Category: Uncategorized

http://www.economist.com/node/21547999

“But even innovations that are directed to unimpeachably “good” ends often bear substantial resemblances to those that are now vilified.”

I just got around to posting this, but here is the recent development from Massachusetts regarding a Social Innovation Financing Trust Fund – a facility to pay for social impact bonds.

     Section 35XX. (a) There shall be established and set up upon the books of the commonwealth a trust to be known as the Social Innovation Financing Trust Fund, in this section called the trust, for the purpose of funding contracts to improve outcomes and lower costs for contracted government services, in this section called pay for success contracts, subject to the requirements of subsection (b).
     (b) Notwithstanding any general or special law to the contrary, the secretary of administration and finance, in this section called the secretary, may enter into pay for success contracts. Each contract shall include: (1) a requirement that a substantial portion of the payment be conditioned on the achievement of specific outcomes based on defined performance targets; (2) an objective process by which an independent evaluator will determine whether the performance targets have been achieved; (3) a calculation of the amount and timing of payments that would be earned by the service provider during each year of the agreement if performance targets are achieved as determined by the independent evaluator; (4) a sinking fund requirement under which the secretary shall request an appropriation for each fiscal year that the contract is in effect, in an amount equal to the expected payments that the commonwealth would ultimately be obligated to pay in the future based upon service provided during that fiscal year, if performance targets were achieved; and (5) a determination by the secretary that the contract will result in significant performance improvements and budgetary savings across all impacted agencies if the performance targets are achieved.
     (c) The secretary, in his discretion, may provide that payments in future years under such contracts shall constitute a general obligation of the commonwealth for which the full faith and credit of the commonwealth shall be pledged for the benefit of the provider or providers of the contracted government services, but the total amount of payments under such contracts secured by such a pledge of the full faith and credit of the commonwealth shall not in the aggregate exceed $50,000,000.
     (d) The secretary shall be the trustee of the trust, shall administer the trust and shall ensure that all funds appropriated as described above are deposited in the trust and shall make payments from the trust in accordance with the terms and conditions of the contracts, without further appropriation. The secretary shall provide a status report on all contracts no later than February 1 of each year to the house and senate committees on ways and means.

Source: http://www.mass.gov/governor/legislationeexecorder/legislation/an-act-making-appropriations-for-the-fy2012.html

Straight out of the White House 2013 Budget:

Pay for Success in Domestic Programs. Many traditional Government social programs fit one of two molds: prescriptive programs that stifle innovation by specifying eligible providers and activities, or flexible block grants that fail to focus on results. To ensure taxpayers get the best possible return on their investment, the Administration is testing a new program model—Pay for Success—in which the Government provides flexibility for how services are delivered and pays for results after they are achieved. The working capital for a Pay for Success project generally comes from private investors that bear the risk of failure, but receive a financial return if the project succeeds. Projects use and build evidence-based practices to improve the lives of vulnerable target populations, reducing their need for future Government services and cash assistance. Over the course of 2012, the Administration is launching a small number of Pay for Success pilots in criminal justice and workforce development. The President’s 2013 Budget reserves a total of up to $109 million to test this new financing mechanism in a broader range of areas including education and homelessness. If successful, Pay for Success projects offer a cost-effective way to replicate effective practices and support continuing innovation as Federal resources become more constrained.

White House, The Budget for Fiscal Year 2013, “Cutting waste, reducing the deficit, and asking all to pay their fare share,” page 45, http://www.slideshare.net/whitehouse/the-presidents-budget-for-fiscal-year-2013.

I love this new NYT article on the rise of data.  The next innovations will come not from the ability of people to gather more data, but from new ways of analyzing data – combining it, slicing it up, extrapolating it for predictions, and so on.

UPDATE:

Just discovered Kaggle,  an amazing website that capitalizes on the rise of “data scientists” by throwing them into a tournament against each other.

More here:
http://www.businessweek.com/magazine/kaggles-contests-crunching-numbers-for-fame-and-glory-01042012.html

My friend Nikhath posted yet another great set of articles from around the web:

http://nikhathdigest.tumblr.com/post/17490895018