Pay for success investing in what works pre-convening session-final
Pay for Success 101 Jitinder KohliCenter for American Progress – Doing What Works White House Convening October 21st 2011
Traditional financing Government Government Government Government agency 1 agency 2 agency 3 agency 4 Helping ex‐ Drug Housing Restorative offenders treatment support justice into work program $20m $8m $14m $5mProvider Provider Provider Provider Provider Provider Provider Provider
Some issues• Funding inputs• Hard to know what is working• Even harder to shift money between programs• Bureaucratic reporting and controls• Effective approaches rarely scale
Pay for Success Bonds Government Investors fund dealmaker agencyDealmaker promises return to investors if Dealmaker Govt makes successful promises to payment if achieve outcome Investor 1 outcome achievedInvestor 2 Dealmaker Dealmaker manages and funds providersInvestor 3 Providers work with Provider 1 Provider 2 Provider 3 beneficiary population and report progress to dealmaker Beneficiary population
Challenges• Complex• Cannot work for everything – Measurability – Non essential services – Outcomes need to flow in sensible timeframe• Requires political courage – Flexibility for dealmaker/providers on the ‘how’ – Possibility of private sector return – Potentially getting beyond silos
Advantages• Allows successful social innovations to scale• Removes input controls from providers• Public money only allocated to approaches that work • Helpful in a fiscally tight world• Leverages private and philanthropic capital
Very early days• But what’s the potential? • Could it be relevant to your world?• What variations might be needed in your context?