Wrench in the Gears

This post is the second in a Q&A exchange on social impact bonds and pay for success finance with UK blogger Privatising Schools. The focus of this post is Big Picture Learning. For additional background on Big Picture in Philadelphia check out my previous post here.

Privatising Schools: Question 8

Let’s look at a specific example of a social impact bond in education. Here in the UK, as you know, we’ve had eight years of austerity, which has done great damage to public services, especially those provided by local government. But central government regularly launches new funds, targeting particular areas of social need: youth unemployment, homelessness, mental health, and so on. We’ve had the Innovation Fund, the Social Outcomes Fund and, most recently, the Life Chances Fund.

Now, the purpose of these funds – and the government is very explicit about this – is to underwrite new public-private partnerships which will find ‘innovative’ ways of financing public services. In other words, social impact bonds (see here). The Innovation Fund, which was run by the Department for Work and Pensions, served to ‘incubate’ ten SIBs.

One of the projects supported by the new Life Chances Fund will see a US charter school chain, Big Picture Learning, set up a school in Doncaster, a town in north-east England, in order to ‘test new ways of learning through a social impact bond’ (see here). The target group is students who have been excluded from mainstream schools and who would normally be in what we call ‘alternative provision’. Doncaster Council is working with a company called the Innovation Unit, which was spun out of the Department of Education back in 2006, to set up the SIB.

According to a report given to the leaders of Doncaster council:
By introducing this educational model via a SIB, […] we have the opportunity to test innovation due to the use of an outcomes contract and making funding for the services conditional on achieving results. The Social Investors (still to be identified) will pay the provider at the start, and then receive payments from the Doncaster Metropolitan Borough Council (the commissioner) based on the results achieved by the project via a Special Purpose Vehicle (SPV) or other appropriate mechanism.

Can you unpack this for us?

My Response:

It is interesting that the first education social impact bond in the UK is with Big Picture Learning, because I’ve been following them for several years. Big Picture started in Rhode Island in the mid 1990s and was incubated in the Annenberg Institute at Brown University. Their 990 tax form from 2001 states that among their “program service accomplishments” is to “redesign secondary education programs and use telecommunications to create educational models.” The program caught the eye of the Gates Foundation when their focus was investing in small high schools. Gates helped them scale the model, which includes a network of over sixty schools operating primarily in the United States but with outposts in nine other countries. The Doncaster school in the UK will make it ten.

The Philadelphia School Reform Commission entered into a $23 million contract with Big Picture in 2017. At that time they took over Vaux, which was one of the schools shuttered in 2013. Big Picture runs the school, which remains public not a charter, on a contractual basis. This report, prepared by ImpactEd and commissioned by the impact investment-oriented Barra Foundation, states the nature of that contract gives Big Picture a lot of flexibility in how it operates, much more than other public schools in the city have. Of course that is how the privatizers do it, tie up the neighborhood schools in accountability regulations and allow “innovative” models the freedom to do whatever they want while pitching in extra money.

Big Picture operates the school in partnership with the Philadelphia Housing Authority (PHA). PHA spearheaded a major urban renewal project in Sharswood where Vaux is situated a few years earlier. The initiative was carried out as part of a federal “Choice Neighborhood” grant administered by the Office of Housing and Urban Development (HUD). The project displaced hundreds of residents, many of whom were never properly compensated for their homes. Nearly four hundred buildings have been slated for demolition, which will substantially erase the historic character of a community that was once a center of jazz and civil rights activity in Philadelphia.

It’s important to understand the opening of Big Picture within the context of this larger urban renewal project. To maximize profit for impact investors, residents of low-income neighborhoods like Sharswood must be set up for integrated service delivery tracked through regional data systems. Undertakings like Gates’ Data Quality Campaign, the San Jose Datazone, and Project Unicorn make it clear tech and finance interests are working intently to coalesce data lakes for social impact analysis. I anticipate activities will be coordinated through our federal “Promise Zone” program, which was incorporated into Every Student Succeeds Act in 2015. Blockchain digital identity systems, being piloted with un-housed populations now, should be ready for broader implementation within the next five to ten years. Self-sovereign digital identity will be a boon to social impact investors, since software like Enigma is being developed by MIT to permit analysis on encrypted data.

Impact investing in education will be woven into larger interventions around housing, nutrition, substance use, preventative health, and behavioral health care. The ultimate goal is to be able to track “impact” in one area of a person’s life across all other facets of their lived experience. This is being embedded into the “What Works” government mantra, and while integrated service delivery may not be a bad approach IF the goal is to maximize benefit to recipients of services, it can be highly problematic if the goal is actually to monitor vulnerable people to maximize profit for global finance.

Unfortunately I am seeing a move in the latter direction. Entities like LISC (Local Initiatives Support Corporation created by the Ford Foundation, which just put $1 billion of assets into impact investing) are folding Pay for Success into their initiatives as shown in this report “Aligning for Success.” We recently had the Reinvest Philly Summit here where social impact bonds were advanced as a financial tool in creating economic opportunities, healthy communities, and a “just economy.” The summit emphasized the role of hospitals as anchors in community development, which is somewhat unnerving given Alphabet’s (parent of Google) interests in promoting “Smart City” infrastructure through Sidewalk Labs. A spin-off of Sidewalk Labs is CityBlock, a managed healthcare provider for “complex, urban populations.”

The Big Picture model is promoted as a progressive alternative for non-traditional learners and requires out of school learning internships. Their website states enrolled students are expected to work two days per week, unpaid, as part of their schooling. Looking for a lean business model? That would be it. You push staffing costs onto “mentors;” which allows you to have a smaller facility, maybe rotate students; and partners get free child labor. There are a number of other alternative education programs out there that have followed similar trajectories, including YouthBuild, which serves over-age, under-credited students, has an international reach, and provides training in building trades. Their students build affordable housing, which I suspect will allow financiers to begin layering SIBs into their finance structure, too.

I’ve heard Vaux has had a rocky start. A fellow activist shared that at a Big Picture school in another state some of the promised internships never materialized and students were left languishing in sad computer labs. To think they’re now going to build in new layers of profit by structuring it as a social impact bond… privatizers have incredible hubris. If the branding is good it seems few are willing to question something so ethically compromised as swapping up to 40% of a student’s instructional time with unpaid training. It’s Dickensian, and I continue to be shocked at how eagerly people eat it up.

Big Picture also partnered with SalesForce to develop an app called ImBlaze that identifies internship opportunities for students enrolled in the program. Ted Dintersmith, partner in the North Dakota education system takeover and author of What Schools Could Be, donated funds so the app could be used more broadly. I’m not sure why, if students are expected to spend 40% of their instructional time at a work-based placement, schools would rely on an app rather than say a trained school guidance counselor. I expect the real reason is because the app tracks student competencies demonstrated on the job, including social-emotional skills. This data feeds into LinkedIn so Big Picture can “see how student internships align to their career trajectory over time.” Which begs the question, can students opt out of this data collection? Is enrollment in this public education program conditional on being tracked digitally for an indefinite amount of time?

Is this app-based competency tracking system tied to Pay for Success finance? Seems likely given that SalesForce’s venture capital wing just teamed up with the Lumina and Robin Hood Foundations on “an impact investing alliance dedicated to investing in for-profit education and workforce development companies whose products, services and technologies not only produce a positive financial return, but also have the potential to alleviate or eliminate poverty.”

Workforce education was one of the first two Pay for Success initiatives launched the Department of Education under the Every Student Succeeds Act. Two million dollars in seed funding went to Jobs for the Future and Social Finance to provide technical assistance to incorporate Pay for Success into four Career and Technical Education programs in different parts of the country. Impact investors are keen on interventions in young children, the pre-k set, because research indicates that’s where they will be able to most effectively move the numbers on their data dashboards and collect their “success” payment. But there is also interest in what used to be called “disconnected youth,” renamed “opportunity youth” now that we have Pay for Success.

“Opportunity youth” workforce SIBs are linked structurally to recidivism SIBs. The first SIB in the US was for incarcerated youth at Riker’s Island Prison, and our largest SIB has been ROCA, which provides services to youth in the juvenile justice system. Social impact investment logic dictates employed youth are less likely to end up incarcerated, therefore, a portion of the “cost savings” that results from non-incarceration is available to be redirected into “success” payments. Incarceration costs are sizeable and straightforward to calculate. This makes it a very lucrative profit center.

So the question remains, what kinds of “success” metrics will be used to assess workforce training? Those in power are most likely to set the terms of success and establish targets they think they can hit. In the NPX “impact security” pilot at San Quentin prison, the success metric is a straightforward number of prisoner hours worked doing computer coding. “Success” has nothing to do with improving the economic outcomes for those who are incarcerated. That would be too messy and may not yield the desired result for the investors.

Given how the impact security for San Quentin was structured, how might such a structure work for Big Picture Learning? Big Picture could issue debt securities to fund provision of educational services. Investors could purchase those securities with the understanding that their profit was contingent on Big Picture meeting success metrics outlined in the securities agreement. Hewlett Packard has been a regular supporter of Big Picture since 2011, so imagine them as the investor. Success targets might be set for the number of students attaining competencies in a proper workforce mindset, or the number of students attaining a credential (we are hearing a lot about stackable credentials and certification here), or even the number of student hours worked in internships. Once the success target is met the donor pays back Hewlett Packard. But say that donor is actually the William and Flora Hewlett Foundation?

Foundations are required to distribute a minimum of 5% of their assets annually to meet the requirements of the Internal Revenue Service. So, why not transfer those funds over to cover the non-profit security agreement. It ends up being much more profitable to the parties involved than a traditional grant, and keeps capital concentrated in corporate hands. Below is a model I developed imagining an HP investment in an impact security to fund pre-k human capital, though a similar structure could work just as easily for workforce readiness.

I have serious concerns that creating profit centers focused on “opportunity youth” can’t help but advance a scenario where predictive analytics profile teens and push many unnecessarily into intervention programs. The drive for program growth could very easily lead to young people being flagged as “opportunity youth” not for their benefit, but rather for the benefit of the investors seeking to profit from managing a larger pool of clients. It also means that there will never be a reason to fix the underlying structures that cause young people to become disconnected from their schooling in the first place. If anyone pursued that course, there would be a smaller population to “fix” and the profit center for impact investment would diminish. Therefore poverty must continue, because there is profit in poverty management.

After a bit of a break, I am finally getting back to the Trans-Atlantic dialogue I had going between myself and UK blogger Privatising Schools. This post is the first in a Q&A series about social impact bonds and pay for success finance.

Privatising Schools: Question Seven

A key focus of your research is the connection between education technology and finance. This aspect of your work answers a lot of questions for me. I’d struggled to understand why the privatisation movement was being pushed not only by companies with a direct interest in selling ‘education services’ – the edu-businesses, the big outsourcing firms, the tech industry – but also by the financial sector.

Why are hedge fund and private equity firm managers sitting on the boards of US charter school chains, or of academy chains here in England? Why is our so-called ‘academies minister’ a former private equity boss? Why have these people suddenly developed a philanthropic interest in education?

You have shown how financial interests, centred in New York and London but operating on a global scale – via the Global Impact Investing Network, for example – are seeking to ‘financialise’ elements of the old welfare state, using complex new instruments like the social impact bond (or SIB). The aim is to create a new investment market within public services – healthcare, education, social services – which have been hollowed out by years of austerity.

As you know, England is the home of the social impact bond. The very first SIB was launched at HMP Peterborough, a privately-managed prison, in 2010. (As it happens, one of the inventors of the SIB, Toby Eccles, is another former Ark employee.) SIBs were then exported to the US, in the form of the ‘Pay for Success’ model. The first SIB in the US, I think I’m right in saying, was launched by Goldman Sachs in 2012, and was used to finance an anti-recidivism programme similar to the Peterborough scheme.

Three years later, Obama’s Every Student Succeeds Act plugged Pay for Success directly into the US public education system, by tying federal funding directly to this new financial instrument.

Could you say more about this? How do social impact bonds work? Why is technology so integral to this new investment vehicle?

My Response:

The premise of a social impact bond is that investors pay for public service delivery with the understanding that if the interventions they’ve invested in “work,” the government pays them back, plus a pre-determined, built-in profit. “Successful” interventions purportedly save the government money by reducing the need for special education, addiction treatment, incarceration, and chronic health management services. The idea is that people identified as being “at risk” of becoming a “burden” on society are “treated” via interventions that are supposed to reduce their likelihood of accessing services in the future.

Of course this structure can be gamed, as evidenced by the Salt Lake City, Utah pre-kindergarten SIB that supposedly reduced the need for special education services for participating children by 99 percent. Most well funded preschool programs, which the Goldman-Sachs-backed project was not, yield at best a 50 percent reduction. So, either the screening tool used to identify children for the program was flawed, or children who may have needed special education services were denied access. This New York Times article, “Success Metrics Questioned in School Program Funded by Goldman” provides additional background.

Social Impact Bonds, or Pay for Success as it is becoming better known, is simply a new method of privatization. Impose austerity so government departments, including education, cannot function; proclaim the system “broken;” and use the created dysfunction as an excuse to outsource services. Worse, by using manipulated data to direct anticipated public expenditures into financiers’ coffers in the present, it hobbles future government operations.

This “Third Way” approach to financing “the public good” has found bi-partisan support in the United States. Liberal interests are happy that services continue to be provided, and conservatives are pleased government is only paying for “what works,” based on data. This summer Democrats, Republicans, investors, consultants, and non-profit service providers all gathered in the Senate Building to celebrate the passage of the Social Impact Partnership Pay for Results Act (SIPPRA), which is set to inject $100 million in federal funding to this nascent “Pay for Success” market. Other beneficiaries of “outcomes-based” contracting include telecommunications companies, cloud-based computing companies, and law firms with expertise in Blockchain smart contracts.

In 2008, the Rockefeller Foundation provided funding to B-Lab to develop the standardized impact metrics that would undergird the system. This framework, now managed as the IRIS initiative, maintains a catalog of over 2,500 metrics aligned to the UN’s Sustainability Goals. Many have specific associated cost savings that are used to calculate profit margins for investors. Predictive analytics establish baselines for individuals and populations, estimate the likelihood they will be “impacted” in a “positive way” (as shown by data), and assess what savings might be generated from “fixing” them via interventions. All of this entails significant levels of surveillance.

Under this model, service delivery becomes increasingly digitized since large quantities of data are required to prove the “success” of programs. Evaluators aren’t equipped to review qualitative data, but instead rely on dashboards that aggregate data streams. Services are platformed to ease data extraction. This dynamic is driving the growth of the ed-tech, tele-health, and tele-therapy industries. In school settings, data dashboards include online learning and assessment data, biometric and health data, behavioral data, attendance data, and school climate data.

The “what works” approach to government and Big Data go hand in hand. The lives of those needing publicly funded services, including students and the poor, are being turned into metrics to feed the impact data pipeline. In the United States, New York University’s Governance Lab has teamed up with UK-based New Philanthropy Capital to coordinate a network of data-centers to push this transition to so-called “evidence-based” policy making.

The NYU affiliated labs are funded by the same entities pushing social impact investing: MacArthur Foundation, Omidyar Network, Pritzker Children’s Initiative, Social Innovation Fund, and the Stanford Center on Philanthropy and Civil Society. I created a relationship map of the labs here. They include: Actionable Intelligence for Social Policy at the University of Pennsylvania, the Rhode Island Innovative Policy Lab at Brown University, Urban Labs at the University of Chicago, the California Policy Lab of UC Berkeley and UCLA, Washington State Institute for Public Policy, and the Ministry of Justice Data Lab.

Many question whether this approach can be made truly profitable for investors. That may be, in part, why despite there being increased hype around social impact bonds, only about a dozen have been launched in the US so far. I was able to locate what I believe to be an important insight into the true nature of the planned profit taking. On page 7 of Ready Nation’s report “Early Childhood Pay for Success Social Impact Finance: A PKSE Bond Example to Increase School Readiness and Reduce Special Education Costs” Robert Dugger, a hedge fund manager who works closely with the University of Chicago Economist Jim Heckman, notes the goal of a 2010 working group was to “facilitate the creation of ‘invest in kids’ bonds that can underwritten individually or aggregated into asset-based securities, which can be invested in by individuals and institutions worldwide.” The key here is asset-backed securities.

The majority of the financiers’ profit could then be generated not from the modest “success” awards built into the outcomes-based contracts, but rather from trading against the debt associated with the provision of outsourced services. They are building a mechanism for legalized gambling on humanity writ large. They seek to create derivatives markets informed by real-time flows of data from the digitized lives of people using public services, including students. Developments in Internet of Things-enabled tracking of behaviors through fit bits, educational games, and compliance monitoring apps as well as the increasing sophistication of Artificial Intelligence-informed high frequency trading will make this possible.

They haven’t quite yet found the means to scale it, but they continue to experiment in earnest. A new “impact security” recently developed by NPX is being piloted around prison labor in San Quentin under the name “The Last Mile” with backing from Omidyar Network now. Several entities, including Alice in the UK and SocialSuite in Australia, are structuring impact data platforms around Blockchain technologies. Governments, including the state of Illinois, are examining ways to put public benefits on Blockchain to track outcomes and impact. Eventually all the pieces will click. The next “Big Short” will likely be not on homes but on the data and predictive analytics that shape our lives and future opportunities.

Hewlett Packard: The Tech Titan Few Education Activists Talk About

Increasingly people are casting a wary eye in the direction of Silicon Valley, concerned about the power its billionaires wield over public education and society generally. While Gates, Zuckerberg, Hastings and Bezos have grabbed much of the spotlight, there is another tech influencer with a long reach that less well known. In this post I will examine the William and Flora Hewlett Foundation’s grants in the area of “effective philanthropy” as they relate to the creation of an economic and policy infrastructure intended to advance social impact investment interests in the United States.

Established in 1966, the foundation is headquartered in Menlo Park, CA. Funds originated from Hewlett Packard co-founder Bill Hewlett. The foundation is one of the largest philanthropies in the United States, dispersing over $400 million in grants per year. Giving areas include: education, environment, cyber, performing arts, global development, strengthening democracy and effective philanthropy. They also manage special projects and donate to initiatives in the Bay Area. The firm, which went public in 1957, is a symbol of the region. HP has long been a leader in hardware and software sales. In 2015 their printer and personal computing business split off from their enterprise business creating two separate firms, Hewlett Packard (HP) and Hewlett Packard Enterprise (HPE).

Why did they need to re-engineer philanthropy?

Before diving into the particulars, it’s important to understand the economic driver behind these so-called philanthropic gifts. Huge markets are anticipated to open up in data-driven government contracting around both social service delivery and climate change management tied to the UN’s Sustainable Development Goals. But before that can happen, governments need to be convinced, non-profits have to be trained, and the infrastructure to gather and assess “impact” has to be put into place. High-level executives and policy makers have been working on this for over fifteen years through New Profit’s “A Gathering of Leaders” and “America Forward” and Results for America. Both New Profit and Results for America have received HP support.

An emphasis on data-driven philanthropy serves HP’s corporate interests in myriad ways. HP and HPE can sell more devices and software. They can sell enterprise solutions including predictive analytics like the “Voice of the Citizen” social media sentiment monitoring platform. HPE is also making inroads in the Smart City market with its Universal IoT Platform. Venture philanthropy requires IoT and geo-location systems to assess “anywhere” learning and capture impact data.

Last year they teamed up with Yet Analytics out of Baltimore on EIDCC, an “experience graph of human capital analytics” that uses AI to project returns on national investments in educational technologies (white paper here). Yet Analytics relies heavily on xAPI, developed by Problem Solutions under contract to the US Defense Department’s Advanced Distributed Learning initiative, to track “learning” that happens “anywhere” via mobile devices. Another division of HPE is Enterprise Blockchain Solutions, a crucial element needed to bring global impact investing to scale.

The map below shows the ways in which HP is connected to human capital management, online education delivery, and digital economic systems. Interactive version here.

Philanthropy Shopping Spree

Remaking the nonprofit sector to serve the needs of global finance capital is a complex undertaking, exactly the type of project for which the foundation of an influential technology company is particularly well suited. The William and Flora Hewlett Foundation distributed targeted grants of varying sizes to policy organizations, special interest groups, higher education institutions, think tanks, venture capital firms, and PR outlets. Often these grants were for general operating support which is notoriously hard to secure. Many grantees work within the United States, but a number have an international reach. In the following sections I will present a series of relationship maps that highlight how HP deployed their capital to create a supportive infrastructure for social impact investing. Below is the overall map of the foundations “effective philanthropy” grant recipients.

Interactive Map of ReEngineering Philanthropy here.

Below are HP’s grant recipients that work primarily outside of the United States. Interactive  map here.

 

OER, Deeper Learning and Ed Reform 2.0

Paul Brest, see relationship map below, served as president from 2000 to 2012. Under his leadership the foundation made major investments in the development of Open Education Resources (OER) with over 300 grants awarded. OER is openly licensed material, primarily digital, a key element needed to scale online education delivered by curated playlists or algorithms, see the US Department of Education’s #GoOpen initiative. Grants were made in support of the Council of Chief State School Officers’ efforts to advance OER platforms like Gooru and UnboundEd.

Interactive map of Paul Brest here.

Brest also pushed “deeper learning” initiatives,” which align with mastery-based education and emphasize growth mindset, promoted by Stanford’s Carol Dweck. The foundation awarded two “deeper learning” grants totaling over $5 million to the Learning Policy Institute (LPI) based in Palo Alto and led by Linda Darling-Hammond, professor emeritus of education at Stanford University. LPI was created in 2015 as an education think tank to promote “evidence-based” research. Darling-Hammond works closely with Patrick Shields, a researcher with 20 years at SRI International. Beyond HP, LPI’s other funders include heavy-hitters in social impact investing, ed-tech, social-emotional learning, and competency-based education.

Interactive map of Learning Policy Institute here.

Brest spent much of his career as a professor and dean of the Stanford Law School. After joining HP he became an advisor to several behavioral science organizations including Ideas42. He currently lectures on social impact investing at the Stanford Graduate Business School where he is faculty co-director for the Center on Philanthropy and Civil Society. Brest also writes for the Stanford Social Innovation Review. In this 7-minute video from 2015 he discusses investments in Social Impact Bonds.

Venture Philanthropists

In a world of rising poverty, venture capitalists hope social impact investing and data-driven non-profit and public service management will keep their concentrated capital in motion. Hewlett Packard joined Blue Meridian Partners with a $10 million investment in 2016. The fund aims to aggregate a billion dollars to scale “high-performance” non-profit interventions in child welfare services. The fund is managed under the umbrella of the Edna McConnell Clark Foundation (Avon money), and the chair of the initiative is Stanley Druckenmiller who spent a dozen years overseeing Soros Fund Management LLC before moving on to start Duquesne Capital whose primary investments are in oil and energy. Druckenmiller is a close friend of Paul Tudor Jones (Robin Hood Foundation), and he has long served on the board of the Harlem Children’s Zone.

Interactive map of Blue Meridian Partners here.

The William and Flora Hewlett Foundation is a minor partner in this fund. Those making $50 million contributions include: The Ballmer Group (Steve Ballmer, Microsoft and Strive Together); Stanley Druckenmiller (Duquesne Capital, Harlem Children’s Zone); The Duke Endowment; George Kaiser Family Foundation (Bank of Oklahoma and Excelerate Energy); and The Samberg Family Foundation (Pequot Capital, Hawkes Financial Services, and Tri Alpha Energy Fusion Research). The David and Lucille Packard Foundation (ed-reform and early learning); the JPG Foundation (successor to the Picower Foundation); and Charles and Lynn Schusterman Family Foundation (oil and gas exploration, education reform and social-emotional learning) each contributed $10 million to the effort. A number of these foundations joined an earlier program in capital aggregation called the True North Fund through which the Edna McConnell Clark Foundation (EMCF) matched $30 million from the Social Innovation Fund, issuing awards to nine youth-serving grantees that agreed to impact evaluation and evidence-based program development.

EMCF was part of a very early impact investing convening co-sponsored in 2003 by the Goldman Sachs Foundation and the Rockefeller Foundation. That spring fifty individuals representing 31 foundations, financial institutions and funding intermediaries were invited to Goldman Sachs’s headquarters in New York to discuss social returns on investment in education / youth development and community development / employment. The aim was to collaborate in identifying common metrics that could be used to establish a cohesive market for social impact investing. EMDF, New Profit, the Roberts Enterprise Development Fund and Coastal Enterprises presented case studies at that event.

Two years later, America Forward’s “A Gathering of Leaders” would continue this discussion at Mohonk Mountain House in the Hudson River Valley. That meeting was intended to develop a “collective understanding of the barriers to growth and generate ideas for how we could release the potential of social entrepreneurs writ large to dramatically grow their impact.” A pivotal moment came when David Gergen, Harvard professor and former advisor to presidents Nixon, Reagan, and Clinton, admonished the group on the need to work within the existing governmental structure to “mobilize and support social entrepreneurs to directly engage in public policy advocacy.”  It should be noted that Christopher Gergen, his son, is a social impact investor in Durham, NC. Christopher is an adjunct professor associated with the Duke Fuqua School of Business’s Center for the Advancement of Social Entrepreneurship (CASE), writes columns on social innovation for regional newspapers, and founded an online tutoring business that was later acquired by Pearson.

The Mohonk gathering outside New Paltz, NY became an annual event. In 2007 George Overholser, formerly managing team member for Capital One credit cards and founder of the Non Profit Finance Fund, pitched the creation of a $1 billion social investment fund. A refrain from his speech was the important role new technologies will play in monitoring “quality” and expenses in real time. This data will permit “proven” programs to scale via private impact investments. With Blue Meridian, eleven years later, the philanthro-capitalists are pretty close to achieving this vision.

Interactive version of map above here.

Several members of Blue Meridian Partners, including HP, are also members of the Fund for Shared Insight. That entity launched in 2014 to share information and create tools for assessing effective philanthropy, including surveys and feedback loops grounded in business management practice. Other core funders of the “shared insight” effort include the Gates, Ford, and Rockefeller Foundations.

In addition to Blue Meridian Partners a number of other impact investors have received foundation support. Interactive map of additional impact investors here

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Think Tanks and Consultants

Interactive map of think tank grants here.

Non-Profit Finance Fund: Between 2012 and 2014 the William and Flora Hewlett Foundation made three separate $100,000 donations to the NonProfit Finance Fund to develop “tools and research on Social Impact Bonds.” George Overholser, a founding team member of Capital One, created the organization in 2007 and went on to launch Third Sector Capital Partners in 2011. Antony Bugg-Levine, formerly managing director of the Rockefeller Foundation and a co-founder and board member of the Global Impact Investment Network (GIIN) replaced Overholser as CEO.

Bridgespan: HP also awarded over $4.3 million to Bridgespan for general operating funds between 2002 and 2012. Bridgespan was spun out of Bain Capital in the late 1990s. Thomas Tierney, a Harvard MBA and former Bain Executive, created the organization to do consulting work specifically with the non-profit sector. Shortly thereafter, in 2003, Tierney joined the board of eBay where he worked closely as board chair with Pierre Omidyar. Omidyar advances social impact investing on a global scale through the Omidyar Network. Gates has poured over $30 million into the Bridgespan since 2000 to carry out ed-reform, turnaround, and global philanthropy projects. Bridgespan’s other co-founders include Jeff Bradach, a Harvard Business School professor specializing in organizational behavior who began his career at Bain, and Kansan Paul Carttar, another Bain alum who transitioned to a career as an independent consultant for the social entrepreneurship sector. Carttar is now busy launching a venture philanthropy fund in Africa.

Interactive map of Bridgespan here.

Above is the list of Gates Foundation Grants to Bridgespan. Direct link here.

Urban Institute: Another think tank that receives ongoing support from the foundation is the Urban Institute, which created a Center on Non Profits and Philanthropy in the late 1990s. A grant was given in 2003, the same year as the Goldman Sachs / Rockefeller Foundation philanthropy meet-up in New York, to underwrite the creation of a “framework to measure non-profit performance.” Three grants totaling $240,000 were awarded between 2012 and 2013 to develop PerformWell, a software platform for social service performance management including setting outcomes, benchmarking and data analysis, all of which feed into impact investing. Urban Institute’s philanthropy center has received $20,000 for general operating support annually since 2010. It is notable that with HP funding they also conducted an assessment of the nonprofit landscape in California in 2008 and later served as a technical advisor on the “Strong Start” pre-k Pay for Success initiative in Santa Clara County, CA.

Interative map of PeformWell here.

America Achieves: America Achieves is an “economic opportunity” think tank that works across education, government and economic sectors to developed “agile” (insert precarious and unstable) systems to “match the magnitude and pace of shifts in the economy” (cue robots and virtual agents). The William and Flora Hewlett Foundation has thus far directed over $1.5 million into Results for America, a program incubated at America Achieves that advances “evidence-based” policy making. Those funds were used between 2013 and 2015 to lobby the federal government to tie budget allocations to proof of impact. During that period Results for America launched their “Moneyball for Government” initiative.

HP also provided America Achieves funding to create a commission on student outcomes, to implement a national campaign around education needs, to study Common Core State Standards, and to implement personalized learning. They received general operating grants in the amount of $650,000 in 2013, 2015, and 2017. These funds were intended to support the promotion of “deeper learning” and the development of a global network of schools that would use the OECD Test for Schools for benchmarking and improvement purposes (again, think impact investing and their EIDCC program to assess ROI on ed-tech investments globally).

Other grants activity to think tanks include: $650,000 awarded between 2009 and 2011 to Root Cause, a Boston-based consultancy that scales “high-performance” nonprofits and has worked with Open Society Foundations; $2.6 million in general operating support to Harvard-affiliated FSG consulting, plus additional special project funds for work in foundation evaluation practices and global network facilitation; and a single $100,000 grant to the Rensselaerville Institute to help practitioners with “outcomes thinking.”

Higher Education

Getting prestigious institutions of higher education on board with this program was also a priority. The tide of social entrepreneurship lifted many boats, and numerous academic institutions have been set up with new programs to advance research and policy development in the impact investing space. The William and Flora Hewlett Foundation issued modest grants in the $100,000 range to the Beeck Center at Georgetown, the Center for Civil Society Studies at Johns Hopkins, and the Center for High Impact Philanthropy at the University of Pennsylvania. Larger grants of around half a million dollars were given to Duke (close ties to David Gergen) and the Hauser Center for Civil Society at Harvard.

Much more substantial awards were made to the Stanford Center on Philanthropy and Civil Society, which is located in HP’s backyard. The foundation supported the operations of the center to the tune of over $6 million since 2006 with awards increasing in recent years and additional gifts made in 2016 to create a new website, purchase a CRM system and develop a communications plan. The center have become a research hub for social impact investing. It publishes the Stanford Social Innovation Review and awards digital impact grants that foster a metrics-oriented approach to service delivery via its Digital Civil Society Lab. Laura Arrillaga-Andreessen, daughter of prominent Silicon Valley commercial real estate developer John Arrillaga and wife of Netscape co-founder Marc Andreessen, founded the center in 2006 and built up the social impact program within the Stanford Graduate School of Business. She also created the Silicon Valley Social Venture Fund, which was incubated within the Silicon Valley Community Foundation for ten years before spinning out in 2008.

Interactive map of higher education grants here.

Influencers

HP also targeted national network groups, the organizations best positioned to establish industry norms for the social sector and train its leaders as change agents. In 2015 the foundation awarded a $10 million grant to the National Philanthropic Foundation for a “New Partnership for Children and Youth,” however no details were given on the website. They directed over $6.7 million in general operating support to the Center for Effective Philanthropy, plus an additional $1.5 million for a youth survey project targeted at Bay Area students, and smaller grants for strategic planning, professional development and national conferences. $1.7 million in general operating funds went to the Foundation Center, which also received grants for their Foundation Center Online, videoconferencing, GrantCraft curated online giving re sources, and a donor management system. Additional grantees included: The National Council on Nonprofits, Peak Grantmaking, Grantmakers for Effective Organizations, Council on Foundations, Institute of Social and Ethical Accountability, National Committee on Responsive Philanthropy, and the Independent Sector.

Interactive map of influencers here.

Evaluation Platforms

Charitable giving is slated to become a largely decentralized online marketplace where elite social investors will be able to vet a range of proposals before adding to their philanthropic portfolios. The Alice software platform, underwritten by Nominet Trust in the UK, provides a glimpse into where things may be headed. A bleak op-ed from the National Review this June envisions Blockchain smart contracts emerging as a means by which crowd-sourced peer-to-peer charity replaces the public welfare system entirely.

Moving forward, a charity’s or social service provider’s potential for “impact” will be determined via data-driven metrics that are benchmarked against peer institutions. Software and evaluation frameworks that underlie this structure are vital to the system’s operation. Data must be collected, organized, and made available as part of the impact assessment process. Just as online school ratings systems have been normalized by Greatschools.org, there is a charity rating enterprise GreatNonProfits.org, which has received over $600,000 in general operating support from the Flora and William Hewlett Foundation since 2009.

For the time being, humans are the ones reviewing the data dashboards. However some anticipate a day when algorithms and even AI will replace people in making impact investment decisions, as already is the case for much high-frequency trading. See this 2015 whitepaper from the Charities Aid Foundation in the UK “Giving Unchained: Philanthropy and the Blockchain.”

The map below depicts evaluation systems into which HP has invested. These include: Guidestar, Give Well, and Wise Giving Alliance. Idealware and Network for Good are grant recipients that provide guidance to non-profits on software purchases, while Boardsource offers training and development for non-profit leaders. The last grantee on this map, Mobile Giving Foundation indicates the degree to which app-based philanthropy and digital payment systems are supplanting traditional ways of giving.

Interactive Map of Evaluation Platforms here.

Special Interest Groups

HP also directed grants to umbrella organizations that serve foundations with a specific social or cultural affiliation or geographic focus. Most received small, recurring general operating grants in the amount of $15,000 to $20,000. The entities representing regional foundations received larger distributions. The Kansas City Community Foundation received the most with over $3 million awarded between 2003 and 2010 for the development of DonorEdge, a non-profit database compiling regional financial, operational and programmatic information. In 2008 Guidestar took over the operation of DonorEdge, which is used by more than a dozen community foundations across the country.

Interactive Interest Group Map here.

Public Relations

All successful campaigns require a communications plan to sell it to the public. This final map features private firms and non-profit media outlets that the William and Flora Hewlett Foundation funded through their “effective philanthropy” program. I have already written extensively about Solutions Journalism Network within the context of vertically integrated “impact media” here. HP has given this media outlet $1.72 million since 2014. The largest gift by far was a $1 million donation made in 2017. Most of the funds were for general operating, though a grant was made for website design and another for development of a “social listening tool.”

HP maintains an ongoing investment in the UK social impact publication Alliance Magazine, awarding $10,000 annually to support free access to its content. In 2002 and 2003 they funded Philanthropix, a photography provider that aids nonprofits in communicating their stories ($450,000). HP also retained Communications Leadership Institute to conduct outreach to policymakers and develop a program to train grant recipients, specifically community college leaders in California, in communications. Lastly, a 2008 grant in the amount of $172,000 was used to hire, in partnership with the David and Lucille Packard Foundation and the James Irvine foundation, the TCC Group to run sessions intended shift the organizational behavior of twenty-seven community organizing groups in California, reported on here.

Interactive Grants Messaging Map here.

After reviewing all of these grant maps, I hope the massive scale of this systems engineering project is clear. The William and Flora Hewlett Foundation injected tens of millions of dollars over the past fifteen years in an effort to transform the philanthropic community of the United States into a conducive environment for data-driven, outcomes-oriented, evidence based grant-making. HP pursued its goals systematically and strategically. The one question still outstanding is whether or not non-profits will be able to sufficiently scale to accommodate the massive influx of Pay for Success capital that is expected. Next up in the Toxic Philanthropy Series will be an examination of the Silicon Valley Community Foundation (SVCF), the largest community foundation in the country with assets of over $13 billion. The William and Flora Hewlett Foundation made a sizable contribution in 2006 that made it possible for SVCF to be created from the merger of The Peninsula Community Foundation and The Community Foundation Silicon Valley.

 

We are living through desperate times: populations dislocated by climate catastrophe and dispossessed by state violence. Many are attempting, unsuccessfully, to navigate economic systems grounded in low-wage, disposable labor and insurmountable debt. The cost of living continues to rise, especially in cities where wealth is concentrated in the hands of speculative investors.

Stable housing is hard to find; food insecurity is real. Addiction is rampant with limited treatment options, and affordable healthcare is beyond reach. Meanwhile, education is being privatized as children are plugged into devices and told to cultivate a “growth mindset.” Digital tracking of mental health and social-emotional competencies is being normalized. It’s as if the Davos / Fourth Industrial Revolution crowd knows things are about to get much, much worse, and is rapidly locking systems into place to track and manage citizens before they become ungovernable.

As the buying power of the working class withers, capital must find new ways to circulate. Increasingly it will flow into investment markets created by outcomes-based service contracting. Such a model will fuel growth in P3 public-private partnerships and enrich those consulting firms, like Ridge Lane LP, angling to broker agreements. Seed funding to jumpstart this transition was part of the Federal Budget in February, the Social Impact Partnerships Pay for Success Act.

Against such a backdrop, we must critically examine the toxic network of arrangements that have been made between non-profit health and human service organizations (including public education systems), predatory venture philanthropy, and companies that have developed technologies to turn citizens into “impact” commodities that can be tokenized and traded like toxic bundled mortgages in derivatives markets.

Branding poverty-mining as “what works” government makes it easier for finance and technology interests to convince elected officials that wringing profit from the misery of society’s most vulnerable is something that could actually be made palatable enough to sell to the unsuspecting masses. Whether living in abandoned warehouses or tents in Kensington, in rural Indian villages, or refugee encampments, those needing access to services will have their lives increasingly subject to digital surveillance. Big Data, predictive analytics, and “smart” Internet of Things sensors rooted in Silicon Valley’s technologic systems of control feed social service data dashboards. The “evidence” often emanating from oligarch Jeff Bezos’s omnipresent Amazon Web Services (AWS).

We must be mindful of ties between AWS and the state surveillance apparatus. Last year AWS finished a new “secret region” to hold data for the US Intelligence Community, part of a $600 million contract signed in 2013. They also host data for Palantir, Peter Thiel’s engine for ICE deportations and the predictive policing of Black and Brown communities. Recent deployment of AWS Rekognition software caused waves of protest among the company’s own employees. Amazon stood firm asserting its support of police and military use of its facial recognition technology.

Click here for interactive version of the map below.

This spring AWS partner, San Francisco-based Salesforce, awarded Australian firm, SocialSuite, capital funds to refine outcomes measurement software they’d developed in conjunction with the IXO Foundation. IXO and TrustLab piloted Blockchain impact investing tokenized pre-k services in Cape Town South Africa last year. Remember Bezos’s pledge to create new pre-k opportunities through his new $2 billion Day One Fund? Seems like this would be a match made in crypto-heaven.

Salesforce also recently teamed up with the Lumina Education Foundation and the Robinhood Foundation on a $15 million venture philanthropy program to underwrite for-profit education and workforce training, which is an impact investment sector. The Robinhood Foundation, established by New York billionaire Paul Tudor Jones, was among the first to require detailed benchmarking of all its grantees.

This year’s federal budget included generous tax breaks for businesses, including charter schools and for-profit education, that are started in designated “Investing in Opportunity Zones” in low income communities across the nation. It seems likely the Salesforce/Lumina/Robinhood alliance will be taking advantage of this windfall.

So we have:

1) adoption of dashboards to evaluate education and social services;

2) software intended to analyze and measure “impact” for investment evaluation;

3) digital identity systems for those receiving services;

4) much of this data being managed by one of the most powerful companies in the world, one that maintains close ties with policing and intelligence interests; and

5) tax policies that fuel dehumanization while enriching elite investors.

It is time to take an unflinching look at the grave harm an industrialized “social sector” will inflict in this new age of automated decision-making and sophisticated social and financial risk scoring. Ronald Cohen and his ilk have designs to consolidate the sector and scale “innovative” solutions to benefit fin-tech while throwing humanity literally to the curb. We must recognize the seriousness of this threat and actively seek out and grow systems of mutual aid grounded in responsive cultural practice and community. We need to support grassroots solutions centered on the personal agency and leadership of oppressed and impoverished people. We must also envision alternative ways to accomplish this mammoth task outside the constraints of online crowd funding platforms, a foundational element of digital economic technocracy.

In my next post I plan to outline how the infrastructure surrounding the US social sector has been systematically transformed to serve the demands of social entrepreneurs, largely through extensive grants made in the area of “effective philanthropy” by the William and Flora Hewlett Foundation since the early 2000s. Hewlett Packard and Hewlett Packard Enterprises, based in Silicon Valley, have a clear financial interests in turning our lives into extracted data given that their bottom lines rely on selling not only devices but also enterprise solutions and a growing array of IoT and Blockchain services.

If you want a sneak peak, check out the philanthropy grant map here.

 

This past week will go down as an auspicious one for social impact investors and a foreboding one for the targets of their interventions: toddlers, job seekers, the unhoused, and those with mental illness. On November 1, 2018 corporate executives, military officers, athletes, and faith leaders converged on New York City to discuss the impending transformation of early childhood into a global investment market. Five days later JB Pritzker became the Democratic governor of Illinois, and former San Francisco Mayor Gavin Newsom became the Democratic governor of California.

JB Pritzker: Impact Investor As Governor

JB Pritkzer, a billionaire heir to the Hyatt family fortune and backer of the first two early childhood social impact bonds in the US, was not on the recent ReadyNation conference program in New York City as he was in the final push of his campaign to oust Republican Bruce Rauner from the Governorship of Illinois. For over a decade, Pritzker’s Children’s Initiative has financed the work of ReadyNation’s Robert Dugger and University of Chicago Economist James Heckman.

Pritzker money paid for the creation of the Heckman Equation, a tool kit promising a 7-10% annual rate of return to investors in early childhood education, up to 13% if health factors were built into the intervention. The tool kit targets very young children ages 0 to 3, identifying “success” metrics for character training, which were felt to have more potential for “growth” than cognitive achievement or IQ. Heckman and a cadre of researchers have since plowed considerable resources into devising tools, many digital, that supposedly measure social-emotional competencies, particularly Big Five “OCEAN” character traits: Openness, Conscientiousness, Extroversion, Agreeableness, and Neuroticism.

Pritzker and Heckman made the rounds, promoting outcomes-based pre-k impact investing to community foundations and institutional investors for quite a few years. In October the complicit NEA (National Education Association) spoke positively of Pritzker’s 5-point, two-generation early childhood education plan, which would allocate $95 million for pre-k expansion in the first year alone. The Annie E. Casey Foundation of Baltimore has been advancing this “two-generation” approach, which hinges on the adoption of vastly expanded integrated data systems.

Interoperable data is a priority for impact investors, because they expect to track impact metrics across multiple interventions to claim “credit” for ALL possible outcomes so they can extract as much profit as possible. It is fitting that the Casey Foundation would be a prominent voice advancing data-interoperability given their funding and organizational leadership are tied to UPS (United Parcel Service), pioneers in real-time tracking.

In 2015, The Pritzker Foundation donated $10 million to the University of Chicago to develop five Urban Data Labs addressing education, crime, poverty, health and the environment. The state of Illinois also recently created a taskforce to investigate Blockchain platform government. Last year they announced a pilot program to put birth certificates on Blockchain in partnership with Utah-based Evernym. Combining digital identity systems with public service delivery may be exactly the infrastructure needed to finally scale privatization of public services via outcomes-based contracts.

The Urban Lab Initiative at the University of Chicago is one of six data labs coordinated out of New York University’s GovLab. The other five are located in Providence, RI; Philadelphia, PA; Los Angeles, CA; Olympia, WA; and London, UK. Below is a screen shot of an expansive data lab network, which includes select funders and social impact bond projects. Due to the scale it is best to view it on the Little Sis website here. We would do well to keep close tabs on the Pritzker administration’s activities in the social sector.

Gavin Newsom Teams Up With The Bay Area Pritzkers

On the West Coast Newsom is positioned to expand Silicon Valley piloted Pay-for-Success initiatives throughout California, an enormous potential market.  The state’s incubator for Pay for Success is both the birthplace of tech and home to the nation’s largest community foundation. The Silicon Valley Community Foundation (SVCF) holds $13.5 billion in assets, much of it tech-originated donor-advised funds. The Foundation casts a long shadow, its influence extending into the four initiatives underway in the region. Some of this influence flows through a spin-off organization SV2, the Silicon Valley Social Ventures Fund. SV2 was developed as an in-house program by Laura Arillaga-Andreessen, wife of Netscape Co-Founder Marc Andreessen, in 1998. Arillaga-Andressen went on to build the social venture philanthropy program at the Stanford Graduate School of Business.  Two PFS initiatives, Strong Start (pre-k) and Big Lift (literacy) are tied to early childhood education. The others are Welcome Home, a housing program, and Partners in Wellness, a mental health initiative. This map shows how the initiatives are connected, as well as select funders and partners. Click here for the interactive map.

SVCF has been in disarray of late over sexual harassment and concerns around fiscal transparency. A new CEO, Nicole Taylor, was installed this week replacing Emmett Carson who launched the foundation back in 2006 when The Community Foundation Silicon Valley and the Peninsula Community Foundation merged. Taylor has roots in the Bay Area and ties to Stanford, but most recently worked as Dean of Students at Arizona State University, which has moved full steam head with a disruptive model of higher education under the leadership of Michael Crow. In 2010, Crow linked ASU with Silicon Valley through his ASU+GSV summits designed to promote ed-tech. Crow is the board chair of In-Q-Tel, the venture capital wing of the CIA, and serves on the education advisory for Ridge-Lane, LP Tom Ridge’s merchant banking firm.

SVCF launched their Center for Early Learning in 2014. Council for a Strong America, the parent organization of ReadyNation, is a partner as is Google, New America, and the Bay Area Council, a powerhouse of 150 representatives of the most influential companies and institutions in region. In addition to providing a home for “The Big Lift” early literacy impact investing program, it also coordinated “Choose Children 2018,” a campaign that pressed for the election of a “children’s governor” for California.

Small world, the Pritzker Family Foundation donated to that campaign and is a partner in the center. According to this LA Times article, the San Francisco wing of the Pritzker family also donated over $600,000 to Gavin Newsom. Small contributions were given during his run for mayor of San Francisco, but most was donated to his gubernatorial campaign. TAO Capital, a venture capital fund that focuses on emerging technology, was a conduit for many Pritzker family donations to Newsom. The firm’s education portfolio includes Dreambox, Panorama, and Newsela.

A central player in Santa Clara County’s impact investing program is their Office of Education, which has built a centralized education data warehouse called “Datazone.” Their language around data integration indicates it may be a prototype for an interoperable platform that would expand impact investment markets by linking education data with out of school service providers. Datazone is a hub for the Silicon Valley Regional Data Trust (SVRDT) launched with financial support from the Chan Zuckerberg Initiative in January 2017.

SVRDT is one of six founding partners in the National Interoperability Collaborative (NIC), an outgrowth of work done by Stewards of Change and Academy Health. This collaborative intends to pull together health, human service, criminal justice, child welfare and health data across platforms. Funders include, not surprisingly, the Annie E. Casey Foundation, Microsoft, and IBM. But the Kresge Foundation is the lead funder. Kresge, based in Troy, Michigan, participated in the financing of ROCA, an early juvenile justice Social Impact Bond in Massachusetts. On that project they were teamed up with Third Sector Capital Partners, Goldman Sachs, the Arnold Foundation, New Profit, and the Boston Foundation.

In addition to NIC’s six founding partners there are eighteen other “members.” Most work in healthcare, workforce development, and social service spaces, but there are two outliers. Of grave concern is the fact that The National Fusion Center Association and the National Council on Crime and Delinquency are also on the list. Fusion Centers are part of the Homeland Security apparatus. My sense is impact investors need to have seamless data integration with the justice and surveillance system, because public expenditures associated with predicted future incarceration will be the primary cost-offset that permits profit-taking for “impactful” youth interventions. We are very likely looking at replacing the school to prison pipeline with compulsory “pre-carceration” intervention services.

ReadyNation Global Business Summit on Early Childhood

Among the gold level sponsors of ReadyNation’s 2018 Global Summit on Early Childhood were the Bezos Family Foundation and the CME Foundation, the philanthropic arm of the Chicago Mercantile Exchange known for futures and commodities trading. With great enthusiasm they rang the closing NASDAQ bell that day. In a tweet the host, ReadyNation, declared it was “great to have so many private sector leaders gathered in NYC to discuss the importance of early learning and workforce development,” both growing markets in Pay for Success finance. Child advocates had been expressly excluded from the event unless attending with a pre-approved team of at least four business people.

During the two-day conference, Rear Admiral Robert Besal discussed the importance of early childhood investment to the country’s military readiness; Memphis pastor Stacy Spencer represented “Shepherding the Next Generation’s” evangelical Christian program of “biblically-based and effective” approaches to strengthen families and communities; and Annette Dixon of the World Bank focused on children as human capital.

Former Minneapolis Federal Reserve economist and outcomes-based finance pioneer Art Rolnick presented “scalable success stories;” R. Edward Freeman, a UVA professor from the Darden Business School who teaches courses in creative capitalism, facilitated group discussion on how entrepreneurs could “impact” “at risk” children; and Utah businessman and advocate for the Social Impact Partnership Pay for Results Act, Jim Sorenson delivered remarks about the business of early childhood over the first night’s dinner service. Rob Arning, chair of the KPMG Foundation, gave the closing keynote discussing corporate volunteerism and “lifelong learning.” KPMG is a global accounting firm and a supporter of outcomes-based government finance. View the complete program here.

The interests of global monopoly capital and empire demand “at risk” children and their families be molded as compliant Christian soldiers and disposable, low-wage workers. A commodities futures market in speculative human capital has been devised and is ready to launch. Once such a system of “human bonds” is prototyped, it can be expanded across all social sectors, feeding the poor as raw material into the bloated, toxic, global impact investment machine. With Pay for Success embedded in ESSA and the Social Impact Partnerships Pay for Results Act now passed, I fear human bonds are poised to move off the page, out of the white papers, and become a reality. Venture capitalists are proclaiming their intentions, ten stories high on screens in Times Square. Who’s paying attention?

Data is Gold

The impact investing system demands interventions be structured to appear as though they “work,” at least according to data dashboards. Negotiating contracts to accommodate engineered “success” metrics should be pretty straightforward, since Third Way elected officials have been systematically conditioned to accept public-private partnerships and data-driven governance through campaigns like Results for America’s “Moneyball for Government.”

If dashboard impact programs of the type featured above are allowed to scale; if computing becomes ubiquitous through 5G IoT/Smart City deployment; if data interoperability is widely adopted; toddlers and babies are going to be subjected to having their social-emotional progress tracked digitally for profit. Grit and resiliency levels will be evaluated against baseline ACES scores, perhaps incorporating genomic profiles factoring in inter-generational trauma.

Their parents will be similarly processed via stackable workforce credentialing programs into precarious employment, a model promoted by Samaschool. Or, if deemed unable to work, they may have their health, mental health or housing managed for profit by investors whose revenue stream depends on the perpetual impoverishment of Black and Brown communities. That seems to be the market for Alphabet’s “urban managed healthcare” program Cityblock.

Social impact interventions provide a pretext for deploying digital surveillance systems to “monitor” behaviors of oppressed communities already subject to intrusive policing. Copious data, often stored on Amazon Web Services, will maximize profit extraction for the “doing well by doing good” predatory class while simultaneously serving as a robust enforcer of social control. In this dawning era of “good capital,” communities of color will face new forms of digital profiling. Pritzker and Newsom embody the stakeholder capitalist pictured below. This capitalist doesn’t carry a spear, but instead wields government-endorsed algorithms endowed with life or death decision-making authority.

A new gold rush is beginning, and data is the gold. The powerful want to control data and use it to their advantage. We must now decide what each of us is willing to do to protect the vulnerable from this threat. How will you fight data-driven policies and demand the humane education and care all people deserve?

 

Note: It appears the Futures Investment Initiative website was hacked at some point on October 22. 2018 and taken offline, so some of the embedded links below may not work. In the meantime, you can access information about the event via an archived Wayback Machine link here. Advisors list for the event here.

Against the backdrop of a dismembered journalist in addition to atrocities and war crimes in Yemen, Crown Prince Mohammed bin Salman (MBS) had planned to welcome “visionary and influential” leaders in “business, government, and civil society” to Riyadh this week for his second Future Investment Initiative (FII), a three-day conference on global economic development scheduled for October 23-25 2018 in Riyadh, Saudi Arabia.

Through private meetings, networking, curated roundtables and “deep engagement with global media” a group of elite invitees (non-transferable invitations require a passport and photo to register) proposed to outline a blueprint for the future of work in environmentally compromised yet technologically sophisticated (surveilled) smart cities operated under the purview of public-private partnerships.

Well-connected firms such as the Boston Consulting Group, Deloitte, McKinsey, Bain, Strategy&, and Ernst and Young had reserved seats at MBS’s table and are listed as summit partners on the FII website.  Each of these firms is actively involved in social impact investing: here, here, here, here, here, and here.

I created a relationship map of the partners associated with this event. Access an interactive version of the map here.

Below is a detail of Bridgespan’s associations. Bridgespan, a Boston-based non-profit, emerged out of Bain and Company’s pro bono work during the mid 1990s.  Bridgespan and Bain maintain a “deep strategic partnership,” collaborating on projects across public service sectors, including education. Many of Bridgespan’s clients are prominent players in the privatization movement. Consider the role of consulting firms like Bain in offering guidance on social impact investment opportunities to interests like the Crown Prince and you can see how Saudi Arabian capital could easily be directed to flow into US education markets via charters and “evidence-based” ed-tech “solutions.” In 2015, Bain enlisted former MA governor Deval Patrick to head the firm’s social impact investment fund. Patrick played an instrumental role developing pay for success contracts in the Commonwealth, notably the ROCA initiative. Access an interactive version of the map here.

Saudi ties to the grisly murder of dissident journalist Jamal Khashoggi in Turkey earlier this month introduced unanticipated wrinkles into the prince’s planned agenda, leading a large and growing number of high-profile participants, including Jamie Dimon of JP Morgan Chase, Stephen Schwarzman of Blackstone, and Diane Greene of Google, to withdraw from the event. Attendance at “Davos in the Desert” will be a fraction of last year’s 3800+ as officials, asset managers, lobbyists, and executives and government representatives scramble to find a way forward that enables them to retain access to the kingdom’s coffers and influence without drawing inordinate public ire.

The official sponsor of the Future Investment Initiative is the Saudi Public Investment Fund (PIF). Established in 1971, governance of PIF was reconstituted and transferred to the Council of Economic and Development Affairs, chaired by MBS, in March 2015. A substantial infusion of capital into the fund is anticipated in the near term from the public sale of up to five percent of Aramco, the Saudi national petroleum and natural gas company. Through implementation of Vision 2030, the Crown Prince aims to diversify the economy of the Saudi Kingdom beyond the energy sector.

Key to this plan is transforming PIF into one of the largest sovereign wealth funds in the world. The vision statement for the document Public Investment Fund Program 2018-2020, which supports Vision 2030, states PIF is to be a “global investment powerhouse and the world’s most impactful investor, enabling the creation of new sectors and opportunities that will shape the future global economy, while driving the economic transformation of Saudi Arabia. So the question is what new sectors of investment will they open and what type of impact do they seek? The Saudi government has retained numerous lobbying firms in the United States to advance their global investment goals for PIF, though the situation with Khashoggi’s murder led many to cancel their agreements in recent weeks.

The full conference program for FII is available online and describes plenaries on business and governments developing a “collective vision,” the ethical implications of a digital economy, and anticipated exponential growth of the fin-tech sector. Also on tap are discussions of the evolution of global capital markets including challenges for sovereign wealth and pension funds, mega investments in “frontier technologies” like SoftBank’s Vision Fund, and “which economic model for privatization will prevail?” Privatization is, evidently, presumed inevitable in such circles.

Screenshots of select sessions below:

I created a relationship map of advisors for FII 2018. Taken together it shows the degree to which ubiquitous computing, digital payment systems, Blockchain, Big Data, real estate development, hedge fund management, and public private partnerships may shape our lives in the decades to come if we don’t organize to counteract prevailing trends. Access an interactive version of the map here.

Advisors: Future Investment Initiative 2018

Mohamed Alabbar, Emaar Properties: Luxury real estate development and management including cutting edge technology implementation (smart cities).

Ajay Banga, Mastercard: Mastercard has patented Blockchain identity verification, is now offering payment services on Philadelphia regional transit cards, and has explored using loyalty rewards payments to nudge people into medical protocol compliance (digital economy, Blockchain).

Victor Chu, First Eastern Investment Group: Venture capital fund focused on Asia and heavily invested in digital payment systems Alipay and WeChat pay (digital economy).

Joe Kaeser, Siemens: German company developing smart city technologies and data analytics tools for managing urban environments (smart cities).

Lubna Olayan, Olayan Group: investment capital, Cornell trustee, WEF and Council on Foreign Relations connected (fin-tech).

Masayoshi Son, SoftBank: launch of the Vision Fund with forty-five billion dollars through PIF investing in emerging technologies. Many Silicon Valley start-ups have obtained significant capital from SoftBank.

Tidjane Thiam, Credit Suisse: investment capital, ties to NYC and Chicago strategic public-private partnerships, innovator in Blockchain securities transfers (digital economy, Blockchain, public-private partnerships).

Peter Thiel, Paypal and Palantir: big data analytics, ties to US state security infrastructure, involved in Pay for Success deal evaluation via their “Philanthropy Engineering” initiative delivering pro bono services (impact investing, Big Data, surveillance).

Withdrew Partnership Status After Khashoggi’s Death

Stephen Schwarzman, Blackstone Group: investment capital, distressed real estate, donations to AI and STEM education, promoting private investment in public education, donor to NYC library, economic advisor to Trump (fin-tech, AI, education reform).

Mellody Hobson, Ariel Investments: investment capital based in Chicago, wife of George Lucas, ties to education reform via After School Matters and the Chicago Public Education Fund, recently added to board of the Rockefeller Foundation (impact investing, education reform).

Arianna Huffington, Thrive Global: founder of Huffington Post, now promoter of well-being enterprise linked to better uses of technology (impact journalism, tech).

Jamal Khashoggi’s death punctuates a legacy of devastation wrought by the powerful Saudi royal family over many years. While US-manufactured bombs slaughter Yemeni civilians with limited media outcry, the death of a journalist who once occupied the inner circles of power has now drawn serious attention to Mohammed bin Salman and the transitions underway in Saudi Arabia. The kingdom’s planned move away from an energy-based economy means considerable capital must find its way into new global markets, including the finance and tech sectors.

The west has created new vehicles to manage such capital flows, namely Pay for Success social impact investment markets. There have been proofs of concept but thus far the machine has not achieved full functionality. To operate as intended will require: 1) the wholesale privatization of public services through public-private partnerships; 2) non-profits be scaled up significantly to accept massive infusions of capital and manage vast quantities of data for deal evaluation; 3) technologies capable of digitizing and platforming the delivery of social services, including education, to prove the “impacts” that will permit those at the top of the pyramid to take their profit from the essence of our lives.

While Crown Prince Mohammed bin Salman may sell FII attendees on cutting-edge giga-projects like Neom, the reality of urban living in the coming century will be far grimmer unless the masses can organize to resist the impact agenda and chart a different course.

Purpose-built “smart” environments, designed for “impact,” will be set up to contain economically precarious workers compelled to navigate increasingly automated labor markets. In a future where concentrated wealth of the type embodied by Saudi assets, reigns supreme, poverty will evolve to be managed for profit through predatory public-private partnerships operating at the behest of social impact investors. Such a blueprint will, through new digital economic structures, allow concentrated global capital to flow unimpeded, thereby continuing to enrich those at the top of the economic pyramid. By deploying innovative tools like self-sovereign identity systems and Blockchain public benefit payments, impact poverty management will allow the oppressive biocapitalist agenda to flourish even as the purchasing power of the masses becomes almost negligible.

The murder of Jamal Khashoggi is our wake up call. US consultants will sit at Mohammed bin Salman’s table this week describing the impact-investing machine they have built, a machine designed to funnel capital through a wasteland of intentional poverty. Can we take this opportunity to put sugar in the gas tank? Khashoggi has given us the gift of time. How will we use it?

This is the sixth of ten questions presented as a Trans-Atlantic dialogue between myself and UK blogger Privatising Schools. A condensed version pulling together content of several responses for UK audiences can be read on the Local Schools Network website.

Privatising Schools: Question Six

Daisy Christodoulou, a businesswoman who has been a significant influence on English education policy, has said that ‘the goal of education is work readiness.’ Could you comment?

My Response:

Industry has attempted to align our nation’s public education system to its human capital requirements for decades. Most education activists in the United States are familiar with Marc Tucker’s 1992 “Dear Hillary Letter” in which he laid out the National Center on Education and the Economy’s proposal for a “seamless system of unending skill development that begins in the home with the very young and continues through school, post-secondary education, and the workplace.” Tucker’s letter to the Clintons outlined a plan that included national education standards and one year of free college leading to a sub-baccalaureate degree.

Tucker felt the American public would more readily accept this branding than they would a European apprenticeship model. His idea was to have a system of modular professional standards, a computerized employment service, and a system of regional labor market boards to coordinate activities. Today we see these systems coming together in the form of career pathways. Twenty-five years after Tucker’s initial proposal, states including Colorado and Washington are adopting a Swiss training model that aims to direct 2/3 of high school students into “middle skills” certification programs rather than traditional four-year college degrees. These folks play a very long game.

Developments around cloud-based computing, educational technology, an online alternative credentialing paved the way for a new approach to human resource management. Now Blockchain transcripts and digital badging (see Credly in the UK) systems are poised to take things to a whole other level. Schools are being redesigned to maximize flexibility, preference social-emotional skills over academic knowledge, and push the inevitability of “lifelong learning” (reskilling). In 2014, the year before ESSA was passed, President Obama signed the Workforce Opportunities and Innovation Act (WIOA) and put many elements of Tucker’s plan in motion. WIOA and ESSA are complementary pieces of legislation.

Behind the scenes, non-profits like Jobs for the Future (JFF) have spearheaded the adoption of policies intended to integrate public education into workforce training. The Gates Foundation has poured over $100 million into JFF since 2009. Workforce development is also being positioned as a market for “pay for success” social impact finance. America Forward, a coalition of 70 social innovation organizations, strongly advocated for the incorporation of Pay for Success provisions into ESSA. Not surprisingly, one the first two PFS contracts issued after its adoption was for CTE training of high-need youth.

Academic standards around career and work have been incorporated into curriculum at the elementary, middle, and high school levels. In cities like San Diego, corporate influencers through the United Way are advancing consortia whose goal is direct students into “high-demand industries” like advanced manufacturing, clean energy and information and communication technology. Pressure to decide on a career pathway ramps up for students in middle school when they are subjected to a barrage of surveys and strengths assessments, often run by third party, data-mining software companies like Naviance, a subsidiary of Hobson which is owned by the Daily Mail and General Trust in the UK.

We hear the mantra of “College and Career Ready” readiness constantly. Renewed interest in careers has been driven by skyrocketing tuition costs and increasingly bleak economic prospects for many Americans. People are looking for stability for their children, and they have been made to feel that pre-professional training in K12 settings is the best way to achieve that. Emphasis on academic rigor under NCLB, to the point where half the students in some states were not meeting the requirements of newly imposed high school exit exams, created significant backlash and fueled renewed interest in career and vocational training (CTE).

Unfortunately, many parents and teachers do not realize that CTE education within the Ed Reform 2.0 context is not intended be carried out in public school settings, but rather through outsourced placements. Instead of students being taught by qualified educators trained in pedagogy and child development, they will be sent off to work assignments of uncertain quality and safety.

Big Picture Learning is a school management organization based in Rhode Island that is backed by prominent reformers like Ted Dintersmith and has expanded across the United States and internationally. Their model has students participating in Learning Through Internship (LTI) placements two days per week, though some placements never materialize and students are left languishing in sad computer labs. Big Picture has created an internship app with the software company Salesforce that tracks students during their placements and captures data about the competencies, including social-emotional ones, they demonstrate outside school. Eventually these competencies will be collected at badges on Blockchain. Given that up to 40% of Big Picture’s instruction takes place off-site, the model is aligned to austerity funding policies that continue to strip resources from neighborhood schools under the guise of school reinvention.

Many states now have designated priority career clusters and programs directing students into “in-demand jobs.” However I question if these interventions are actually intended to serve the interests of the next generation. I don’t think they are. Is it fair to place students on pathways to careers that may not exist in a decade? Is it ethical for companies to expect schools to redesign curriculum to meet industry standards? How likely is it that private interests seek to control human capital in ways that leads to an oversupply of applicants and depressed wages?

I think a far better model would be to fully fund K12 education, offering a rich liberal arts education with a wide range of elective and extracurricular activities. THEN offer free or low cost CTE training after students reach the age of 18 and better understand their capabilities and desires. The idea that a thirteen year old would be in any position to make major life and career decisions, especially given doomsday scenarios of a future of automated labor floating around, seems ludicrous at best.

Part One: Talking Across the Pond Here

Part Two: Virtual Reality and Globalized Workforce Here

Part Three: “Personalized Learning” Driven By Data Here

Part Four: We Haven’t Won, We’re Testing All The Time Here

Part Five: Focus on Pedagogy First Here