What is Pay for Success?

Pay for Success (PFS) is an innovative contracting model that drives government resources toward high-performing social programs. PFS contracts track the effectiveness of programs over time to ensure that funding is directed toward programs that succeed in measurably improving the lives of people most in need.

How Pay for Success Works

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1. GOVERNMENT identifies a critical social issue with historically poor outcomes such as recidivism, chronic homelessness, or early childhood education.

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2. PRIVATE FUNDERS such as foundations, banks and businesses, provide upfront capital to a high-performing social service provider that is helping a specific at-risk target population.

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3. SERVICE PROVIDERS deliver services to key at-risk communities, in an effort to reach or exceed predetermined outcomes for success.

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4. EVALUATORS rigorously measures outcomes to ensure providers achieve impact.

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5. GOVERNMENT repays private funder’s initial investments only if project is successful in achieving positive outcomes.

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6. PROJECT MANAGER conducts, facilitates, and advises the overall process. The project manager is sometimes called the Intermediary or Technical Assistance Advisor (like Third Sector).

Before the Pay for Success contract, some of our programs and staff were bogged down with complying with the terms of grants and contracts. Now, we have more flexibility. Pay for Success allows us to focus our work solely on achieving outcomes for the families we serve.

–ERIC MORSE: Chief Operating Officer of FrontLine Services

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Pay for Success Helps Provide:

Individuals

with the high-quality supportive services that they need to thrive.

Providers

with flexible funding for outcomes-focused service delivery.

Governments

with preventative services that lead to better outcomes in the long term.

Taxpayers

with confidence that public resources are directed toward proven programs.

Funders

with a new way to support programs with both financial and social returns.
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Pay for Success Works Across Issue Areas:

Recidivism

In Massachusetts, a Pay for Success contract is leveraging up to $27 million in government resources towards education and employment programming for hundreds of at-risk youth.

Homelessness

An $8 million Pay for Success contract is delivering evidence-based permanent supportive housing services to up to 200 chronically homeless individuals in Santa Clara County, California.

Workforce Development

Year Up worked with Third Sector to explore how Pay For Success can scale its Professional Training Corps Model for workforce development across multiple jurisdictions

Child Welfare

In Ohio, Pay for Success is funding intensive treatments for 135 families in Cuyahoga County to reduce the length of stay in out-of-home foster care for children whose familes are homeless.

Health

In California, Alameda County is exploring how Pay for Success can expand asthma prevention and management programs to about 45,000 children suffering from active pediatric asthma.

Education

The City of Las Vegas and Clark County are partnering with the State of Nevada to determine how Pay for Success can create innovative strategies to improve social outcomes in early childhood education.

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