Caroline Whistler: Dividends for Doing Good

Third Sector Capital Partners, Inc.

Caroline Whistler, 29
Co-Founder and Co-President
Third Sector Capital Partners
San Francisco

Caroline Whistler’s time studying nonprofits in Brazil reinforced something she learned working at the Nonprofit Finance Fund: Philanthropy is a drop in the bucket compared to government funds.

That realization is a big part of why she returned to the United States in 2011 to help found Third Sector Capital Partners, a nonprofit that helps government agencies, charities, and other entities develop social-impact bonds.

She played a leading role in establishing two of the seven U.S. pay-for-success projects now in operation: an effort in Cuyahoga County, Ohio, to reduce the number of children in homeless families who enter the foster-care system and a program in Santa Clara County, Calif., to provide housing support to chronically homeless people and reduce their use of expensive services like emergency rooms.

The financing portion of such deals has gotten the lion’s share of attention. Private investors pay for a social program that has performance goals. If an independent evaluator certifies that the program has met the goals, government repays the investors’ principal and — depending on how good the results are — may provide an additional return.

But Ms. Whistler says the real potential for transformation is in persuading governments to tie funding to results for people in need: “It allows government to step back and say, ‘Wait, what do we really want to achieve?’ ”