U.S. House Passes Landmark Pay for Success Legislation (Institute for Child Success)

The U.S. House of Representatives passed on June 21 a landmark bill to provide at least $100 million toward Pay for Success (PFS) programs—with half that amount designated for programs to help children.

The House of representatives approved H.R. 5170, the Social Impact Partnerships to Pay for Results Act (SIPPRA), which will allow the federal government to contribute funding for states’ Pay for Success projects. The bill is a major policy priority for the Institute for Child Success, and it provides a $100 million fund to pilot the federal support of state and local PFS projects, reserving $50 million for the projects serving children.

Without this legislation, the federal government is restricted in how it can support PFS, despite benefitting from projects across the country that reduce burdens on programs such as TANF and Medicaid. The House bill would help to improve outcomes for children and families across the country in a fiscally responsible and evidence-based way.

Pay for Success is an innovative funding model that drives government resources toward social programs that prove effective at providing results to the people who need them most. The model gives highly effective service providers, including nonprofit organizations and charities, access to flexible, reliable, and upfront resources to tackle critical social problems by tapping private funding for up-front costs of the programs. It allows philanthropies and impact investors—rather than state or local governments—to  provide the initial capital to scale-up effective programs. Not-for-profit entities deliver those scaled-up programs. Governments then pay investors back for the outcomes achieved, but only if the program succeeds. (Learn more here).

ICS is thrilled the House has passed this legislation, and that the Senate held an encouraging hearing on a similar bill in May, with Finance Chairman Sen. Orrin Hatch of Utah promising to work further on the legislation this year. ICS thanks the lead sponsors—Reps.  Young of Indiana and Delaney of Maryland, Chairman Hatch of Utah, and Sen. Bennett of Colorado—for their tireless leadership and for advancing this legislation in an outcomes-focused and bipartisan fashion.

SIPPRA and more developments in Pay for Success are the focus of the Third Annual Conference for the Early Childhood Social Impact Performance Advisors, planned by ICS and our partners. Check our Facebook and Twitter feeds for live updates, and this blog for daily posts from the conference.