further consideration.
I also am excited that the federal Social Innovation Fund today is announcing new grants to help develop Pay for Success projects across the nation. This activity stands to bring the private, public, and nonprofits sectors together in communities to drive impact where positive change is sorely needed.
Cognizant of today's progress, I am confident that the potential of impact investing is closer than ever to being fully realized. On behalf of the National Advisory Board, I look forward to advancing impact investing as a tool to enable positive change in communities for years to come.
President, Ford Foundation
Chair, US National Advisory Board on Impact Investing