Michigan To Join “Social Bond” Experiment

Sep 9, 2013

Michigan will be part of an experiment to let private equity invest in public services.

The Michigan Public Radio Network’s Rick Pluta reports.

The state would make agreements with investors and charities. The investors would fund a service that fulfills a social need, but that would also save taxpayers money. If the agreement hits its targets, the state returns the investment plus interest.

The agreement could expand an existing program, or test out something new, says Joe Pavona. He is a special advisor to Governor Rick Snyder.

“That could be something like reducing homelessness,” he says.  “It could be something enriching early childhood development. It could be something like reducing recidivism rates for juveniles.”

Pavona says the next step is to decide what sorts of partnerships the state will seek out. 

Skeptics say the concept is largely untested, and the profit motive adds pressure to overstate results.