Local governments and public school districts around the nation have historically made their food purchasing decisions based primarily on cost, tragically discounting the greater public good.
Stewards of the tax dollars entrusted to them properly see themselves as fiduciaries charged with managing $11 billion in American school-food budgets along with the huge sums set aside for food at county jails, city parks, court systems and other public places. But cheap food isn't necessarily cheap. Illnesses and deaths attributed in large measure to unhealthy food have enormous costs of their own, whether measured in financial or human terms. Type 2 diabetes, for example, costs Americans some $327 billion annually. And underpaid food-sector workers, some enduring unsafe working conditions, rely on government support at roughly twice the rate of employees in other fields.
Yet empirical data suggest that more expensive, but smarter food choices can actually reduce overall food costs. No wonder Good Food Purchasing Policies are attracting the attention of municipal policymakers throughout the United States. Increasingly, they are shifting public dollars to food venders whose products are nutritious, locally sourced and environmentally sustainable. Everyone who values healthy food and a healthy planet should enthusiastically support such decisions.
But Cook County, Illinois, the first county and the largest government unit in America to adopt a Good Food Purchasing Policy, stands alone. The county's new initiative, incubated by the Cook County Commission on Social Innovation which I am privileged to serve as Vice Chair, reflects unprecedented thought leadership in several important ways. It explicitly prioritizes opportunities for economically disadvantaged populations and communities, bringing minority and women-owned farms and food-related businesses, unfairly and systematically shut out of institutional supply chains, to the front of the food procurement line. It will help preserve urban and peri-urban farmland. It will transition underutilized County-owned land and buildings to local, minority-owned farmers and food processors, to social enterprises that are owned by or employ disadvantaged people, and to public land trusts. And it will tap into tax credits and other economic development tools to help small and midsized agricultural and food processing operations become more self-sufficient.
Cook County's Good Food Purchasing Policy was adopted soon after the County Board unanimously enacted a first-in-the-nation ordinance I was honored to draft granting social enterprises a preference in procurement when bidding on contracts for County goods and services. May Cook County's groundbreaking policies serve as models for other governments and corporations whose diverse stakeholders will now see merit in building positive social impact into all their procurement decisions.
Marc J. Lane is a Chicago attorney and financial adviser and the vice chair of the Cook County Commission on Social Innovation.
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
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