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March 11th, 2015
State and Local Governments Receive Assistance to Launch Pay for Success Projects Across the Country
CAMBRIDGE, MA – The Social Impact Bond Technical Assistance Lab (SIB Lab) at the Harvard Kennedy School (HKS) today announced the selection of five state and local governments to receive technical assistance to help develop Pay for Success (PFS) projects that align payment for community-based solutions with verified social outcomes. The competition, run with support from the Corporation for National and Community Service (CNCS) Social Innovation Fund (SIF) and the Pritzker Children’s Initiative, received applications from 30 state and local governments, demonstrating the growing interest in new approaches to identifying and funding effective social services to address pressing social problems. In addition to the five new state and local governments that will receive technical assistance, the SIB Lab will collaborate with the Corporation for Supportive Housing (CSH) on assisting a cohort of three state governments.
In the Pay for Success model, governments partner with private sector investors who provide up-front funding to promising service providers. Investors only receive a repayment from the government if the service provider’s work is measurably successful. Because governments pay only if the programs work, the PFS model has the potential to more effectively allocate taxpayer dollars while increasing funding for programs that deliver improved social outcomes.
“Governments around the country are looking for solutions to difficult social problems, from chronic homelessness to insufficient access to high quality early education. Governors and mayors are looking for ways to scale up good programs with limited fiscal resources. The Pay for Success approach has the potential to generate scalable solutions to some of our nation’s most pressing challenges,” said Jeffrey Liebman, professor of public policy at Harvard Kennedy School and SIB Lab director. “The SIB Lab is excited to partner with these innovative government leaders who are trying to provide more effective services to their citizens and make better use of taxpayer dollars.”
During the past three years, the SIB Lab has helped Massachusetts, New York State, and Chicago launch Pay for Success contracts using social impact bonds. Newly selected state and local governments will join current SIB Lab partners Colorado, Connecticut, Denver, Illinois, Massachusetts, Michigan, New York, and South Carolina in receiving pro bono technical assistance. The technical assistance will support recipients in designing, implementing, and evaluating policy initiatives in areas ranging from early childhood education to prison recidivism and economic self-sufficiency to green infrastructure.
The winners of the 2014 SIB Lab competition for technical assistance are:
- DC Water (District of Columbia)
- San Francisco
The SIB Lab evaluated project proposals based on the potential of the project to advance the PFS field by applying the model in new areas or policy fields, the level of commitment and readiness demonstrated by the applicant, and the feasibility of the proposed projects to scale.
“The SIF Pay for Success grantees held highly competitive, open competitions to select communities in need of services and here we’re seeing the results of those competitions,” said Lois Nembhard, Acting Director of the Social Innovation Fund. “We couldn’t be more enthusiastic for the first Pay for Success subgrantees, all charged with the important mission to measurably improve the lives of people most in need.”
The SIB Lab will provide each winning government with a full-time Government Innovation Fellow to be based for one year in the government agency that is spearheading the city of state’s pay-for success initiative, pro bono technical advising from Liebman and other senior experts, up to six months of programmer and data analyst time, and a small pool of flexible funding that can be used to remove barriers to implementation of PFS projects.
The SIB Lab will also be collaborating with another SIF awardee, CSH, to provide a joint cohort-based model of technical assistance to a cohort of state governments interested in the use of the PFS model to provide persons residing in institutional settings with the opportunity to transition to community-based supportive housing. As part of its collaboration with CSH, the SIB Lab will provide technical assistance to New Mexico, New York, and Washington.
“It is an honor for CSH to collaborate with the Harvard Kennedy School Social Impact Bond Technical Assistance Lab (HKS SIB Lab) to provide our subgrantees the in-depth knowledge they will need to succeed,” said Deborah De Santis, CSH President and CEO. “HKS SIB Lab has built a sterling, national reputation for its government-focused expertise on project development, evaluation design, and procurement, and we know our subgrantees will benefit greatly from their contributions.”
Comment from Winning State and Local Governments:
“This kind of innovative, public-private partnership can result in important reforms in our criminal-justice system while also saving the taxpayers money. Under this plan to ‘pay-for-success,’ the Department of Community Correction will be able to retain expert intervention services aimed at reducing the reincarceration rate in an accountable, cost-effective way.”
Governor Asa Hutchinson, Arkansas
“Early learning is a top priority for my administration and for the future success of Nevada’s children. As we search for new and innovative service models and funding sources, technical assistance from the Harvard Kennedy School will be of tremendous benefit. Nevada is honored to be a part of the Corporation for National and Community Service project.”
Governor Brian Sandoval, Nevada
“My Administration is committed to investing in what works to improve the lives of Pennsylvanians and save money for taxpayers. Pay for Success is an innovative strategy to finance proven programs, and we are honored to be selected and look forward to working with the Social Impact Bond Technical Assistance Lab to find cost-effective and efficient solutions to help our most vulnerable citizens.”
Governor Tom Wolf, Pennsylvania
“San Francisco is committed to combatting poverty and building stronger mixed-income communities through our HOPE SF initiative. We will explore using a Pay for Success approach to tie funding to long-term HOPE SF outcomes to ensure all our residents, especially those in public housing, share in the prosperity of our City. We look forward to working with Harvard and CNCS to improve the quality of life for our most disconnected residents and end intergenerational poverty in our City.”
Mayor Edwin M. Lee, San Francisco
“In addition to the benefits of green infrastructure, this work will develop the social impact bond model and will be a huge public service to the industry and other CSO communities across the nation. And the SIB model is measurable, so that participants can objectively quantify results, which promotes accountability and smart programming.”
CEO and General Manager George S. Hawkins, DC Water
About the HKS SIB Lab
The SIB Lab conducts research on how governments can foster social innovation and improve the results they obtain with their social spending. Through this hands-on involvement, the SIB Lab gains insights into the barriers that governments face and the solutions that can overcome the barriers. Founded with support from the Rockefeller Foundation, the SIB Lab is supported by the Laura and John Arnold Foundation, the CNCS Social Innovation Fund, the Dunham Fund, and the Pritzker Children’s Initiative.
Chicago Becomes Third SIB Lab Partner to Launch Social Impact Bond
On October 7, 2014, Chicago became the third SIB Lab partner to launch a social impact bond. The project will provide pre-K services to over 2,600 children in high-need communities over four years. The project will allow the expansion of services by the Child Parent Center (CPC), which offers services to preschool children and their parents designed to improve child development, parenting skills, health and nutrition, and academic achievement. The intervention is supported by the Goldman Sachs Social Impact Fund, the Northern Trust Company, and the J.B. and M.K. Pritzker Family Foundation, which together will provide nearly $17 million funding. The Finnegan Family Foundation will underwrite a portion of the evaluation costs. Metropolitan Family Services (MFS) will serve as the project intermediary. For more information, please see the City’s press release here and additional information on the project here.
Massachusetts Launches Social Impact Bond
On January 29, 2013, Massachusetts launched a social impact bond that will benefit almost 1,000 young men who are in the probation system or exiting the juvenile justice system and have a high risk of re-offending. The 7-year project will be implemented by Roca, Inc. in the Boston and Springfield areas. Third Sector Capital Partners will serve as the project’s intermediary. In order to fund the program, Goldman Sachs, the Laura and John Arnold Foundation, New Profit, The Boston Foundation, The Kresge Foundation, and Living Cities provided $18 million in grants and loans. If the project successfully decreases incarceration, increases job readiness, and increases employment among the young men served, the Commonwealth will make up to $27 million in success payments. In 2013 Massachusetts received an $11.7 million U.S. Department of Labor Workforce Innovation Fund grant, which will enable the Commonwealth to extend the project, should it prove successful, to an additional 391 young men. For more information, please see the Commonwealth’s press release here and additional information on the Third Sector Capital Partners website.
New York State Launches Criminal Justice Social Impact Bond
On December 30, 2013, New York’s Governor Andrew Cuomo announced the launch of the first state-led SIB in the United States, and service delivery has begun. Through this project 2,000 formerly incarcerated individuals who are at high risk of reoffending will be connected with the Center for Employment Opportunities (CEO) to receive evidence-based employment training and job placement services over 4 years. Individual and institutional investors invested $13.5 million in this project, and will be repaid based on the program’s impact on recidivism and employment. This is the largest operational SIB in the world to date and the first to use a randomized control trial (RCT) in determining outcome payments. Please see the New York State press release for further information.
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