Pay for Success

“I see impact investing and philanthropy on a spectrum,” says Dwight Poler. “Impact investing works well providing proof-points to other funders willing to pay for delivered results, such as a government entity seeking more effective social services or employers with a vested interest in job training. But many important needs lend themselves more to pure philanthropic funding, such as early stage innovation or areas where the social benefit is not easily quantified or otherwise supported.”

Dwight Poler, from The Problem Solver interviews featured in the Boston Foundation 2017 Annual Report

For Dwight Poler, whose family has a Donor Advised Fund at the Boston Foundation, philanthropy is not the only tool for solving Boston’s problems.

While a Managing Director at Bain Capital, Poler cofounded a social investment model in London called the Private Equity Foundation (PEF). Bain, alongside other private equity firms, invested funds and pro bono skills through PEF into charities that help disadvantaged young people achieve education and employment, including a social impact bond which generates returns to investors from the British government if the outcomes are realized. 

When the Boston Foundation approached Poler about investing in Pay for Success, he was immediately interested. Like PEF, it’s a program that otherwise might not be supported due to tight public funding. Through Jewish Vocational Service, some 2,000 Greater Boston immigrants receive vocational English-language lessons. 

If they learn English and move on to higher salaries within three years, the investors will get their money back—and possibly a profit—from the state.  Poler thinks that this kind of “impact investing” can attract a new class of investors. “I’ve started to see some social investments that truly are generating market-level returns,” he explains. When it comes to returns on his family’s fund, he says the Foundation “not only identifies impactful projects worth supporting, it also offers the best asset managers available.” 

He’s planning to focus more on philanthropic investing going forward. “I am most interested in structural innovations around economic self-empowerment. Contributing to projects that catalyze job creation and a source of funds that doesn’t remain donor-dependent is very exciting.”