Congress eyes pay-for-success model for social services and public health (Smart Cities Council)

“Washington spends too much time debating how much or how little to spend on social safety net programs, and not enough time asking whether or not we’re improving lives,” says U.S. Rep. Todd Young, an Illinois Republican. "For all our best intentions, evidence shows current federal programs aren’t doing much to improve income inequality."

“Washington spends too much time debating how much or how little to spend on social safety net programs, and not enough time asking whether or not we’re improving lives,” says U.S. Rep. Todd Young, an Illinois Republican. "For all our best intentions, evidence shows current federal programs aren’t doing much to improve income inequality."

Young is co-author of the Social Impact Partnership Act, which is being touted as a bipartisan reform bill – the first of its kind to bring the concept of pay-for-performance into the social and public health sphere. The legislation would expand the use of evidenced-based social and public health interventions , and according to its backers, drive taxpayer savings.

Using a pay for success model

"Using pay for success, the government only has to pay if the program meets measurable goals," says U.S. Rep. John Delaney, the Maryland Democrat who worked with Young on the bill. "Our bill is designed to provide better services to those in need through new partnerships between socially conscious investors and the public sector."

He said the model could be used in a variety of ways, from programs to reduce recidivism to those designed to improve early childhood education.

Encouraging public-private partnerships

Supporters say the legislation would empower states, local governments, nonprofits, and the private sector to scale up evidence-based interventions that address the nation’s most pressing challenges – or as Young puts it, to help Americans "overcome the root causes of poverty and seize economic opportunities to work and provide for their families."

It does that by encouraging public-private partnerships that harness philanthropic and other private-sector investments to expand and replicate scientifically proven social and public health programs. Because social impact partnerships are focused on achieving results, government dollars are paid out only when desired outcomes are met.

The legislation, which just recently passed the House Ways and Means Committee, has attracted support from public and private sector organizations. Senators Orrin Hatch (R-UT) and Michael Bennet (D-CO) are the lead sponsors of similar companion legislation in the Senate.

Approach has come of age

"Social impact partnerships represent an approach that has come of age," said Andy Sieg, Managing Director and Head of Global Wealth and Retirement Solutions at Bank of America Merrill Lynch. "We see the confluence of investor demand, government innovation and access to data leading to the dawn of this new market."

Jon Baron, President of the Coalition for Evidenced-Based Policy, called the bill a highly thoughtful approach to advancing social impact partnerships. "Because of the strong focus on evidence of impact, we believe this approach would be a major step forward in addressing poverty, education failure, teen pregnancy, and other problems that damage the lives of millions of Americans each year."

Denver's approach

Earlier this year, the City and County of Denver launched the Denver Social Impact Bond program to help hundreds of homeless people in the community. The program is investing funding from lenders to provide housing and case management services to at least 250 homeless individuals who regularly use the city's emergency services.

As Denver Mayor Michael B. Hancock explained, “It makes no sense to continue paying the high cost of ineffective remedial and emergency care systems when we can invest in proven programs that will set these individuals on a healthier path. Now is the time to break the cycle from streets, to emergency rooms, to jails and back to the streets, and replace it with a long term solution.”

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