Pay-for-Success Watch: The Cleveland Case Study

As part of The Chronicle’s continuing coverage of the pay-for-success (PFS) funding model emerging in the U.S., we share this case study of a promising Ohio project written by Patrick Lester of the Social Innovation Research Center.

To recap, PFS projects shift the burden of social investment off the government and onto private investors. Private sector investors front the capital for organizations to implement social programs. The government only pays the initial investor back, with interest, if a specific set of outcomes are met.

This model has attracted attention both in the public and private sector. It is important that we continue to analyze the financial structure and service outcomes as the nation sees more projects in their implementation phase.

This particular case study explores the design and launch of Cuyahoga County’s current pay-for-success snitiative. The county is launching the country’s first PFS initiative, called the Partnering for Family Success Program, that focuses on the relationship between foster care and homelessness. The report details the history of the project, financing, service design and evaluation.

While the overall success of the initiative will not be known for at least five years, this case study may prove useful to understand how a pay-for-success projects gets off the ground.

You can CLICK HERE to read Lester’s full report. Below is a “Cliff’s Notes” version we put together.

Project History

Lester presents a history of the project from exploration to implementation. The project began its exploratory phase in 2011 with a grant from The George Gund Foundation to hire Third Sector Capital Partners to advise the municipality.

For the next year, Third Sector developed a plan with the county, including an extensive citizen feedback component. Following that, the county released a Request for Responses for formal proposals from organizations interested in becoming a partner.

In 2013, the county announced its decision to focus on reducing out-of-home placements for children of homeless mothers. The initial partners of the project were Frontline Services (the lead service provider), the county’s Division of Children and Family Services, Cuyahoga Metropolitan Housing Authority, the Center on Urban Poverty & Community Development at Case Western Reserve University (as the evaluator), and Third Sector Capital Partners (as the advisors).

Intervention Design

The report points out the predicament children of homeless parents face when it comes to permanency planning. The County needs to ensure families have stable housing before children can be returned. Under the county’s PFS project, Frontline Services, as the lead provider, will deliver services to homeless parents with children in foster care. Services will combine housing assistance with an array of evidence-based support services.

The model will use a modality called Critical Time Intervention (CTI). Enrolled consumers will receive services for 12-15 months and will have their housing, social, emotional, economic, and health needs addressed at the same time.

Service Overview:

  • Caseworker stabilizes housing for family (caseworkers have a max of 10 families on caseload)
  • Parent moves in, and caseworker provides ongoing home visits and other contacts to address underlying issues such as substance abuse, employment, education, etc.
  •  Within 30 days of housing, participants receive services from a Frontline trauma therapist to determine appropriate interventions
  • If and when the parent completes the service plan, children can be returned home
  • After reunification, therapist conducts another assessment to determine the need for ongoing interventions

 Evaluation

Success for this particular project will be measured by the number of out-of-home placement days for children of enrolled families. This number will be compared to a control group that will not receive the additional CTI components from Frontline Services.

The final evaluation will take place at the end of the project’s fifth year, and will be used to determine the success payments to initial investors.

Financing

The projects investors, who are contributing a combined $4 million, are The Reinvestment Fund, The George Gund Foundation, The Nonprofit Finance Fund, The Cleveland Foundation, and Sisters of Charity Foundation of Cleveland.

If the program reduces out-of-home placement days by 25 percent the funders will break even. If the program does better than 25 percent, investors will make a profit. However, the county will only pay up to $5 million in success payments; any savings to the county over that number will go back to the county.

Summary

Cuyahoga County’s project provides an interesting look at using the pay-for-success funding model to address complex child welfare issues. Although the efficacy of the financing model in the U.S. is still largely unknown due its newness and small sample size, the growth in the field is undeniable.

According to Lester, this kind of in-depth research regarding the model is useful for the future of the field.

Writes Lester: “While this case study has focused on the initial design and launch of the Cuyahoga County initiative, it is likely to continue to provide important lessons for other pay for success initiatives that follow in its footsteps.”

Judith Fenlon is the money and business editor of The Chronicle of Social Change

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Judith Fenlon
About Judith Fenlon 167 Articles
Money & Business Editor for The Chronicle of Social Change