Goldman Sachs urban investment group and the J.B. & M.K. Pritzker Family Foundation is making an initial $1.0 million loan to United Way of Salt Lake, which they will use to allow an additional 600 low-income children to attend Granite School District preschools, according to a July 16 report on The Salt Lake Tribune news site. This fact sheet details of the results-based financing scheme, also known as pay-for-success or social impact bond:
Believing greater access to preschool for low-income kids results in their reduced usage of expensive elementary school special education services. According to a New York Times Dealbook post, "[t]he loans carry an interest rate of 5 percent, which is paid along with the principal if the program is successful. In the best case, Goldman and Mr. Pritzker would make additional 'success fees.'” According to the fact sheet above, "[i]f the preschool program does not result in increased school readiness and decreased use of special education services, then there is no obligation on the part of United Way or other public funding sources to repay the loan."