Pay-for-Success Youth Projects Coming for California

A major grant maker in California has seeded two organizations to begin laying the groundwork for at least one, and possibly two, pay-for-success (PFS) projects on youth services.

The California Endowment will provide $250,000 for feasibility studies on the prospects for PFS projects focused on two subjects: restorative juvenile justice programs, and foster care stability.

The initial work will be carried out by National Council on Crime and Delinquency and Third Sector Capital Partners, which would likely oversee one or both of the projects depending on the feasibility studies.

”Pay for Success contracting is a tool with the potential to transform the way governments purchase social services by creating a new emphasis, and monetary value, on social outcomes,” said Caroline Whistler, co-founder of Third Sector Capital Partners.

Pay-for-success (PFS) projects, otherwise known as social impact bonds, entail a non-governmental investment in social services that will be paid back with interest by a government  if targeted outcomes are achieved. If those outcomes are not met, the investor is left incurring the cost of the work.

Though it is a relatively new and entirely unproven strategy, there is hope among juvenile justice and child welfare leaders that it will enable governments to allow for experimentation with reform-minded programs and policies in both fields.

The Administration for Children and Families supported the use of PFS in instructions to states during the most recent application phase for IV-E child welfare waiver projects. And the Justice Department made PFS projects a priority in a recent solicitation for reentry work.

The two organizations will be “analyzing a lot of data from…interested counties to firmly establish the target populations and determine the potential outcomes to determine how a pay for success model should be built,” said NCCD Vice President Kathy Park, who will lead the PFS project for NCCD.

“These are two areas NCCD cares about,” she said. “They require longer than the typical one-year grant cycle to implement interventions well and evaluate outcomes. And they are interventions we believe will make a difference.”

John Kelly is the editor-in-chief of The Chronicle of Social Change

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John Kelly
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John Kelly is editor-in-chief of The Chronicle of Social Change.