Social Impact Bonds

Dedicated Funding Streams & Financing

  • Social Impact Bonds

Chicago, Illinois

In 2014, Chicago Public Schools (CPS) and the City of Chicago partnered with the Goldman Sachs Social Impact Fund, the Northern Trust Company, and the J.B. and M.K. Pritzker Family Foundation to launch the Chicago Child-Parent Center Pay for Success Initiative funded by a Pay-for-Success contract. The contract allowed the City to expand high-quality pre-K services to more than 2,600 low-income 4-year-olds across eight schools. The funding partners provided nearly $17 million in upfront capital and included a 4-year service delivery term, and a 17-year evaluation and repayment term. In a pay-for-success model, lenders provide the upfront capital necessary to operate a program that produces long term avoided costs to the government. The government then uses those savings to repay the lenders.

Connections to Key Early Learning Study at Harvard (ELS@H) Findings:

Stable, robust funding is essential to expanding and improving early education. Unlike K-12 education, early education has historically been supported through a fragmented – and largely insufficient – set of federal, state, and local funds. Research suggests there is a need for more accessible, affordable, and high-quality approach to early education across the mixed-delivery system – and for better financial and professional supports for the educators who serve children and families each day; creating dedicated funding streams can therefore help states and cities address these needs and achieve these goals.

Findings from the Early Learning Study at Harvard (ELS@H) show:

  • Families rely on a range of formal (e.g., Head Start, center-based care, public pre-K) and more informal (e.g., home-based, relative care) early education settings; when choosing a setting for their child, families balance many logistical constraints and personal preferences.
  • But for many families – and especially low- and middle-income families – early education choices remain tightly constrained due to issues of affordability and supply.
  • No one early education setting type is inherently of higher quality than another; children develop and learn well in every setting type, and in the study, all setting types showed room to grow in quality.
  • Early educators play a critical role in supporting the well-being of young children and families across setting types.
  • Yet their pay, benefits, and other professional supports are often inadequate in light of the job demands and their cost of living.


Learn More about ELS@H Findings

Learn more about Chicago

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  • The city population is 2,696,555
  • The percentage of children under 6 with all available parents in the workforce is 62%
  • The median family income among households with children is $72,300