Last week, I traveled to Dallas, Texas to speak about the Massachusetts Pathways to Economic Advancement Pay for Success Project at the “Investing in What Matters” conference, hosted by the Nonprofit Finance Fund (NFF) and the Federal Reserve Bank of Dallas. The gathering brought together social innovation thought leaders to discuss themes shared in NFF’s 2017 publication, “What Matters: Investing in Results.”
Social Finance contributed two chapters to book. In the first, Financing Outcomes Through Social Impact Bonds, we highlight the structure of Pay for Success (also known as Social Impact Bonds) and why its unique structure creates a risk transfer and incentive alignment that can transform solutions to entrenched problems. Our second chapter, Outcomes Rate Cards: A Path to Paying for Success at Scale, co-authored with Andrew Levitt at Bridges Fund Management, introduces a Outcomes Rate Cards as a way to develop outcomes-aligned projects faster, scaling more successful programs more quickly.
In my talk at the “Investing in What Matters” conference, I highlighted the transformative scale that Pay for Success can provide for effective non-profits by bringing together three uncommon partners — impact investors, government payors, and nonprofit service providers — through the lens of our Massachusetts Pathways project. Thought leaders like Michael Sorrell, President of Paul Quinn College, the first federally-recognized urban work college, and Chad Houser, CEO of Café Momentum, an urban café providing post-release employment for kids coming out of juvenile detention, spoke about how their organizations demonstrate impact — for their students, employees, their families, and the community. The conference was a reminder of the great variety and number of participants building momentum for the evidence and results-based field.
Social Finance mobilizes investor capital to tackle seeming intractable social issues through Pay for Success and outcomes-based financing mechanisms. Through the Massachusetts Pathways to Economic Advancement Pay for Success Project, Jewish Vocational Service, or JVS, is expanding career horizons for immigrants and refugees by offering a variety of programs that combine English learning classes with workforce readiness, skills training and job development. Through this project, JVS is scaling their program to reach 2,000 more immigrants and refugees in the Greater Boston area, allowing these adult learners to make successful transitions to employment, higher wage jobs, and higher education.
Social Finance raised $12.4 million from over 40 impact investors to support this expansion of JVS’s services. The Commonwealth of Massachusetts will make up to $15 million in outcomes payments if certain outcomes, focused on higher wages and participation in higher education programs, are achieved.
The Massachusetts project is the first Pay for Success project in the U.S. to focus exclusively on workforce development — and it is a model that we hope to expand to other communities. Reflecting on the conference, it becomes clear how much appetite there is across the government, philanthropic, investor and service provider sectors for outcomes-focused initiatives to grow. As the field develops, there is a bright future to build on the momentum that I saw in my peers and colleagues and continue to build and expand evidence-based practices in Texas, the southwest, and across the country.