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Pay for Success

High demand for public resources often leaves service providers struggling to deliver a broad range of health, education, and social services that truly make positive change. At the same time, public and private funders require evidence to show that investing in such services achieves intended benefits and outcomes. AIR is applying the Pay for Success model to address these challenges in communities around the country. The model brings together investors with local, state, and federal government agencies to fund and improve services. For example, a local company or community investor might fund programs to reduce homelessness or strengthen literacy among young children.

Connecting upfront funding to specific program outcomes requires independent evaluators to determine whether the outcomes have been met. If these services deliver their intended results (e.g., reducing homelessness, improved student literacy), the government then reimburses investors for the cost of the service, along with a modest return on their investment (typically 1-2% of the overall investment). In this design, the investors bear the initial cost of services and take the risk of not being reimbursed, should the service not produce the intended outcomes, as measured by the evaluators. Typically, an intermediary organization may provide technical assistance to the service agencies, strengthening their capacities to deliver evidence-based programs and strategies to achieve outcomes.

Why would investors take that risk? Because improving these near-term outcomes (for example, greater literacy in pre- Kindergarten through 3rd grade) may achieve important effects on the broader social and public sectors (e.g., increased earnings, greater consumer buying power, and decreased reliance on government safety nets).

Currently, there are more than 60 Pay for Success projects at various stages of operation worldwide with 17 of these being implemented in the United States since 2012.

More about our work related to the Pay for Success/Social Impact Bonds model >>

Highlights of AIR's Work

24 May 2019
Brief

Service Provider Readiness in Pay for Success Initiatives

Initial Pay for Success (PFS) projects emphasized the selection of provider organizations with sufficient expertise and experience as well as an administrative capacity to support scale-up of adopted interventions. A number of questions emerge about readiness in PFS, which we address in these briefs.
Project

Project (re)LAUNCH: San Diego Veterans Employment Pay for Success Initiative

The transition back to civilian life is difficult for many veterans. Often times, military training does not directly translate to civilian skills and available jobs back home. Addressing these challenges is the central aim of the San Diego Veterans Employment Pay for Success Initiative, Project (re)LAUNCH, a partnership of the San Diego Workforce Partnership; Third Sector Capital Partners, Inc.; 2-1-1 San Diego; and AIR.
Project

National Capital Region Pay for Success Demonstration Project for Permanent Supportive Housing

Pay for Success models bring together investors with local, state, and federal government agencies to fund and improve education, health, and social services. For the U.S. Department of Housing and Urban Development and the U.S. Department of Justice, AIR is testing a PFS model in Maryland to support people experiencing chronic homelessness in Montgomery and Prince George’s Counties.
Project

Readiness and Capacity-Building Toolkit for Pay for Success Investments

A major challenge in the growth of the Pay for Success model, which brings together investors with government agencies to fund and improve services in the community, is effective assessment of provider capacity. AIR is creating an organizational readiness toolkit, which is informed by a synthesis of the current literature on PFS and implementation science, as well as interviews with leading intermediary organizations and their community partners.
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Barbara Broman

Barbara Broman

Managing Director

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