Pay for Success Works to Help the Public (GrayDC)

By Alex Miller

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WASHINGTON - Members of Congress constantly disagree with the way the government spends money. They say many of the programs government chooses to invest in are a waste of American’s tax dollars. Pay for Success is a new program that gives the government the ability to invest only in programs that they know will be successful.

It’s a new wave of philanthropy called social entrepreneurship. The goal is to get private companies, like banks, to invest in public projects with the hopes of being repaid. However, these private companies are only repaid if the project works.

For instance, a program in Massachussetts is currently working to target teens who have already been in jail. The goal is to reduce recidivism rates over the course of three years. This program, worth $27 million, will look at teens who have already been in jail. If, over the course of three years, the number of days spent in jail by these teens is dececreased, the investors will be paid back by the government according to how successful the program was. Then, if the government chooses, they can use the program guidelines going forward already knowing the program works.

Michael Cwidak-Kusbach of Third Sector Capital Partners says even though this is a new way of investing, the goals are the same.
“We’re helping people,” he says. “Investments are made in a variety or ways for a variety of purposes. These are unique investments. They’re driving actual social outcomes.”

A specific program in Virginia is working with at-risk mothers. Pay for Success provides home visits even before a baby is born to teach expectant mothers the proper ways to care for their babies and themselves.

The programs target needy areas across the country focusing on everything for healthcare to foster care to juvenile justice.