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Originally published Tuesday, February 11, 2014 at 12:03 AM

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Editorial: Social impact bonds are a smart way to solve old problems

An innovative approach to funding human services prevention deserves a close look in the state Legislature.

Seattle Times Editorial

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STATE lawmakers interested in solving old problems in a new way should spend a few moments thumbing through Rep. Hans Zeiger’s proposal to create something called “social impact bonds.”

As seen in a growing number of sites around the world, social impact bonds are pay-for-performance contracts between private-sector capital funders, a human-services nonprofit and a government. The money pays for a human-service prevention program, run by the nonprofit. If the prevention works, and the state saves money, the funders get a negotiated rate of return.

In Massachusetts, Goldman Sachs agreed to help reduce prison recidivism for 929 young men by paying for education, work training and other services. New York has a similar program at its Rikers Island prison.

Zeiger, R-Puyallup, has impressive bipartisan support for his bill, HB 2337, and managed to unite the state labor union, human-services advocates and the right-leaning Washington Policy Center. It is a low-risk bill. It sets up a 14-member steering committee, tasked with finding one pilot project this year.

This is a smart approach. Government alone cannot solve social problems, and the state must direct more money into education. Wooing investors to fund proven prevention programs is a win-win.

HB 2337 is currently stuck in the House Appropriations committee. Chairman Ross Hunter, D-Medina, should give this out-of-the-box idea a hearing.

Editorial board members are editorial page editor Kate Riley, Frank A. Blethen, Ryan Blethen, Sharon Pian Chan, Lance Dickie, Jonathan Martin, Thanh Tan, William K. Blethen (emeritus) and Robert C. Blethen (emeritus).

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