Presidential 2016: Using Data, Community Engagement & Pay for Success to Improve Community Outcomes (New Profit)

Thanks to the persistence of social innovators across the country, every day we see strategies that are working and delivering results in a rapidly changing world. This ongoing blog series will highlight the voices of our Coalition of 75 social innovators and their solutions to our country’s most pressing social problems, as well as examples of how this powerful work can be transformed into national change. Today we will hear from Matt Josephs, Senior Vice President of the Local Initiatives Support Corporation (LISC), about how Pay for Success can be leveraged to empower and revitalize low-income communities.

Pay for Success (PFS) is a form of performance-based government contracting that has taken root across the country during the last five years. The model may leverage private capital to implement and scale rigorous evidence-based social programs, and has been applied to serve some of the most vulnerable populations in our country ranging from the homeless, to at-risk youth, to individuals involved in the criminal justice system. PFS ultimately seeks to shift the way government spends its program dollars focusing more on cost-effective, preventative interventions that have long-term successful outcomes for its program participants.

The Local Initiatives Support Corporation (LISC) is a national non-profit Community Development Financial Institution (CDFI) dedicated to helping community residents transform distressed neighborhoods into healthy communities of choice and opportunity – good places to work, do business and raise children. LISC has developed local and national initiatives rooted in data-driven research and practices that provide tremendous benefits for low-income families and address the comprehensive needs of communities – from improving the long-term financial well-being of families and reducing crime in communities through targeted interventions, to investing in schools, health clinics and affordable and supportive housing for low-income families.

One recent example of how LISC has employed tenets from the PFS model is our Two Shades of Green (TSG) program in New York City. TSG is a housing preservation strategy that incorporates green and healthy practices into the rehabilitation of buildings. Since 2013, LISC has worked with partners to implement the TSG energy, water and health upgrades on 600 units. Baseline measures have been established to hone TSG outcomes and assess changes to asthma triggers, costs, and complaints over time, and the program conducts ongoing evaluation of both health and utility outcomes. The evidence is showing a reduction in the number of asthma attacks and other health complaints for building residents along with reduced utility costs for property managers.

As an intermediary whose mission is to revitalize neighborhoods and improve outcomes for low-income families, LISC’s role has always been rooted in identifying partners and programs that work, expanding their capacity and creating financial structures that leverage investment dollars – enabling LISC and our partners to validate and scale solutions more broadly. The PFS model gives local leaders the flexibility to design and adjust programs to fit local needs in order to improve outcomes for our most vulnerable citizens. It emphasizes tracking data and evaluating agreed upon outcomes before funding is allocated. Ultimately, data-driven practices and policies like Pay for Success are a way to build a culture of continuous improvement and accountability and to monitor ongoing program performance.

There are many high-performing evidence-based programs operating throughout the country, but little capacity or capital available to bring them to scale. Some of these programs offer innovative solutions that local communities have pioneered and should be scaled to a larger geographical area, but are often complex and therefore expensive to scale without targeted government investment and private capital support. The PFS model may leverage this private capital support to test, implement and scale new and innovative programs, without risking tax dollars until the program is proven successful.

LISC was recently awarded funding from the Corporation for National and Community Services’ Social Innovation Fund to support the structuring of PFS projects to get them from the development to the implementation/launch phase. Applicants will be selected based on data-driven feasibility studies that demonstrate improved measurable outcomes, a well-defined problem and target population and a preliminary analysis of the social and financial benefits of the program to the back-end payor. LISC will draw on its deep experience working with local community partners, service providers and government to assess the strength of various stakeholders and on its transactional expertise to develop an economic model for the program, raise private capital, and facilitate evaluation design to get the project to launch.

Pay for Success is helping to build a culture of continuous improvement and accountability, and LISC is proud to be a part of this movement. As a member of the America Forward Coalition, LISC is part a larger effort to revitalize struggling communities and create opportunities for those who live there through approaches such as Pay for Success. America Forward provides a platform to learn from policy and programmatic experts, share best practices, and positively influence public policy. LISC is grateful to be actively engaged in a shared commitment to seeking innovative and data-driven, evidence-based solutions in order to improve both policies and program outcomes that contribute to a better quality of life for our neighbors and communities and we urge the next Congress and the next Administration to continue to support PFS and other similar data driven initiatives in the years ahead.

Read more about how social innovators in the America Forward Coalition, like LISC, are solving America’s biggest problems in communities across the country every day in our briefing book, Moving America Forward: Innovators Lead the Way to Unlocking America’s Potential, and join the conversation. Follow @LISC_HQ and @America_Forward, and tell us how Pay for Success and data driven programs and policies have empowered and revitalized your community using #AFPresidential16.