The more we hear “pay for success” the more it will help SIBs and the other models also discussed here, improve services in society and save government money overall – a welcome requirement in a world where funds are scarce and taxes too high.
These are the three words that you’ll hear much more often in the human services world this year as governments look for new and creative ways to fund successful programs. You’ve most likely already heard these words in the context of “social impact bonds,” which both my Governing colleague J.B. Wogan and I have written about in the last year or so.
But there are more pay for success (PFS) models than just SIBs. Currently I’m working on a paper for the Annie E. Casey Foundation on other forms of PFS programs. In fact, PFS in general is a concept that has been around for nearly a decade–Maryland started experimenting with a PFS model known as “opportunity compacts” back in the mid-2000s.
All PFS models have two things in common: They involve a third party intermediary who brokers a deal involving upfront investment in some preventative program or another. And they involve closely monitoring and measuring program performance to assess whether the upfront investment is actually achieving hoped-for down-the-road savings.