At the heart of a Pay for Success project are the participants: people and communities in need who could benefit from access to more effective services. However, Pay for Success projects or Social Impact Bonds are only valuable in specific circumstances. For Pay for Success projects to be successful, the following conditions must be in place:
Pay for Success projects need committed government leadership with the will and ability to champion the project and pay for positive outcomes.
At the core of a Pay for Success project is a social program with a strong track record of demonstrated positive outcomes for participants.
Pay for Success projects need service providers that deliver effective intervention(s), have the capacity to scale services successfully and embrace data and performance metrics.
The total value of the project, meaning broad community benefit as well as direct economic benefit, must exceed the project’s costs.
Robust data are needed to define a specific target population and identity outcomes that can be quantified and measured within a reasonable investment timeframe.
The project participants—whose wellbeing is the ultimate concern of a Pay for Success project—must be protected against any unintended consequences.