Bank invests $1.5M in social impact bond
PNC backs pay-for-success project to improve birth outcomes for vulnerable families in Kent County.
The Strong Beginnings pay-for-success project running in Kent County for the past three years has one very large new backer.
Pittsburgh-based PNC Bank — which has a sizable West Michigan footprint — said July 22 it has invested $1.5 million, facilitated through intermediary IFF, to support the Strong Beginnings pay-for-success project.
Strong Beginnings is a 15-year-old Grand Rapids-based federal Healthy Start program administered by fiduciary Spectrum Health Healthier Communities in partnership with nine local agencies. It is dedicated to improving the health and well-being of African American and Latino women, men and infants, prenatal through early childhood.
Launched in 2016, the Strong Beginnings pay-for-success pilot project is Michigan’s first social impact bond. A social impact bond, synonymous with pay-for-success financing, is one form of outcomes-based contracting.
Under the pay-for-success model, nonprofits commit to deliver specific social outcomes with the financial support of investors who will be repaid by a funder (in this case, the state of Michigan) with interest if the nonprofit delivers on preset goals. If it does not, the government pays nothing.
Social impact bonds have been launched in 27 countries, including the U.S., to address significant community problems, PNC Bank said.
The stated goals of the Strong Beginnings pay-for-success project include:
Reducing preterm births in the target population by at least 12% compared to the control population.
Reducing instances of rapid-repeat pregnancy (repeat births within 18 months of the prior birth) by at least 7%.
The project was set up to enroll five groups of 340 pregnant women each year for five years.
Strong Beginnings’ team of community health workers, nurses, counselors and nutritionists visit clients in their homes or other convenient locations to provide health care services, education and encouragement throughout their pregnancies and the first 24 months of their babies’ lives.
According to Jeremy Moore, director of community health programs and shared services at Spectrum Health Healthier Communities, African American babies in Kent County are more than twice as likely to die as Caucasian babies. Nationwide, 1 in 6 African American babies is born too early compared to 1 in 10 overall.
“Those are not acceptable outcomes for anybody,” Moore said. “We’re trying to reduce the risks of bad health outcomes through targeted investment in how prevention and systems change is incentivized.”
PNC, along with a group of foundations and nonprofit organizations, invested in the Strong Beginnings pay-for-success project with the expectation that Strong Beginnings will continue to build on its past successes in reducing infant mortality.
Combined, the organizations’ investments should be able to help Strong Beginnings increase staffing by 1,700 employees over a five-year period, according to PNC.
Sean Welsh, regional president for Western Michigan at PNC Bank, said Strong Beginnings is very similar to the institution’s flagship philanthropic initiative and, thus, was appealing to the bank.
“Strong Beginnings’ mission to promote healthy pregnancies in Kent County is consistent with PNC’s signature philanthropic program, PNC Grow Up Great, a $500-million, bilingual, multiyear initiative dedicated to helping children from birth to age 5 succeed in school and life,” he said.
“As a Main Street bank, PNC is committed to using all of the tools available, including community development banking investments, to help our local communities thrive.”
Welsh added the other aspect that makes it attractive is it potentially will allow PNC to get better returns on its investment than in other funding models.
“That allows us to want to invest even more money, so we’re able to take this to scale to serve more families,” he said.
Welsh noted if this investment goes as expected, he anticipates the bank would try a performance-based investment again if promising opportunities can be found.
“It requires a lot of (things) — the state of Michigan has to be on board, and you have to find an organization that actually has meaningful data to prove their case,” he said.
“In this case, (Strong Beginnings has) proved that if you invest in prenatal and post-birth for the mother and the child, that child shows up to school ready to learn and then that child also ends up needing less assistance and care as they go forward. So, the state of Michigan saves money by doing this.”
If the pilot continues to be a success, Spectrum Health hopes to expand the program to include more organizations in other parts of the state, Moore said.