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?
The scaling of these financial products and pace of that expansion has my head spinning. I am among many grateful for your skill in tracking these developments and making the larger narrative coherent. The evolution is pointing to variants of the Chinese social credit scheme with montized points for baskets of behavioral assets. Too bad if you are not worthy of credits.
THANK you for this, but I could hardly even limp through it; it is truly heartbreaking how fully this is organized and VOTED into power. “This capitalist doesn’t carry a spear, but instead wields government-endorsed algorithms…”
You are very right to be concerned and heart broken but VERY wrong when you call this capitalism. It is obvious most peope do not even know what capitalism today because it hadn’t been practiced for decades. What we see today is criminal fascism.
Karen, it is evolving, because capital must continue to flow and few people have much buying power anymore. As a result, the new system turns lives into data and that becomes a new currency-life has value to the extent one is willing to comply. That slide was takenfrom a presentation by William Clark the Philadelphia lawyer at Drinker Biddle who created the template for benefit corporation enabling laws. The B Lab commissioned that picture. They think it’s great. Strangely, it is not meant (I don’t think) to be a parody. They truly believe that P3 partnerships are the way to go for the elite, and they probably are as long as they can force everyone else to go along.
Capitalism is a political and economic system in which trade and industry are controlled by private entities, not by the government. What we have now is capitalism on steroids. Everything in our “society” is now a commodity to be controlled by the private forces that control the market – education, healthcare, “justice”, even the government itself. In fact, there is no society, just ask Margaret Thatcher. To pretend that this isn’t capitalism – the only logical outcome of capitalism – shows a remarkable misunderstanding of economics.
What we have is corporate fascism not capitalism