Five things you should know about Tracy Palandjian

Tracy Palandjian is chief executive of Social Finance Inc., a private nonprofit she cofounded seven years ago in Boston. It introduced a pay-for-success financing model that uses private investment to pay for nonprofit social service projects that address challenges such as opioid addiction, job training for immigrants, and inmates making the transition from prison to freedom. Investors get reimbursed, with a profit, only if the programs meet target results. Since the launch of the pay-for-success model, it has funded 18 projects across the country, tapping into $200 million in capital. Social Finance has been involved in six of those projects. Palandjian, 46, spoke recently about becoming an accidental entrepreneur, and why she leaves extreme sports to her husband and three teenage daughters.

1. A former consultant at Parthenon Group, Wellington Management Co., and McKinsey & Co., Palandjian left the private sector at the end of 2010 “to do something kind of crazy.” She launched Social Finance in the United States after finding out about Social Finance UK, which pioneered the concept in England. It was a risk — the country was only starting to emerge from the recession and Palandjian was abandoning the stability and predictability of the private sector.

“I grew up in Hong Kong and, because I grew up in a fairly traditional Chinese household, I was always told to be practical and to go get a job and be useful in life and provide for your family. So I had been on a fairly predictable track my whole life. But something was always missing. I thought, ‘Wouldn’t it be great to do something that has an impact outside of myself?’ This opportunity presented itself and I decided to, I guess, jump into the ocean and embrace it. And it was super risky because nothing in my life had prepared me to be an entrepreneur. I had never started anything in my life. It was very daunting, and so I’m very pleased to report that after seven years we have not only built a firm that is fairly viable and we’re thriving, but we’ve also built a brand new field from scratch.”

2. The pay-for-success approach resonated with federal, state, and local government officials who have to stretch limited funds for social programs. Although a risky proposition, some investors have embraced the chance to practice “impact investing” by taking on social challenges. The Social Finance model has grown to 90 projects in 18 countries.

“The social safety net is getting more and more challenged. In this greatest time of technological innovation and wealth creation, we also have the greatest gaps and the greatest chasm between the most lucky folks and the must unlucky, vulnerable folks, so we have a real opportunity to seize the moment. Investors have also embraced it because they know they need to put their capital to work, not just to make money and create a financial return, but to make a positive impact in the world.”

3. Being exposed to social crises through Social Finance has been “incredibly humbling” for Palandjian who said she was lucky to be able to pursue whatever path she wanted.

“Access to opportunity is a constant theme of the kinds of projects that I personally get attracted to. What we do here is so deeply cross-sector and cross-discipline it reminds me of that old African proverb, ‘If you want to go fast, go alone. If you want to go far, go with others.’ And what we do is about setting the table and bringing everyone to the table over long periods of time to solve these very, very gnarly social problems. It’s been incredibly rewarding; it’s the hardest work I’ve ever done in my life. I’ve learned a lot.”

4. As a teenager in Hong Kong in the 1980s, Palandjian got her first job at 17 just so she could have spending money to hang out with her friends. The work, however, left much to be desired.

“I did not grow up in this country so the idea of working at your local ice cream store, that just doesn’t exist in Hong Kong. Selling lemonade, they don’t do that in a dense urban environment. My first job was in high school and I worked at an architect’s office just filing stuff. Oh my God, just like, filing. I actually wanted to become an architect when I was young — clearly I’m an architect of another type now — and I was doing mindless work.”

5. Growing up, Palandjian’s hobbies included Chinese watercolor painting and calligraphy, but she said she doesn’t really have any hobbies now. While her husband and three teenage daughters enjoy sporting activities, Palandjian prefers calmer adventures.

“This is going to sound really boring, but I like to read and do yoga. The rest of my family, they like to do extreme sports — they go mountain biking, my husband and my eldest daughter, and I don’t do any of that stuff. They go on century rides. They’ll say, ‘Let’s ride to Provincetown and take the ferry back!’ and I’m like, ‘Great, I’ll pick you up from the ferry.’”

Correction: An earlier version of this story misstated the number of pay-for-success projects involving Social Finance.

Katheleen Conti can be reached at Follow her on Twitter @GlobeKConti.

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