Pay for Success sounds straightforward, but getting it right may take a while

Source: Margaret J. Krauss, NewsWorks, October 6 2016

… Pay for Success contracts are a fairly new idea. The first U.S. program launched in New York in 2012. They’re also known as social impact bonds.  Whatever you call them, a Pay for Success contract is essentially a loan from the private sector to government in service of the public good. Pennsylvania identified five areas of focus: early childhood care and education; education, workforce preparedness, and employment; public safety; health and human services; and long-term living and home- and community-based services. … Theoretically, though, everyone wins: service providers have long-term commitments from funders to do good work; funders get to invest their money in programs they believe in; the government saves money and serves people in need; and people in need get tangible, effective help. And all of the decisionmaking relies on evidence.  While it’s good to reward effective work, particularly since budgets are limited and lots of people need help, proving that societal change translates into financial savings every time can be tricky. In an article for the Stanford Social Innovation Review, V. Kasturi Rangan and Lisa A. Chase write that Pay for Success could be detrimental to the very populations that governments, funders, and service providers are trying to help. … It will be a while until Pennsylvania can gauge the success of Pay for Success. But the state, as well as the Harvard Kennedy School, the Corporation for National and Community Service Social Innovation Fund and the Pritzker Children’s Initiative, has invested a lot of time in trying to get this first round right: design and development for the two programs has been ongoing since January 2016. …