kin challenge: funding roadmap · 2015-04-01 · aca requires non-profit hospitals to engage in the...

KIN Challenge: Funding Roadmap Katie Golden, Lexi Mele-Algus, Rochelle Ross, Sheila Shah

1 June 2014

Philanthropic Financial

KIN Challenge Methodology

•  Identify the portfolio of emerging financing opportunities for HICCup communities to fund “production of health” efforts

Objective

Approach

Output

•  The team identified a broad range of funding mechanisms available to communities

•  The mechanisms were narrowed down to 8 prioritized options based on scalability, feasibility, and timing

•  Based on interviews and research, the findings of the prioritized mechanisms are packaged in a Funding Roadmap which can be delivered to the interested communities to help them navigate their options

2

HICCup Discussion •  KIN Challenge Methodology •  Strategic Considerations •  Funding Roadmap Overview

Funding Roadmap •  Range of Investing Options •  Overview of Funding Mechanisms •  Supporting Detail on Funding Mechanisms

•  Community Benefit •  Community Development Financial Institutions •  Community Reinvestment Act •  Conditional Cash Transfers •  Creative Fundraising •  Medicaid 1115 Waivers •  Social impact Bonds •  Wellness Trusts

Table of Contents

3

Sample of Interview Contacts

4

Contact Category / Organization

Nirav Shah Social Finance

Laura-Min Proctor J.P. Morgan

Lisa Thomas Microfinance/Kellogg Professor

Nikki Taylor Social Impact Bonds

David Chen Impact Investing

Josh Shapiro Investment Banking

David Dranove Healthcare Economics

Andrew Ziskind Huron Consulting Group

Tim Shannon Student/General Investing

Aaron Isaac Baum Earth Institute

Zoila Jennings J.P. Morgan

Daniel Byrne Private Wealth Management

Barrett Willich Private Equity

Scott Kleimen Social Impact Bond Technical Assistance Lab

Timing and Evaluation •  Not all positive outcomes of production of health efforts will be seen within 5 years.

HICCup should consider how to continue evaluation and lessons learned beyond the 5-year competition period

•  Smaller communities may have difficulty with having a great enough prevalence of a condition (e.g., 100k may not be a large enough population to be statistically significant if only a fraction of that population has diabetes)

Community Leadership •  As community leaders (e.g., government officials) within an area turn over, HICCup

should focus on continuity and ensuring an integrated Way to Wellville stakeholder group over time

•  Addressing other areas (e.g., education, poverty) may provide greater production of health outcomes than narrowly focused healthcare initiatives

Strategic Considerations for HICCup

5

Integration •  Ensure potential partners and informational sources for funding are available to

benefit all communities that seek support; limit competition among communities for limited funding sources to extent possible

•  Consider facilitating a competition-wide business development / financing forum to share best practices and ensure communities leverage the power of “one HICCup” instead of separate communities

Funding •  There may not be one ideal funding option for the communities to utilize given the

investment requirements and nuances of health ROI •  Funding (and other aspects of production of health) may benefit from the larger,

aggregated scale of multiple communities. However, this brings additional complexity with healthcare needs and measurement. HICCup should work to leverage the “Way to Wellville” overall brand and strength, while balancing this with the needs of the individual communities

Strategic Considerations for HICCup (continued)

6

Overview of Impact Investing

Community Criteria for Mechanisms

Detail on Funding Options

Funding Roadmap Overview

The communities can refer to the following Funding Roadmap to help navigate the range of funding mechanisms that are available to them. The roadmap includes the following key components:

7

Funding Roadmap: A Guide for HICCup Communities to Fund Production of Health

8

Finding Capital to Fund Initiatives

Production of health is expensive.

•  We recognize that production of health within a community requires significant health capital, and securing this financing may seem like a daunting task

There are a variety of options that a community can pursue.

•  This Roadmap provides an overview of 8 prioritized financing options. The list is not exhaustive; some options are already used in the healthcare industry, but others are new and relatively innovative for healthcare

•  For each of the options, we outline what they are, how they can be scaled, what a community can do to help make them successful, risks, and potential partners

There is no one-size-fits all approach to funding.

•  Health capital will likely come from a variety of public and private sources, some which can be realized quickly for use as seed money, others will take some time to set up

•  Based on differing characteristics of each community, what is best for one community may not be the best option for another community

9

Traditional Investing

Responsible Investing

Impact Investing (Financial

First) Grants Venture

Philanthropy

Impact Investing (Impact

First)

Range of Investing Options

10

Philanthropic Activities

market returns below market returns

Investment Management

negative returns

Prioritized Funding Options in this Roadmap: •  Community Benefit •  Community Development Financial Institutions •  Community Reinvestment Act •  Conditional Cash Transfers •  Creative Fundraising •  Medicaid 1115 Waivers •  Social impact Bonds •  Wellness Trusts

Key Questions to Consider When Determining Which Mechanisms to Use

•  What is the financial or (non-financial) return required for the investment? •  What is the risk tolerance of the community? •  Who bears the risk in the investment? •  What is the payor mix of the community? •  What is the time frame the community is working with?

11

Overview of Prioritized Funding Mechanisms

Mechanism Description Community Characteristics

Solution Characteristics

Community Benefit

ACA requires non-profit hospitals to engage in the community to maintain tax-exempt status

• Sufficient number of not-for-profit hospitals

• Activities per IRS specifications

Community Development Financial Institution

Provides credit/financial services to underserved markets

• Low-to-mid income level

• Positive financial returns

Community Reinvestment Act

Law mandating commercial banks to re-invest in communities

• Open to new, non-traditional funding methods for the industry • Low-to-mid income level

• Requires tangible assets (e.g., fitness center)

Creative Fundraising

Crowd-funding, lotteries, sponsorships

• Active involvement from whole community

• Varies

12

Overview of Prioritized Funding Mechanisms (continued) Mechanism Description Community

Characteristics Solution Characteristics

Conditional Cash Transfers

Payment contingent on individual participants meeting certain criteria

• Have active involvement from whole community

•  Individual or family based

Medicaid 1115 Waivers

Federal Medicaid funds for innovative experiments

• Significant Medicaid population • Budget neutral

Social Impact Bonds

Private investments that generate financial & social return

• Be open to risk and innovative, new funding methods

• Targeted intervention for targeted population

Wellness Trusts

Pool of money reserved for promoting health production

• Willing and capable of instituting new legislation

• At community discretion

13

Community Benefit

14

Community Benefit: Overview

Description

Community benefits are “initiatives and activities undertaken by nonprofit hospitals to improve health in the communities they serve.” Community benefit is a requirement for tax-exempt hospitals to sustain their 501(c)(3) status. Activities must address one of the following objectives: improve access to health care services, enhance population health, advance increased general knowledge, relieve or reduce the burden of government to improve health. The three main categories of community benefit are: financial assistance, government-sponsored means-tested health care and community benefit services

Investment Scale

Variable - some states have requirements for minimum spending on community benefit (e.g., IL requires community benefit equal property tax liability) but others do not specify and use a case-by-case basis

Time to Implement Variable

http://www.hilltopinstitute.org/publications/WhatAreHCBsTwoPager-February2013.pdf 15

Community Benefit: Additional Information

Requirements and ACA Reform •  Federally, the IRS provides guidelines on what can be reported as community benefit •  States have differing regulations, but some federal requirements to prove tax-exempt

status include: •  Conducting community health needs assessment •  Developing implementation strategy every three years •  Adopting and publicizing a financial assistance policy •  Limitations on charges, billing and collections for those under the financial

assistance policy •  Community Building Activities – part of Part II of tax exemption requirements and if

used, must be specified how it improves community health. Examples include: physical improvements and housing, economic development, community support, environmental improvements, etc.

•  State requirements may be more stringent and will need to be looked at for each community to understand what will qualify for their local hospital •  State profiles can be found at the following site:

http://www.hilltopinstitute.org/HCBP_CBL_state_table.cfm with a snapshot on the next page

16

Community Benefit: State Profiles

17

Community Benefit: Success Criteria

Community benefit must be significant in order for non-profit hospitals to remain tax-exempt. These requirements are outlined by the IRS, but success criteria include: Part I: Community Benefit Activities •  Falls under the list of approved activities under Schedule H •  Shows engagement and dialogue with the community •  Aligns with goals of the government and public health officials in the community Part II: Community Building Activities •  Articulates explicitly how community building activities promote the health of the

communities it serves •  Note: Community building activities have been controversial on if they count towards

community benefit •  Provides certainty that being involved in activity will count towards community benefit

18

Community Benefit: Success Criteria (continued)

Requirements for activities to be considered community benefit (specifically community health improvement services) vs. community building •  Be carried out or supported for the purpose of improving community health or safety •  Be subsidized by the organization •  Not generate an inpatient or outpatient bill •  Not be provided primarily for marketing purposes •  Not be more beneficial to the organization than the community •  Not be required for licensure or accreditation •  Not be restricted to individuals affiliated with the organization •  Meet at least one community benefit objective (e.g., improving health service access, public

health enhancement, advancing general knowledge, relief of a government burden relating to health improvement)

•  Respond to a demonstrated community need

19

Community Benefit: Case Study

Richland County, Montana Diabetes Project Overview The Community Diabetes Project was created as a project between Richland’s hospital, county health department, health network, and Commission on Aging. It involved screening, assessment, health education, and case management for the elderly at risk for preventable hospitalizations. Benefits •  The involvement of several different parties helped the Project remain relevant for the

current community needs •  The hospital had fewer rehospitalizations and the ability to show community benefit in

an effective way •  The health department had reduced costs for treating chronically ill patients •  The community as a whole benefited from a healthier population and greater

awareness for prevention activities

http://www.hilltopinstitute.org/publications/HospitalCommunityBenefitsAfterTheACA-HCBPIssueBrief3-February2012.pdf 20

Community Benefit: Risks and Considerations

Considerations •  Currently, hospitals provide most of their community benefit through

reduced cost of care and charity care. With a significant portion of the uninsured population moving to insurance through the ACA, they will be looking for new opportunities to provide community benefit and will be great partners

•  Communities in states which have stricter regulations and support for community benefit activities may be at an advantage when trying to partner with hospitals

•  Activities need to be within the allowed activities for hospitals to be interested

Risks •  Sustainability of hospital participation needs to be discussed to ensure it is

not a one time contribution •  Roles and accountability will need to be defined early on to ensure

partnership is effective •  Must be able to articulate how the hospital will not lose money from reduced

revenues •  Some hospitals may not be aware that community building activities will be

relevant for them and will need to be educated on the topic

21

Community Benefit: Informational Sources

•  IRS – Hospitals and Community Benefit Interim Report http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Hospitals-and-Community-Benefit-Interim-Report

•  The Hilltop Institute – analysis to advance the health of vulnerable populations. Discussion about Hospital Community Benefit Programs http://www.hilltopinstitute.org/hcbp.cfm

•  Healthlaw.org description and detailed report about Community Benefit http://www.healthlaw.org/issues/health-care-reform/nonprofit-hospitals-and-community-benefitpdf#.U4_o__ldX0Q

•  The Hilltop Institute: Hospital Community Benefits after the ACA – Addressing Social and Economic Factors that Shape Health http://www.hilltopinstitute.org/publications/HospitalCommunityBenefitsAfterTheACA-ShapeHealthIssueBrief9-May2014.pdf

•  The Hilltop Institute: Hospital Community Benefits after the ACA – Partnerships for Community Health Improvement http://www.hilltopinstitute.org/publications/HospitalCommunityBenefitsAfterTheACA-HCBPIssueBrief3-February2012.pdf

•  Catholic Health Association: Detailed information about community benefit http://www.chausa.org/communitybenefit

22

Community Development Financial Institutions

23

CDFIs: Overview

Description

A financial institution that provides credit and financial services to underserved markets and populations. A CDFI may be a community development bank, a community development credit union (CDCU), a community development loan fund (CDLF), a community development venture capital fund (CDVC), a microenterprise development loan fund, or a community development corporation CDFIs have loaned and invested over billions in our nation’s most distressed communities and have leveraged billions from the private sector for development activities in low wealth communities.

Investment Scale

$30K - $500K Since its creation, the CDFI Fund has awarded almost $1.7 Billion to community development organizations.

Time to Implement N/A – dependent on access to and relationships with local CDFIs

http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=5290

24

CDFIs: Different Types

http://www.minneapolisfed.org/community_education/cdfi/index.cfm 25

CDFIs: Success Criteria

Requirements

•  “Double Bottom Line” – economic gains and social impact on local community

•  Business plan or ability to show that you will be able to make a profit in the future

•  Usually require proof that you were not able to receive money from another entity

•  Investment opportunity should lend itself to the CDFI strategy/mission

•  If used, helps them achieve better ratings under the CDFI Assessment and Ratings System (CARS)

•  Provide returns (mainly 0% - 5%) in a reasonable time period (e.g., 1-5 years)

•  Must serve underserved markets

http://www.socialfunds.com/education/article.cgi?sfArticleId=7_1 26

CDFIs: Sources of Capital

There are several ways to locate CDFIs: •  Locate CDFIs through: http://ofn.org/cdfi-locator •  Search award database:

http://www.cdfifund.gov/what_we_do/need_a_loan.asp •  This database will allow to see specializations of different CDFIs •  If there are none located in your community, it may be worth

broadening your search to different, adjacent counties and/or the whole state

•  Search list of certified CDFIs: http://www.cdfifund.gov/what_we_do/programs_id.asp?programID=9#certified

27

CDFIs: Case Study 2

IFF •  IFF is a prominent, national CDFI with a focus on fostering comprehensive community

development, strengthening bonds with all sectors, facilitating capacity building •  IFF can provide below-market loans through use of a revolving loan fund •  IFF’s focus on healthcare through:

•  Affordable loans for facilities or equipment •  Real estate planning and development •  Planning, construction and financing packages for large scale projects

•  IFF focuses on healthy food access through: •  Grocery initiatives: Illinois Fresh Food Fund, Healthy Food Access Fund •  Nonprofit initiatives: loans for healthy food related projects, real estate services

and technical assistance •  Ex: Angelics Organics Learning Center (Caledonia, IL)

•  IFF lent $40K for finalization of a community-supported organic farm and learning center. The center promotes programs for inner city youths, harvest share programs and produce sales to the greater public

http://www.iff.org/about-iff 28

CDFIs: Case Study (continued)

•  OneUnited Bank, headquartered in Boston, MA is the largest African-American owned CDFI in the country and focuses on serving and developing urban communities. The Bank has achieved consistent profitable growth through both bank acquisitions of similar mission driven banks and organic loan and deposit growth. The Bank has provided innovative products and services to fulfill its community development mission in the urban communities of Boston, Massachusetts, Miami, Florida and Los Angeles, California. OneUnited Bank continues to be integrated into the social and economic fabric of each of these communities in every respect from not-for-profits, small business, affordable housing, churches, etc.

•  The Center for Community Self-Help, another leading CDFI, was founded in 1980 in Durham, North Carolina. Self-Help's home and business lending has provided low-wealth, minority, rural and female borrowers with over $5.24 billion in financing. Much of this is through Self-Help's national secondary market program, which enables conventional lenders to make more home loans to low-wealth families

•  The Reinvestment Fund (TRF) is a national leader in rebuilding America’s distressed towns and cities, through the innovative use of capital and information. TRF has invested over $1.2 billion in Mid-Atlantic communities since 1985. A Community Development Financial Institution, TRF finances housing, community facilities, healthy food access, commercial real estate and energy efficiency projects. It also provides public policy expertise by helping clients create actionable solutions and by sharing data and analyses.

29

CDFIs: Risks and Considerations

Considerations for Health •  CDFIs can focus on social determinants that increase health, good

partners •  Possible partnerships: affordable housing, community health facilities,

healthy food retail stores •  CDFIs can provide gap financing •  CDFIs can convene community stakeholders, help identify goals

and help in evaluation processes Risks

•  Only viable if you: •  Have away of generating revenue and payback in a reasonable

time •  Can prove you serve underserved communities

•  Interest rates can be higher than traditional banks •  May take longer to obtain a loan •  May have a cap on loan amount

http://www.entrepreneur.com/article/222683#

CDFIs: Informational Contacts and Potential Partners

There are a number of trade associations and other resources applicable to the CDFI industry. For more information, see: •  Association for Enterprise Opportunity •  CDFA Community Development Finance Association •  CDFI Coalition •  Community Development Bankers Association •  Community Development Venture Capital Alliance •  Fair Finance Consortium •  Fair Finance •  National Federation of Community Development Credit Unions •  National Community Investment Fund •  Opportunity Finance Network •  U.S. Department of the Treasury - CDFI Fund •  CU Strategic Planning

31

Community Reinvestment Act

32

Community Reinvestment Act: Overview

Description

United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods. Traditionally seen in housing market.

Investment Scale

Varies – there are both small loans to individuals and larger loans to businesses / communities. Below or above $1M

Time to Implement Varies depending on structure of loan

33

Community Reinvestment Act: Success Criteria To maximize the benefits of CRA within local communities, NCRC encourages community stakeholders to develop a CRA strategy that involves a combination of any or all of the following activities: •  Submit written comments on the community reinvestment performance of banks in

local area when these banks undergo their regular CRA examinations; •  Monitor bank mergers, acquisitions and expansions to identify strategic opportunities

to encourage banks in your local area to improve their community reinvestment records;

•  Meet periodically with banks operating in local area, even if they are performing well on their CRA exams, to discuss the community’s credit/capital/bank service needs and to suggest actions a bank can take to better meet those needs;

•  Meet with bank regulators to discuss the performance of specific banks, as well as improvements to the CRA exam process;

•  Encourage local government or other local institutions with substantial bank accounts (e.g., churches, foundations, etc.) to establish a linked deposit program to ensure that only those banks with reasonable community reinvestment records are eligible to benefit from a financial relationship with major local depositors; and

•  Become a shareholder advocate – owning even a small number of shares in a publicly-held bank allows you to introduce, vote on and/or speak at shareholder meetings about shareholder resolutions that address community reinvestment concerns.

h"p://www.ncrc.org/programs-‐a-‐services-‐mainmenu-‐109/policy-‐and-‐legisla;on-‐mainmenu-‐110/the-‐community-‐reinvestment-‐act-‐mainmenu-‐80/community-‐reinvestment-‐act-‐q-‐a-‐a-‐mainmenu-‐159

34

Community Reinvestment Act: Sources of Capital

Type Source Required Return Contact

Banks Small / Large financial institutions

Varies depending on nature of loan FDIC / NCRC

35

Community Reinvestment Act: Case Study

•  In May 2010, First Tennessee implemented a plan to support the recovery of local communities adversely impacted by natural disasters, principally flood victims in Middle and West Tennessee. Following the disaster, First Tennessee provided payment assistance to 50 consumer and business customers and extended more than $27 million in new credit to consumers at favorable terms.

•  Another example of CRA lending is the Affordable Home Improvement Program. This allows homeowners to get a fixed rate loan for up to four years to do minor home improvements. Homeowners throughout many low- and moderate-income communities have used this product to improve their homes, which brings value to the homeowner and improves the overall community.

•  Another example of CRA lending is the use of the New Market Tax Credits program to help the Collegiate School of Memphis get started

36

Community Reinvestment Act: Risks and Considerations

•  Primarily used for low- to moderate- income communities and for traditionally underserved populations

•  Typically utilized in the housing market, as it requires a tangible asset to collect a return or to be used as collateral against a loan •  However, some banks, like Goldman Sachs and J.P. Morgan,

are beginning to explore the intersection of CRA and healthcare

37

Community Reinvestment Act: Potential Partners

h"p://www.occ.gov/tools-‐forms/tools/compliance-‐bsa/cra-‐perf-‐eval-‐search.html

Use this search tool to find CRA performance evaluations for a specific bank or for all the banks in a state. You can also further narrow your search to focus on a specific performance rating:

38

Community Reinvestment Act: Informational Sources

•  Understanding how a community can extract value from the CRA: http://www.ncrc.org/programs-a-services-mainmenu-109/policy-and-legislation-mainmenu-110/the-community-reinvestment-act-mainmenu-80/community-reinvestment-act-q-a-a-mainmenu-159

39

Conditional Cash Transfers

40

Description Investor pays for program contingent on individual participants meeting certain criteria

Investment Scale

$40 million in private donations raised to finance the Opportunity NYC Family Rewards program

Time to Implement

Little time needed to raise funds once grant-providers identified but will take time to design and implement programs

Conditional Cash Transfers: Overview

41 http://www.nytimes.com/2010/03/31/nyregion/31cash.html?_r=0

Type Source Required Return Contact

Grants

Rockefeller Foundation NYC Cultural Innovation Fund, supporting equity and resilience

Fund does not require a match to its grants

Edwin Torres ([email protected])

Conditional Cash Transfers: Sources of Capital

42


Conditional Cash Transfer: Success Criteria

Philanthropic Focus Financial Focus

•  Intermediary organization with experience in social science projects such as MDRC can help design the program and track progress to goal

•  Must consider how results will be measured and communicated back to funder

43

Opportunity NYC Family Rewards, an initiative led by Mayor Bloomberg’s Center for Economic Opportunity Goal: To reduce poverty Timeframe: An experimental 3-year pilot program, 2007-2010 Intermediary: Social science non-profit organization MDRC led design and evaluation of program; non-profit economic development organization Seedco led implementation of program Collaborating Institutions: Harvard University researchers, NYC Department of Education Investors: $40 million in donations from a Consortium of private funders including Rockefeller Foundation and Mr. Bloomberg’s foundation Programs: Low-income NYC families received $6,000 a year, on average over 3 years in housing vouchers, services, and savings plans for achieving specific health, education, and employment goals. As a result, families were 16% less likely to live in poverty Other CCT Examples: Earned Income Tax Credit (EITC), Temporary Assistance for Needy Families (TANF), Oportunidades Mexican welfare program

Conditional Cash Transfers: Case Study

Sources: http://www.mdrc.org/publication/conditional-cash-transfers-new-york-city http://www.nytimes.com/2010/03/31/nyregion/31cash.html?_r=0 44

•  Some of the NYC Opportunity programs were successful in changing individual savings, educational performance, and employment behavior, while other programs had little impact on individual behavior. Check out the MDRC research results for more info.

•  There may be difficulty in proving short-term results due to the lag in data for individual results from various community initiatives

Conditional Cash Transfers: Risks and Considerations

45

Conditional Cash Transfers: Informational Contacts and Potential Partners

•  Seedco, an economic development organization (intermediary) •  MDRC, a social science non-profit organization (intermediary) •  Rockefeller Foundation (primary investor)

46

Conditional Cash Transfers: Informational Sources

About Opportunity NYC •  http://www.mdrc.org/project/opportunity-nyc-demonstrations •  http://www.rockefellerfoundation.org/our-work/current-work/new-york-

city/opportunity-nyc •  http://www.rockefellerfoundation.org/uploads/files/

56c564b3-4765-4442-ae25-42cc94e1d270-cultural.pdf

47

Creative Fundraising Crowd-funding / collaborative funding Lotteries & lottery bonds Donation matching Sponsorships, in-kind donations, and other fundraising

48

Creative Fundraising: Overview

Description

A: Crowd-funding / collaborative funding B: Lotteries & lottery bonds C: Donation matching D: Sponsorships, in-kind donations, fundraising walks, and individual fundraising A combination of the above fundraising mechanisms can supplement other funding options selected

49

A: Crowd-funding / Collaborative Funding: Overview

Description The use of small amounts of capital from a large number of individuals to finance a new business venture. Has the potential to expand pool of investors beyond the more traditional ones

Investment Scale

Varies; Example: Seaside Heights, NJ raised $1 million on Indiegogo based on their “Restore the shore” campaign

Time to Implement

•  Campaign set-up can be as quick as putting up a website and advertising locally

•  Fundraising period can be open as short/long as needed

50 http://en.wikipedia.org/wiki/List_of_highest_funded_crowdfunding_projects

B: Lotteries & Lottery Bonds: Overview

Description

A portion of the revenue earned through state lotteries funds education initiatives and bond issuances. Also known as prize-linked savings, lottery bonds give the bondholders a chance to win a random monthly drawing for a tax-free cash prize

Investment Scale

Varies; Britain’s premium bond program attracts roughly one third of UK citizens with $70 billion in total holdings

Time to Implement

May require significant upfront time to establish necessary regulatory and legal structures

51 http://www.moneywise.co.uk/banking-saving/savings-accounts-isas/are-premium-bonds-really-good-deal

C: Donation Matching: Overview

Description For-profit corporations have been increasingly matching any donations its employees make to charities.

Investment Scale

Varies; Example: GE Foundation matches over $35 million annually to 501(c)(3) organizations and educational institutions

Time to Implement

Upfront time dependent on how long corporations need to add HICCup to list of charities employees can donate to

52 https://doublethedonation.com/matching-grant-resources/list-matching-gifts-companies/

D: Sponsorships, In-kind Donations, Walks, & Individual Fundraising: Overview

Description

For-profit corporations may be interested in opportunities to (a) sponsor an initiative, to (b) provide in-kind donations to support an initiative, to (c) contribute to a fundraising event such as a walk or run. Individuals can also raise money for the HICCup cause.

Investment Scale

Varies; Example: over the past 5 years, 650 NYC marathoners have raised nearly $4 million for the anti-poverty organization Robin Hood

Time to Implement

Upfront time dependent on discussions with community development groups within corporations

53 https://www.crowdrise.com/teamrobinhoodnycmarathon2012

Lottery Bonds Case Study

UK Lottery Bonds Goal: To encourage financial savings Bond Issuer: National Savings and Investment (NS&I) Bond Holders: Purchase a minimum of £100 in bonds and get a chance to win a random monthly drawing for a tax-free cash prize Other players: UK government backs investment to ensure protection Other examples: Save to Win in Michigan

54

Creative Fundraising: Potential Partners

Crowdsourcing / Collaborative funding •  Crowdfunder (intermediary) Lotteries & Lottery bonds •  Oregon Lottery Bonds

Donation Matching •  Rockefeller Foundation (investor) •  Double the Donation (intermediary) Sponsorships & non-cash donations •  YMCAs, gyms, fitness tracking device companies, corporate “day of

service” events, etc. Fundraising Walks •  American Cancer Society’s Relay For Life & Making Strides Individual Fundraising •  Crowdrise (intermediary)

55

Creative Fundraising: Informational Sources

Crowdsourcing / Collaborative funding •  http://www.forbes.com/sites/chancebarnett/2013/05/08/top-10-crowdfunding-sites-for-

fundraising/ Lotteries •  http://nylottery.ny.gov/wps/portal/!ut/p/

c4/04_SB8K8xLLM9MSSzPy8xBz9CP0os_jggBC3kDBPE0MLC0dnA09vT0fLQDNvA0dfU_2CbEdFALm-TnU!/?PC_7_SPTFTVI4188AC0IKIA9Q6K0QS0_WCM_CONTEXT=/wps/wcm/connect/NYSL+Content+Library/NYSL+Internet+Site/About+Us/Mission+for+Education/Where+the+Money+Goes

Lottery bonds •  http://www.finweb.com/investing/what-is-a-lottery-bond.html#axzz33rqR6azi •  http://www.nsandi.com/savings-premium-bonds •  http://www.bloomberg.com/news/2012-04-16/lottery-securities-beating-aaa-provide-winning-

bet-muni-credit.html •  http://mi.savetowin.org/ •  http://www.d2dfund.org/files/publications/consumer-demand-prize-linked-savings.pdf Donation Matching •  http://www.rockefellerfoundation.org/grants/grants-and-grantees/

7163be20-0418-4e10-8158-38eb3979c2b2 •  http://www.philanthropyjournal.org/resources/fundraisinggiving/maximizing-matching-gifts •  https://doublethedonation.com/blog/2012/10/raising-money-from-volunteer-grant-programs-

seven-frequently-asked-questions/ Charity Walks •  http://www.livestrong.com/article/234033-how-to-organize-a-charity-walk/

56

Medicaid 1115 Waivers

57

Description

Medicaid 1115 waivers allow a state to use federal Medicaid funds in ways that are not otherwise allowed under federal rules, which can include broad changes in: •  Eligibility •  Benefits •  Cost sharing •  Provider payments •  Specific services and/or population coverage The waivers provide states an opportunity to test and implement coverage approaches that do not meet traditional federal program rules.

Investment Scale

Must be budget neutral (i.e., the demonstration cannot cost the federal government more than what would have otherwise been spent absent the demonstration)

Time to Implement

•  Set Up: Significant variation in the length of time it takes to get final approval of a waiver; state-dependent

•  Execution: Generally approved for 5 years, can be renewed for 3-year period

Section 1115 Medicaid Waivers: Overview

58

Waiver Approval •  States can and should discuss waiver ideas with CMS or submit concept papers

before submitting an application to increase likelihood of approval •  Engage the community - as part of the application process, states will need to show

CMS that they have held a meaningful comment period and that they have taken the comments they received into consideration when finalizing their waiver applications

•  Use the press to help publicize the waiver and its intended use. The press can help publicize the proposed changes and make sure that information on the comment process is widely available to the community

•  States can obtain comprehensive waivers to make broad changes in eligibility, benefits, or cost sharing; yet for “production of health” initiatives across a population it is recommended to explore a Section 1115A waiver: •  1115A waivers allow the Center for Medicare and Medicaid Innovation (CMMI) to

test, evaluate, and expand different service delivery and payment methodologies to foster patient-centered care, improve quality, and slow cost growth in Medicare, Medicaid, and CHIP

Section 1115 Medicaid Waiver: Success Criteria

59


Waiver Approval (continued) •  Local governments and stakeholders should work with state Medicaid leaders on the

complexity of starting up a local program to ensure approval and funding at the local level •  When policymakers look to Medicaid financing, they can be challenged by trying

to make a local model apply across a statewide program, but there are several federal options for states to use to provide services in limited geographic regions

60

Evaluation •  The Affordable Care Act now requires greater transparency and public notice in 1115

waiver approval and renewal process; communities should be mindful of and monitor these new rules to ensure successful evaluation of initiatives funded through these efforts

Execution •  Develop and leverage “integrators” - individuals or organizations that can bridge

Medicaid, public health, and child welfare to provide sustained leadership and champion progress

•  “Integrators” can navigate the different programmatic requirements, understand data, and still see the big picture in order to move positive systems change forward while implementing prevention initiatives



61

Background Rates of poorly controlled asthma among low-income children, particularly racial and ethnic minorities, remain disproportionately high in Boston area. Comprehensive asthma programs, including education, case management and home environmental interventions have reduced disparities but few sustainable payment models exist. Local stakeholders turned to Medicaid 1115 Waivers to finance interventions. Waiver Coverage The state utilized waivers to fund bundled pediatric asthma services for high-risk patients, including coverage of non-traditional home visits and interventions by community health workers

Section 1115 Medicaid Waiver: Case Study

Boston Community Asthma Initiative

62


Section 1115 Medicaid Waiver: Case Study

Boston Community Asthma Initiative (continued) Results •  80% reduction in the percent of patients with one or more asthma-related hospital

admission •  60% reduction in percent of patients with any asthma–related emergency department

visits •  41% reduction in the percent of patients with any missed school days. •  46% reduction in the percent of parents/caregivers with any missed work days •  For every $1 spent on the program, $1.46 is returned to society/insurers

63

Section 1115 Medicaid Waiver: Active Waivers (as of June 2011)

64

•  Need to have cooperation and buy-in at state and local levels to ensure waiver approval for limited geographical area or community

•  The federal government enforces budget neutrality by establishing a cap on federal funds over the life of the waiver, placing a state at risk for all waiver costs above the cap

•  There may be limitations to coverage and/or waiver approval for certain communities based on payor mix (i.e., if a low portion of residents are Medicaid-eligible)

Section 1115 Medicaid Waiver: Risks and Considerations


65

•  Kaiser Commission on Medicaid and the Uninsured: Five Key Questions and Answers About Section 1115 Medicaid Demonstration Waivers: http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8196.pdf

•  Myths, State Successes Overcoming Barriers and the Promise of Integrated Payment Models: http://www.nemours.org/content/dam/nemours/wwwv2/filebox/about/Medicaid_Funding_of_Community-Based_Prevention_Final.pdf

•  Boston Children’s Hospital Approach to Community Health: Using Programs to Achieve Systemic Change: http://healthyamericans.org/assets/files/TFAH2013HealthierAmericaXrpt07.pdf

•  Budget Neutrality Form: http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/Downloads/Interim1115-Budget-Neutrality-Form.pdf

•  How the ACA Makes the Section 1115 Waiver Process More Transparent: http://familiesusa.org/sites/default/files/product_documents/Section-1115-Waiver-Process.pdf

•  Transforming Population Health: Case Studies of Place-Based Approaches: http://www.nemours.org/content/dam/nemours/www/filebox/healthpro/advocacy/boston.pdf

Section 1115 Medicaid Waiver: Informational Sources

66

Social Impact Bonds

67

Description

An intermediary raises up-front capital from private investors to invest in a proven social impact intervention in expectation of the investor receiving a return if desired social outcomes are achieved. The intervention must generate savings for the government, or a payer, who will be responsible for repaying the investor if outcomes are achieved.

Investment Scale >$7M due to necessary scale and fixed costs

Time to Implement

Development stage = 1-2 years Implementation stage = 3-5 years (steps further detailed in next slide)

Social Impact Bonds: Overview

Source: Information based on informational conversations 68

Development Stage •  Stakeholders decide on issue that needs to be addressed •  Intermediary completes Request for Qualifications and,

subsequently, requests for proposals to identify qualified programs to meet social impact need

•  Stakeholders develop multi-year contract and schedule of repayment for payer to ensure repayment if outcomes are achieved

•  Investment firm creates bonds, which are offered to investors and social entrepreneurs

Implementation Stage

•  Capital is used for community intervention •  Independent evaluator assesses impact of intervention •  If intervention generates savings, portion given back to

investors and others used for additional interventions

Social Impact Bonds: Steps for Implementation

69


Social Impact Bonds: Steps for Implementation (continued)


http://www.socialfinanceus.org/sites/socialfinanceus.org/files/BAML%20SF_PFS%20Playbook.pdf 70

Requirements for Current Social Impact Bond Structure •  Outcomes must be clearly defined, achievable and measurable in an

acceptable time period •  Target population must be well-defined and sizable •  Proposed interventions should reflect best practices (research-tested and

evidence-based), should focus on prevention, and should be replicable/scalable

•  Outcomes must be independently validated •  Clearly defined savings or return value should be established •  Savings must go above and beyond cost of intervention •  Public agencies, nonprofits, investors and community stakeholders must

all be willing to work together

Return Requirements •  Variable based on type of investors, riskiness of project •  Return based on conversations = 5% - 15% on an annualized basis

Social Impact Bonds: Success Criteria

71

Players •  Investor = Goldman Sachs Urban Investment Group

•  Guarantor = Bloomberg Philanthropies •  Intermediary = MDRC •  Program Operator = Osborne Association and Friends of Island Academy •  Intervention = Adolescent Behavioral Learning Experience (ABLE) Program •  Target Population = 16-18 year old youth at Rikers Island •  Independent Evaluator = Vera Institute of Justice

•  Evaluation Payer = Mayor’s Fund to Advance NYC •  Payer = City of New York

Logistics •  Goldman Sachs Urban Investment Group invested $9.6M to MDRC to operate

the ABLE program at Rikers Island, backed by a guarantee of $7.2 from Bloomberg Philanthropies

•  MDRC set up financial arrangements, selected intervention/provider, trained staff, piloted intervention, monitored implementation and served as primary liaison

•  NYC repays Goldman Sachs based on repayment schedule (on following page)

•  Goldman Sachs has limited downside as the most they can lose is $2.4M ($9.6 - $7.2) if outcomes are not achieves

Social Impact Bonds Case Study: NYC Recidivism

http://www.mdrc.org/key-partners-nycs-social-impact-bond

72



$9.6M

+ $7.2M

50% of teenagers released returned within 1 year

Social Impact Bonds Case Study: NYC Recidivism (continued)

73

Risks •  Time of implementation may be too long •  Evaluation methodology may be non-existent or difficult to implement •  Data may be difficult to collect •  Competition goals and initiatives may not be targeted enough, as collective

impact social impact bonds have not been structured at this time •  Ever changing healthcare field may make it hard for investors to feel

comfortable investing •  Legal/political implications may add additional risks – investors fear

governments inability to pay as representatives change and through election cycles

Considerations •  Likely need for a foundation to guarantee the loan, as investors are still

concerned with riskiness of projects •  May need to get up-front funding from another source to reduce the risk for

the investor •  Significant fixed costs to get the project up and running may be a reason to

try and do several social impact bonds and combine administrative functions •  Possibility of using payer outside of government (e.g., insurer, employer) •  If Medicaid is used as a payer, will need to think through state/federal/local

budgeting and who is ultimately accountable

Social Impact Bonds: Risks and Considerations

74

Investors Bank of America/Merrill Lynch Goldman Sachs Urban Investment Group J.P. Morgan Social Finance Intermediaries Social Finance Third Sector Capital Partners Instiglio Payers Medicaid Employer Insurer Public Health Funding

Foundations Robin Hood Foundation Rockefeller Foundation Kresge Foundation Laura and John Arnold Foundation Other Social Impact Bond Technical Assistance Lab Federal Reserve Bank of San Francisco Nonprofit Finance Fund Living Cities

Social Impact Bonds: Potential Partners

75

•  Social Finance: SIB Playbook http://www.socialfinanceus.org/sites/socialfinanceus.org/files/BAML%20SF_PFS%20Playbook.pdf

•  Discussion About Requirements •  http://www.americanprogress.org/issues/open-government/

report/2014/03/03/85106/networking-for-success/ •  Payforsuccess.org •  McKinsey Report on Social Impact Bonds

http://mckinseyonsociety.com/downloads/reports/Social-Innovation/McKinsey_Social_Impact_Bonds_Report.pdf

Social Impact Bonds: Informational Sources


76

Wellness Trusts

77

Description

A pool of money set aside for the purpose of promoting and supporting health production initiatives. The pool of funds contributing to the Trust can be found through taxation (e.g., on hospitals, insurers, people), private foundation resources, or redirection of existing government funding.

Investment Scale $0 – $60M

Time to Implement

Ranges; may require significant upfront time to establish necessary regulatory and legal structures

Wellness Trusts: Overview

78

Wellness Trusts: Illustrative Structure

79

Garnering External Support to Pass Law (as utilized by state of Massachusetts) •  Several events: press conferences, rallies, lobby days •  Series of “mini-lobby days” to educate/engage Reps and Senators •  Open letter to legislators from civic leaders – over 300 signatures •  Earned media, including event coverage, LTEs, and Op-Eds (including

from mayors) •  Organized support in key districts •  Broad set of allies: faith groups, mayors, business

Wellness Trust: Success Criteria


80

Criteria for Prevention Initiatives Financed from Trust

•  Sustainable – unlikely to be diverted to other uses •  Sufficient to impact healthcare costs and population health (e.g., not

mini-grants) •  Logical link between funding sources and cost savings •  Administrative simplicity •  Politically viable

Criteria for Partnership Initiative for Funding

•  Demonstrated history of past collaboration •  Defined roles and responsibilities for each organization •  Clearly defined process for decision making •  Agreement on preliminary milestones and timelines for capacity building

phase •  Budgets demonstrate equitable funding distribution among partners



81

Execution

•  Initiative champions from state and local level •  Foundation of advocates with credibility and relationships in health care

policy and public health •  Active conversations with private sector of employers, especially hospitals

and insurers •  Mix of short to long term investments in the trust •  Performance measures should be relevant to community

Evaluation

•  Assessment should analyze health improvements, job creation, improvement in education programs, impact on physical environment

•  Performance measures should be relevant to community •  Coordinate cross-site evaluation with outside evaluator •  Utilize a data system that connects community and clinical data


82

Type Source Requirements Contact

Grant Example: CDC: Community Transformation Grants – Small Communities

•  Must support area with < 500k citizens

•  Must support the five "Strategic Directions" from the National Prevention Strategy: 1) tobacco-free living, 2) active living and healthy eating, 3) high-impact quality clinical and community preventive services, 4) social and emotional wellness, and 5) healthy and safe physical environments

CDC, Division of Community Health http://www.cdc.gov/nccdphp/dch/programs/communitytransformation/small-communities/index.htm

Taxation Hospitals •  May not require a financial

return in taxed or if funds are redirected

Taxation Heath Plans

Taxation Employers

Wellness Trust: Sources of Capital

83

Overview The Prevention & Wellness Trust Fund will invest $60 million over 4 years in evidence-based community prevention activities, with the goal of reducing costly preventable health conditions. The majority of funds will be awarded through competitive grants.

Details of Funding & Distribution •  $60M over 4 years for Trust •  Sourced from a tax on insurers and assessment on large hospitals:

•  Assessment on Health Plans •  Assessment on Acute Hospitals with > $1B in net assets •  < 50% revenue generate by public payers

•  The Department of Public Health (DPH), in consultation with a new Wellness and Prevention Advisory Board, administers the funds

•  The Trust awards money in the form of grants to fund specific initiatives •  10% of funds used for credits to employers to set up wellness programs •  Health insurers provide premium discounts to small businesses that launch wellness

programs

Wellness Trust: Case Study

Massachusetts Prevention and Wellness Trust

84

Funding Activities •  Oversight board created to document most prevalent health conditions in state and to

identify evidence based interventions •  A minimum of 75% of funds must be spent on competitive grants to:

•  Reduce rates of the state’s most costly preventable health conditions •  Reduce health disparities •  Increase healthy behaviors •  Increase the adoption of workplace-based wellness programs •  Develop a stronger evidence-base of effective prevention programs

Evaluation •  20-person Commission created to monitor impact and effectiveness •  Use of an outside organization to conduct evaluation

Financial Outcome •  Identified Outcome Measures were created by Advisory Board •  Goal = budget neutral


Massachusetts Prevention and Wellness Trust (continued)

85


Massachusetts Wellness Trust (continued)

86

•  Instituting the Wellness Trust within a community requires extensive legal and regulatory changes; buy-in from government across multiple levels is required

•  Taxation must be across several different stakeholders to ensure one insurer, employer, etc. is not disproportionately affected

•  There may be difficulty in proving short term results due to the lag in data for results from various preventative care measures in communities

Wellness Trust: Risks and Considerations

87

•  Fact Sheet: The Massachusetts Prevention and Wellness Trust Fund: http://www.mphaweb.org/documents/PrevandWellnessTrustFund-MPHAFactSheetupdatedOct12.pdf

•  Massachusetts Prevention and Wellness Trust Fund: http://www.healthpolicyohio.org/wp-content/uploads/2014/02/OWPNribble_mpha_june_24_2013_collaborative_meeting_presentation.pdf

•  Massachusetts Prevention and Wellness Trust: An Innovative Approach to Prevention as a Component of Health Care Reform: http://www.northeastern.edu/iuhrp/wp-content/uploads/2013/12/PreventionTrustFinalReport.pdf

•  A Wellness Trust to Prioritize Disease Prevention: http://www.brookings.edu/~/media/research/files/papers/2007/4/useconomics%20lambrew/04useconomics_lambrew.pdf

Wellness Trust: Informational Sources

88

kin challenge: funding roadmap · 2015-04-01 · aca requires non-profit hospitals to engage in the...

Documents