Center for Social Entrepreneurship

at Middlebury

Independent Project: Social Impact Bonds

While Middlebury offers dozens of courses each semester, some students choose to access resources outside of the established curriculum. Genevieve Dukes ’13, an economics major, and Bronwyn Oatley ’13, a political science major, asked the MCSE for an opportunity to examine social impact bonds (SIBs) through an academic lens.

“This is a place where faculty and administrators say yes to projects,” said Oatley.

Oatley and Dukes were both enrolled in Faculty Director Jon Isham’s winter term course, “Social Entrepreneurship in the Liberal Arts.”

“We were both really fired up at the end of our J-term class,” said Dukes. “And we felt like we still hadn’t covered all the content — we hadn’t dug deep.”

During a furious brainstorming session at — where else? — Carol’s Café, the two developed what Oatley called “a dream list” of books for a syllabus that covered various topics relating to social entrepreneurship. They brought their ideas to Isham, who recommended additional titles and helped the seniors zero in on the focus of social impact investing and SIBs. Most importantly, Isham agreed to advise them on an independent project, which would allow them to explore the topic as part of a for-credit course during the spring semester.

The three meet for an hour and a half every Wednesday. For the first half of the semester, Oatley and Dukes completed fairly heavy reading assignments in order to establish background knowledge and a foundation for the concept of social bonds. Oatley, who’s keeping a blog about the project, described these books as those that she’s “always wanted to read.”

In the second half of the course, the students shifted to a more technical study of SIBs, which Dukes described as “the use of an investment product to take risk off of the government.” SIBs partner the public and private sector within a multi-stakeholder framework by providing funding to scale projects that address social problems. In contrast to grants, SIBs are solution-oriented, and repay investors only when the intervention meets quantifiable targets.

Dukes and Oatley discovered that social impact bonds are highly localized, so they delved into a direct approach — studying the possibility of a social impact bond for the state of Vermont.

“You have to tailor the bond’s objective to the government’s goals,” said Oatley. “It really is a initiative that crosses all sectors and requires really strong enthusiasm and dedication from social sector providers, investors, and the government.”

Although the students are studying the needs and goals of these stakeholders within Vermont, they’re humble about the scope of their project.

“We’re not piloting a project, we’re feeling out the opportunity,” clarified Dukes. “But we’re optimistic that there’s some future for this beyond our output.”

While the idea for the project came from students, both Oatley and Dukes expressed deep gratitude for Isham’s support. Oatley described Isham as both “a mentor and a collaborator.”

“The reason why we zoned in social impact bonds [was because] Jon had several connections,” explained Oatley. In addition to putting them in touch with a Middlebury alumnus at Harvard University working on social impact bonds, the students had the opportunity to work with Third Sector Capital, a Boston firm which serves as an intermediary between social sector providers and governments.

“Jon is so well-connected, and because there’s only two of us [students], we’ve had the ability to be really nimble,” explained Oatley.

As if to prove her point, at that moment, Isham walked into the room — on the phone with the office of Lawrence Millers, the Secretary of the Vermont Agency of Commerce and Community Development. They scheduled a conference call for later that afternoon.

“We’ve gotten access to things that we probably wouldn’t in a normal class,” said Dukes with a smile.

Oatley said that she’s “loved” the opportunity “to dig in to a topic that has some practical relevance” with just one other student and a professor.

“I sincerely hope Middlebury has the resources to make this happen going forward,” she added.

The focus on a specific topic — in addition to access to resources outside the scope of a typical course — has opened the doors for the students’ work after they graduate in May.

“It’s really valuable that we’ve had the chance to identify something that we’re both passionate about,” said Oatley. “I’m considering internships and fellowships in the social finance field. More broadly, this sector — social entrepreneurship — is where I want to spend my next two, five or even ten years. This [project] has given me a greater understanding of the landscape of social enterprise and made me better able to see myself as an active contributor on that landscape.”

Dukes also agreed that the lessons learned will inform her future thinking as well.

“This project has given me a personal area of interest that I hope to use to inform whatever I’m doing,” she said. “[I’ve learned that] you can use rigorous tools of metrics and finance to measure and generate social change. Whether it be during graduate school or within the private sector, I think that’s incredibly valuable.”

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