Pay for Success

In August of 2012, former New York Mayor Michael Bloomberg announced a project through which his foundation and Goldman Sachs would pay for a project aimed at lowering the recidivism of adolescent males incarcerated at Rikers Island, New York’s massive and potentially doomed prison-plex.

Connecticut has announced it is underway with a pay-for-success venture that will reward private funders if they are successful in using a substance abuse treatment model to curb re-referrals to, and out-of-home placements made by, child protective services.

The National Council on Crime and Delinquency (NCCD) already has an iron in the pay-for-success (PFS) fire in San Diego where it is working with The Children’s Initiative on a plan to provide county-wide alternatives to detention.

Patrick Lester, who for years headed the public policy shop for the Alliance for Strong Families and Communities, now leads the Social Innovation Research Center. He’s pretty much a one-man show there as he builds the organization, and he has primarily focused the center’s attention on pay-for-success and social impact bonds.

The potential for Pay-for-Success (PFS) models in the human services field has captured the attention of the federal government, foundations and social impact investors. But two years after America’s pioneer PFS projects began, there are fewer than 10 ventures being implemented.

There are dozens of potential pay-for-success (PFS) ventures that are being gauged for feasibility, or have moved into a planning stage. But few of these projects, in which funders assume risk and taxpayers only pay if certain benchmarks are met, have actually gotten off the ground.

The Nonprofit Finance Fund has announced five sub-grantees that will receive technical assistance to develop Pay for Success (PFS) projects nationwide.

The University of Utah’s Policy Innovation Lab in the James Lee Sorenson Global Impact Investing Center has announced the selection of six government agencies to participate in Pay for Success initiatives in Colorado, Utah, Idaho, Montana and Nevada.

The Corporation for National and Community Service (CNCS) has released a list of grantees that will work on pay-for-success projects with the lead entities selected by the agency last year. Pay-for-success (PFS) projects shift the burden of social investment off the government and onto private investors.