The Corporation for National and Community Service (CNCS) announced a slate of federal grants that will be used to help spur Pay for Success (PFS) projects around the country.
Pay for Success projects shift the burden of social investment off the government and to 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. So, in essence, the government is now paying for outcomes and not services rendered.
The Social Innovation Fund’s (SIF) PFS model is designed to fund organizations that aim to help cities, states, and nonprofits develop Pay for Success projects. Awards are given to organizations that are aiding in planning, feasibility studies, deal structuring, and/or pipeline development of potential PFS programs. All of the grantees focus on Pay for Success projects in the areas of youth development, economic opportunity and healthy futures.
The SIF’s awards have the potential to lead to 100 PFS deals across the country, according to CNCS.
Within the next few months, all 2014 grantees will hold competitions of their own to identify sub-grantees that would be a good fit for a PFS project. The chosen organizations will then receive grants or services of at least $50,000 over three years along with technical assistance and capacity-building services.
The Social Innovation Fund was launched in 2009 to help support organizations that use innovative evidence-based program models. The SIF model uses public/private partnerships to leverage funds, requiring private grant makers to match federal funds, dollar for dollar.
Last month, the agency announced seven new partnerships with leading grant makers to serve as intermediaries to fund and support community-based organizations that can show evidence of their effectiveness in addressing some of the nation’s toughest social issues.
The new slate of PFS awards were announced in Washington, D.C. this week at an event co-hosted by the Beeck Center for Social Impact and Innovation at Georgetown University, the Corporation for National and Community Service, and the U.S. National Advisory Board on Impact Investing
The following organizations received SIF funding to grow the PFS field and support organizations working on a variety of social issues:
The Corporation for Supportive Housing (CSH)
CSH received a $750,000 grant to support communities nationwide implement supportive housing PFS projects. The projects will focus specifically on high-cost, vulnerable populations – homeless individuals, youth and families, and disabled residents of health care institutions who prefer to live in the community.
CSH will hold an open competition to identify up to 12 communities across the country who want to implement Pay for Success-financed supportive housing.
Green & Healthy Homes Initiative (GHHI)
Green & Healthy Homes Initiative (formerly known as the Coalition to End Childhood Lead Poisoning) received a grant of $1 million to assess the feasibility of asthma-related PFS projects benefitting low-income children who suffer from the disease. GHHI is already engaged in this work through a partnership with the Calvert Foundation and a large local health system in Baltimore.
In 2015, GHHI will conduct a nationwide, open competition for healthcare organizations and nonprofit service providers that are constructing asthma-related PFS projects. One health care entity, acting as a private investor, and one service provider will be selected in five U.S. cities, for a total of 10 sub-recipients. Those selected will receive technical assistance from GHHI to advance their project.
Harvard Kennedy School Social Impact Bond Lab
The SIB Lab will use its $1.93 million grant to provide technical assistance to 10 local and state governments to build their capacity to pursue PFS projects.
Institute for Child Success (ICS)
ICS will use their $782,412 grant to provide support to organizations who are implementing early childhood PFS projects. The Institute has been a leader in the field of PFS early childhood projects. In 2014, ICS organized the first national conference on PFS early childhood programs. They also conducted a nine-month feasibility study in South Carolina examining Nurse-Family Partnerships.
With the CNCS grant, ICS will hold another conference in 2015. Participants for the conference will be chosen through an open competition. ICS will then choose 12 grantees to provide technical assistance over three years to develop their early childhood PFS project.
National Council on Crime and Delinquency (NCCD)
NCCD was awarded $863,959 to assess the feasibility of Pay for Success projects in jurisdictions from states with the highest rates of racial and ethnic disparities. Those states are Wisconsin, California, New Jersey, Massachusetts, Connecticut, Illinois, Pennsylvania, New York, Minnesota, Rhode Island, Nebraska and Washington, D.C.
As The Chronicle reported earlier this year, NCCD is currently involved in two other PFS projects in California, along with co-SIF grantee Third Sector Capital Partners. They are conducting a feasibility study to assess the possibility of Sector Capital Partners’ two PFS projects, one focusing on restorative justice and the other focusing on prevention services for child welfare-involved youth to prevent juvenile justice system cross-over.
In the next several months, NCCD will hold an open competition to select sub-recipients to receive technical assistance for up to two years.
Nonprofit Finance Fund (NFP)
NFP has received $3.6 million to advance late-stage PFS projects in a variety of geographic locations and social issues. NFP will work with governments and organizations that have near-term opportunities to implement Pay for Success projects that have already been deemed viable through feasibility assessments.
NFP is the only organization contributing to PFS projects in the later stages of implementation.
Third Sector Capital Partners
Third Sector Capital Partners, a PFS advisory firm, has received $1.9 million to provide states and local governments with technical assistance to implement PFS projects that focus on economic opportunity, healthy futures, and youth development.
In the coming months, Third Sector will hold an open competition to select approximately 10 sub-recipients across two cohorts to receive services valued at a minimum of $50,000.
Third Sector is currently partnered with NCCD to conduct feasibility studies in two California counties.
University of Utah, David Eccles School of Business PFS Lab
The University received $1.15 million to expand their PFS lab within the James Lee Sorenson Center for Global Impact Investing at the University of Utah’s Business School. The lab will work with sub-grantees to build the PFS field in the Western U.S., with an initial focus on the intermountain west. The grant will be used to expand, and increase awareness around PFS financing models.
Pay for Success Watch is mostly written by Chronicle Editor-in-Chief John Kelly and Money & Business Editor Judith Fenlon.