About 374 children are expected to be enrolled at six schools with a shortage of preschool seats through a social impact bond program launched in October by Chicago Public Schools (CPS) and the city of Chicago.
Over four years, this nearly $17 million “pay for success” initiative—where investors are only repaid if goals are met—will expand early childhood education in high-need areas for over 2,600 students using the half-day Child-Parent Center (CPC) model. Benchmarks include reducing future costs for special education, making sure students are ready for kindergarten, and increasing third-grade literacy.
As project coordinator, IFF will manage the flow of funds, including repayment to lenders from savings achieved through decreases in the need for special education. IFF also will hire an independent evaluator to analyze results. “We are proud to play a leading role in this new and innovative way of investing in social programs,” IFF chief executive officer Joe Neri said. “By linking repayment to outcomes and budgetary savings, we can unlock millions of dollars from private sector resources to expand programs for some of our most vulnerable populations.”
The primary lenders are the Goldman Sachs Social Impact Fund and Northern Trust Company, with the J.B. and M.K. Pritzker Foundation as subordinate lender. The Finnegan Family Foundation will underwrite the program evaluation for the first two years. Metropolitan Family Services will provide quality assurance and connect families with community resources.