2016 Lane Reports

Cook County, Illinois: An Agent of Change

The Lane Report, August 2016
Monday, August 1, 2016
by Jesus "Chuy" Garcia and Marc J. Lane

Cook County is taking a page out of the social enterprise playbook. The county’s new Commission on Social innovation is chartered to incubate actionable policy recommendation that would create and sustain innovative solutions to increasingly daunting social problems. And if a social enterprise is defined the way Social Enterprise Alliance sees it — as an initiative that marries the social mission of a nonprofit or government program with the market-driven approach of a business — the Commission on Social Innovation certainly qualifies.

While public- and social-sector programming has improved the lives of countless people, increasingly so have market-based strategies. So the commission — as thought leader, convener, collaborator and catalyst — will empower social-purpose businesses, impact investors, nonprofits and philanthropists, each defining success in terms of both financial and social returns.

The commission’s tools include all those that social enterprises customarily put to work. It will catalyze impact investment. It will leverage philanthropy. It will be guided by empirical data. It will hear from subject-matter experts and will seek to apply models that have been effective elsewhere. And it will scale those solutions that prove out.

The commission has its work cut out for it. The nation’s second largest county, serving 5.25 million residents including all the residents of Chicago, is under enormous stress. The Cook County Department of Public Health recently reported that the county’s south and west districts suffered an unemployment rate of around 12 percent. Nearly 30 percent of the population lives at less than 20 percent of the federal poverty level, and roughly 26 percent of adults over the age of 25 in the Department’s jurisdiction don’t have a high-school diploma. Violent crime plagues the county, particularly in its poorest precincts where too many people are incarcerated and too few rehabilitated.

Yet the commission has good reason to believe its efforts will effectively drive positive social change. Its members are visionary disruptors. And the county’s resources are rich; its talent pool abundant; and its nonprofit, business and investment communities deeply committed to social progress. So, multi-stakeholder and cross-sector social ventures are well within the commission’s reach.

Among the commission’s targets are the Illinois Medical District, the largest in the nation, which the commission plans to help spawn mission-driven, health-related business; and the Illinois International Port District with which the commission intends to collaborate to revitalize the Port of Chicago, collateral damage of de-industrialization. The goal is not only to maximize its commercial potential in concert with other Great Lakes ports, but also to maximize its social potential as an engine of economic development in the distressed communities it borders.

The commission will evaluate opportunities to help county residents in food deserts band together to build and maintain neighborhood stores. They might adopt membership models, connect with local businesses or nonprofits, and even rely on newly sanctioned crowd-funding opportunities.

The commission also intends to work constructively with the Cook County Land Bank Authority, supporting the efforts of social entrepreneurs and investors eager to redevelop and reuse vacant, abandoned, foreclosed and tax delinquent properties throughout the county in an effort to promote affordable housing, economic development, conservation and job creation.

And in conjunction with the Chicago chapter of Social Enterprise Alliance, the commission will soon offer capacity building workshops for nonprofit leaders throughout the county.

These initiatives and others the commission considers won’t be zero-sum transactions. The commission’s aim is nothing short of transformation.

The Cook County Commission on Social Innovation hopes to serve as a model for other government units throughout the nation. May our success inspire others.

Peterborough's problem was daunting: Sixty percent of prisoners serving short-term sentences historically had gone on to re-offend within a year after their release. But policymakers were confident that a solution was within their reach. They attracted private investment to pay experienced social service agencies to provide intensive, multidisciplinary support to short-term prisoners, preparing them to re-enter society and succeed outside the penal system. - See more at: http://www.chicagobusiness.com/article/20131007/OPINION/131009850/a-new-kind-of-futures-contract-for-illinois#sthash.ThgxeiFt.dpuf

The world's first social impact bond, or SIB, was introduced in 2010 to fund innovative social programs that realistically might reduce recidivism by ex-offenders in Peterborough, England, and, with it, the public costs of housing and feeding repeat offenders. Prudently building on the strengths of that initiative, Illinois Gov. Pat Quinn is rolling out SIBs to help solve some of the state's most vexing social problems.

A SIB isn't a traditional bond where investors are guaranteed a fixed return but a contract among a government agency that agrees to pay for improved social outcomes, a private financing intermediary and private investors. SIBs shift the risk of experimenting with promising but untested intervention strategies from government to private capital markets, with public funds expended only after targeted social benefits have been achieved.

Peterborough's problem was daunting: Sixty percent of prisoners serving short-term sentences historically had gone on to re-offend within a year after their release. But policymakers were confident that a solution was within their reach. They attracted private investment to pay experienced social service agencies to provide intensive, multidisciplinary support to short-term prisoners, preparing them to re-enter society and succeed outside the penal system.

The government decided which goals would be supported, but exactly how those goals would be achieved was left to the private sector. It was the investors, through a bond-issuing organization, who ultimately endorsed the allocation of investment proceeds — how much would be invested in job training, drug rehabilitation and other interventions.

If the Peterborough plan eventually shrinks recidivism rates by 7.5 percent or more, the government will repay the investors' capital and share the taxpayers' savings with them, delivering up to a 13 percent return. If the target isn't hit, the investment will have failed and the government will owe the investors nothing.

Illinois' SIB effort was spearheaded by the state's Task Force on Social Innovation, Entrepreneurship and Enterprise — the governor's think tank on social issues, which I am privileged to chair — with support from Harvard University's John F. Kennedy School of Government, the Rockefeller Foundation and the Aurora-based Dunham Fund. A request for information issued by the Office of Management and Budget on May 13 yielded responses from service providers eager not only to reduce recidivism here but also to create jobs, revitalize communities, improve public health outcomes, curb youth violence, cut high school dropout rates and alleviate poverty.

Now the governor has issued a request for proposals intended to spur better outcomes for Illinois' most at-risk youth — by increasing placement stability and reducing re-arrests for youth in the state's Department of Children and Family Services, and by improving educational achievement and living-wage employment opportunities justice-involved youth most likely to re-offend upon returning to their communities.

Kudos to Mr. Quinn for bringing SIBs to Illinois. May they soon start delivering on their promise.

- See more at: http://www.chicagobusiness.com/article/20131007/OPINION/131009850/a-new-kind-of-futures-contract-for-illinois#sthash.ThgxeiFt.dpuf
The world's first social impact bond, or SIB, was introduced in 2010 to fund innovative social programs that realistically might reduce recidivism by ex-offenders in Peterborough, England, and, with it, the public costs of housing and feeding repeat offenders. Prudently building on the strengths of that initiative, Illinois Gov. Pat Quinn is rolling out SIBs to help solve some of the state's most vexing social problems. - See more at: http://www.chicagobusiness.com/article/20131007/OPINION/131009850/a-new-kind-of-futures-contract-for-illinois#sthash.ThgxeiFt.dpuf

Jesus “Chuy” Garcia is a member of the Cook County Board of Commissioners and Chair of the Cook County Commission on Social Innovation.

Marc J. Lane, Vice Chair of the Cook County Commission on Social Innovation, is a business and tax attorney and financial advisor whose clients are stakeholders in the evolving Social Impact Ecosystem. Marc is the author of The Mission-Driven Venture. [email protected]

Reprinted from Jesus "Chuy" Garcia and Marc Lane's June 23, 2016 editorial which appeared on TriplePundit.com. Copyright  © 2016 Triple Pundit.


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