Policy Practicum: Designing a Social Impact Bond for Santa Clara County Mental Health
Social impact bonds, also called “Pay for Success” initiatives, are an innovative finance mechanism through which investors provide the funds for organizations to provide social services at the request of a government entity. These investors may be repaid, with interest, depending on the organizations’ success in achieving specified outcomes. The most noteworthy examples to date involve pay-for-success schemes to reduce recidivism in the UK, Massachusetts, and New York City prisons. Santa Clara County will soon issue a request for proposals for a social impact bond to reduce the hospitalization of mentally ill patients at the Santa Clara Valley Medical Center. It has retained Third Sector Capital Partners as an advisor and Keith Humphreys, Ph.D., Professor and Section Director for Mental Health Policy in the Department of Psychiatry and Behavioral Sciences at Stanford University, as the evaluator. Students in this Policy Lab practicum are working closely with Dr. Humphreys, the Santa Clara County Counsel’s Office, and Third Sector to develop the scheme, including designing clear metrics for success and undertaking a cost-benefit analysis of the de-institutionalization of mental health patients.