Press Release: Santa Clara County Hires Third Sector

Santa Clara County Hires Third Sector to Construct and Implement Pay for Success Pilot Project 

Santa Clara County’s Board of Supervisors voted unanimously on August 27, 2013 to advance the County’s pursuit of Pay for Success (PFS). The Board’s vote allocated $75,000 in funding for Third Sector Capital Partners (Third Sector). The Sobrato Family Foundation and the Silicon Valley Community Foundation will match the County’s support.

The County's funding is an important evolution in the PFS field and demonstrates government's increasing interest in providing financial support for PFS exploration and project construction.

After the meeting, Gary Graves, the Chief Operating Officer of the County, said “Pay for Success is an exciting opportunity to demonstrably improve the lives of our most vulnerable citizens while transforming the County's approach to procuring social services. Third Sector's expertise has been invaluable over the past six months, and we look forward to their guidance as the County pursues this next phase of work.”

Since December 2012, Third Sector has worked with Santa Clara County to assess the feasibility of PFS and has engaged government officials, community-based service providers, and local philanthropists and investors as part of an extensive landscape analysis. The results of the feasibility assessment and landscape analysis revealed significant potential for a PFS project. The County’s funding will support Third Sector’s continued work with County staff to advance service provider(s) selection, evaluation, contracting, and fundraising in the areas of homelessness and mental health.

“Third Sector is eager to continue our work towards launching a Pay for Success project. We are grateful for the financial commitments made by the County, Sobrato Family Foundation, and Silicon Valley Community Foundation to support the feasibility work necessary to create a project that generates real benefits for the County and its residents,” said Caroline Whistler, Co-Founder and Partner.

Santa Clara County’s pursuit of PFS has been spearheaded by Catholic Charities of Silicon Valley and Step Up Silicon Valley. With support from a Disruptive Innovation grant from the Health Trust, Step Up Silicon Valley initially engaged Third Sector to undertake a feasibility assessment of Santa Clara’s preparedness for this innovative initiative.

Pay for Success (also referred to as Social Impact Bonds) 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 PFS, 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.

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.