What Is Missing In Pay-For-Success In Children’s Services? (Open Minds)

By Paul Neitman, LMSW

The advent of pay-for-performance initiatives, such as social impact bonds (SIB), has given many in the children’s services field opportunities for innovation that, from my perspective, have been lacking. This was the focus of the recent article by my colleague Howard Shiffman, The Shifting Target For Pay-For-Success – Child Services.

An important piece of that article that caught my attention was the reference to the analysis, Social Impact Bonds: Lessons Learned So Far, work from the John F. Kennedy School of Government at Harvard University. The analysis confirmed what many of us know – that many organizations in the non-profit world lack the capacity to meet the provider requirements necessary to successfully implement a SIB initiative.

Based on my knowledge of the capacity of many non-profit children’s organizations today, my review of some of the SIB projects, and having written a SIB request-for-information (RFI) response for a children’s services initiative, I have some “on the ground” perspectives on the use of SIBs in children’s service.

The SIB process is inherently a political process – As a result, this process requires “politically important” outcomes, which is to say you need specific, measurable, cost saving short-term results (i.e. first-year results), in addition to long-term results. And, the organization needs the ability to both replicate the results, and scale up those results to large population targets. Many in the children’s services field who are used to focusing on process measures, may have difficulty operationalizing projects in such short time frames with acceptable outcome results.

Interventions are inadequate – In many of the SIB projects I have reviewed, the interventions appeared to be woefully inadequate to meet the aggressive, short-term results promised. This emphasizes the importance of applying evidence-based interventions to the SIB program developed.

Executive teams haven’t innovated – Many organizations and their executive teams have not been able to keep up to date with innovation, including theory, research, and evidence-based practices. These organizations may not have the ability to design successful interventions for the ever-changing needs of clients served and funder expectations for service delivery and funding.

Non-profit organizations are short on resources – Many agencies may not have the resources necessary to succeed in a SIB project, including financial, technological, or staffing resources. Organizations need all these to develop, implement, and meet the data and financial requirements necessary to implement a successful SIB project.

Non-profit boards of directors have a limited geographic vision – Many children’s organizations are limited by geography because their historically limited service areas limit their “geographic vision.” Many may not have the capacity to develop a large scale project that will eventually be necessary for overall SIB initiative success.

While this does not apply to the current capacity of all non-profit children’s service organizations, many truly are limited in their ability to adapt to today’s client and service requirements, including those necessary for successful SIB design and implementation. What this comes down to, according to Howard, is “experience” – he writes:

PFS programs often have scalability as a requirement and many non-profits do not have the experience of growing successful programs within a short period of time. Provider organizations also have a difficult time recruiting the needed staff to succeed in growing their program. It takes a very savvy and experienced provider to successfully manage all the logistics involved in managing an upscale and all the partners involved in the PFS project.

And there are positive and negative implications to gaining this experience. On the positive side – provider organizations will have a potentially new, well-funded source of revenue to upscale their successful outcome-oriented programs at minimal or no risk. On the negative side, if a provider fails to reach their contracted outcomes they are definitely at risk to damage their reputation – past, present, and future funders may not want to support this organization after concluding that their services lack quality.

For more on embracing innovation for future success, join Howard and Devereux Colorado’s chief executive officer, Perry May, on May 25 at 2:00 p.m. (EST) for the web briefing – Creating A Community-Based Continuum Of Care For Children: The Devereux Colorado Case Study – to hear how Devereux Colorado has successfully developed new community-based programs to transform their organization from a residential treatment provider to a community-based continuum of care provider.