Temporary Assistance for Needy Families (TANF), the cash assistance and other services program for poor families with children, was reauthorized by the House for another year with little change. The TANF extension was attached to the Social Impact Partnerships to Pay for Results Act (H.R. 5170), a bill to create poverty-related demonstration projects through a funding mechanism called social impact bonds. With the House passage, the bill moves to the Senate, where Senators Hatch (R-UT) and Bennet (D-CO) have co-sponsored companion social impact bond legislation.
The bill would take up to $100 million from the $608 million TANF Contingency Fund to pay part of the cost of the demonstration projects. In this model, states or localities, possibly partnering with a private foundation or other “investor,” would apply to carry out a demonstration project with the goal of reducing poverty and related problems. The project would have to promise to save federal dollars because of its successes in reducing the use of federal benefits. The federal government would only pay a share of the cost if the project achieved its goal and produced net savings. If the program’s goals were met, a private sector entity that made the initial investment would see a return on its funding.

Before going to the floor, an amendment by Representative McDermott (D-WA) was accepted which requires that half the funding made available through the social impact bonds be spent on children’s services/programs.

Views differ as to the effectiveness of social impact bonds. The House appears to hope the bill will see action in the Senate with TANF’s extension attached.

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