Press Release: $11.67 Million Federal Grant Awarded to Third Sector Led Project

Massachusetts Awarded $11.67 Million U.S. Department of Labor Grant for Pay for Success Project Led by Third Sector Capital Partners

Massachusetts has been awarded an $11.67 million grant from the U.S. Department of Labor that will expand the Commonwealth’s Social Innovation Financing project by providing additional success payments tied to increases in employment and reductions in recidivism. Third Sector Capital Partners is the project intermediary for this juvenile justice project, in partnership with New Profit Inc.

“The Department of Labor’s grant award represents an important endorsement of the quality of the Commonwealth’s juvenile justice project and is a validation of the potential for Pay for Success initiatives to accelerate America’s transition to a performance-driven social sector,” said Third Sector Capital Partners CEO and Co-Founder George Overholser.

Massachusetts and Third Sector Capital Partners are partnering with the service provider Roca to support young men aging out of the juvenile justice and probation systems. The project is designed with the specific goal of reducing recidivism and improving education and employment outcomes over several years for more than 750 youth who exit the juvenile justice system, and the several thousand who exit the probation system annually. The U.S Department of Labor Grant will allow the Commonwealth to serve nearly 400 additional at-risk youth over the course of the project.

“This grant will allow the Commonwealth to expand the scope of our Social Innovation Financing juvenile justice project aimed at helping to put at-risk youth on a path to success,” said Secretary of Administration and Finance Glen Shor. “Through this innovative, results-oriented project, we can achieve better outcomes while stretching every taxpayer dollar as far as possible.”

Pay for Success has emerged as an innovative procurement mechanism that increases investments in effective social interventions by focusing on results and outcomes and changing the way government allocates and invests its resources. Under Pay for Success, philanthropic funders and commercial investors pay the initial cost for providing a social service, and are reimbursed by the government only if the service provider achieves a predetermined set of outcomes. This new mechanism creates savings for government while scaling social programs with demonstrable impact.

"The Pay for Success model is a promising strategy for expanding effective programs while ensuring maximum return on taxpayer dollars," said Secretary of Labor Thomas E. Perez. "At a time when all levels of government are experiencing cutbacks, Pay for Success offers a new approach to strategically leverage resources to provide essential services for vulnerable populations through programs with measurable success rates."

Third Sector Capital Partners is a nonprofit organization with offices in Boston and San Francisco whose mission is to accelerate America’s transition to a performance-driven social sector. Third Sector advises governments, service providers and investors across the country in the development and implementation of PFS projects. Third Sector has been selected as the intermediary for two PFS contracts in Massachusetts, and is also advising Cuyahoga County, OH on PFS. Recognized experts in the PFS field, Third Sectors’ team has been published by the Economist, New York Times, Wall Street Journal and Federal Reserve Bank of San Francisco and has presented at the White House, Harvard Business School, and international events like the Social Capital Markets Conference.

Governor of Massachusetts Press Release
U.S. Department of Labor Press Release