Governments can use Pay for Success to more effectively steer taxpayer dollars to social service interventions that have measurable results for people, helping them to improve their life outcomes.
Why Governments are Pursuing Pay for Success
Pay for Success protects taxpayer dollars by ensuring government only pays for services when a project achieves positive outcomes.
Pay for Success drives resources toward effective, preventative services that reduce the need for costly remedial services down the line.
Impact investors, who provide the upfront capital for Pay for Success projects, take on the performance risk that the social service intervention will not meet its goals.
Pay for Success encourages social service innovations and public-private collaboration between government, social service providers and impact investors.
Government Steps to Pay for Success
- Determine policy priority: Governments can assess social need and find topics that would fit for Pay for Success financing through a Request for Information (RFI), or by partnering with a Pay for Success intermediary to do a landscape or feasibility study.
- Procure Pay for Success partners: Government-led Pay for Success projects at the state, city, and county level formally begin with a competitive procurement for a Pay for Success intermediary, a service provider, or both, through a Request for Proposals (RFP).
- Project development: Key early steps involve accessing data. Government works with Social Finance to determine which data is needed for both a baseline assessment and ongoing program evaluation, and makes that data available to its Pay for Success partners. For more on our services, visit our What We Do page.
- Pay for Success agreement: Government contracts with the intermediary and/or service provider and/or evaluator to establish the services to be provided, the performance metrics, governance structure and pay for success payment triggers and amounts.
- Project launch: After the Pay for Success agreement is signed, Social Finance mobilizes capital to support the project, and services launch. Government participates in performance management and pays only if the project achieves target impact.