This study aims to examine critically the potential for this innovative financing mechanism to address the financing and quality service delivery issues described above. As there has been considerable fervor around impact bonds in recent years, we identified the need to provide an impartial and independent perspective with respect to the potential benefits of impact bonds.
The research for this study consisted of a systematic review of the literature, more than 70 structured and informal interviews, and online surveys of 30 individuals. The interviews and surveys captured multiple representatives of the actors involved in every SIB contracted as of March 1, 2015, as well as interviews with other key players in this area (see Appendix 1 for a detailed description of research methodology and list of survey participants, interviewees, and other contributors).
What is the Outcomes Matrix?
The Outcomes Matrix is a tool to help organisations to plan and measure their social impact. It includes outcomes and measures for nine outcome areas and 15 beneficiary groups.
How does it work?
Browse and select relevant outcomes and measures from the nine outcome areas to create your own unique outcomes matrix. You can also select beneficiary groups to highlight suggested outcomes and measures which relate to that specific group. Your selected outcomes and measures can be exported to an excel file and then customised to meet your organisations individual needs.
Why should I use it?
The Outcomes Matrix is a free tool to help you plan and measure your social impact. It provides a useful starting point for you to consider the social impact that you are trying to deliver and how your will measure it.
Given that PFS is still in its infancy, many governments are finding that setting the right price is a particular challenge and the cashable savings concept can constrain their ability to deploy PFS successfully. As PFS financing moves forward, it is important that governments adopt a broader set of considerations for deciding how much they are willing to pay for outcomes. Specifically, governments should take into account three factors
in deciding the value of an outcome:
1. Well-being benefits: the improvements that accrue to individuals and communities when the outcome is achieved
2. Public’s willingness to pay: the outcome is deemed to be worth the investment
3. Cashable savings: the savings that accrue to governments when the outcome is achieved
The term “Pay for Success” (or “PFS”) refers to an innovative model for financing and implementing social services through a collaboration of public, private, and nonprofit sectors. Sometimes known as “Social Impact Bonds,” PFS financings enable government agencies to finance important social projects in a nontraditional way. Under a PFS model, a government sets a specific, measurable outcome it wants achieved in a population and promises to pay for such services if and only if the social services agency providing the services accomplishes the outcome. The social services are initially funded by investors from the private sector and, if success is achieved, the government repays the investors.
This white paper addresses the legislation that has been adopted at the state level, pointing out the various functions of the PFS financing structure and how individual states have treated these components within their legislation. Given the varying scope of the legislation adopted thus far and the inconsistent approaches taken by individual state legislatures, model state legislation is included as an appendix to this white paper.
The increasing ability of social policy researchers to conduct randomized controlled trials (RCTs) at low cost could revolutionize the field of performance-based government. RCTs are widely judged to be the most credible method of evaluating whether a social program is effective, overcoming the demonstrated inability of other, more common methods to produce definitive evidence. In recent years, researchers have shown it is often possible to conduct high-quality RCTs at low cost, addressing a key obstacle to their widespread use. Costs are reduced by measuring study outcomes with administrative data already collected for other purposes (e.g., student test scores, criminal arrests, health care expenditures). These developments make it possible now, more than ever before, for policy officials to use scientific evidence about “what works” to increase government effectiveness.
In the development of a Pay for Success (PFS) Initiative and the feasibility technical assistance process, there is a series of key components related to actions that need to be completed and decisions that need to be made by the core project team charged with design and implementation in order for the PFS initiative to move forward. The list below outlines these components and the associated goals for each. Although the list is presented in a linear order, note that many of these items will be completed in parallel and iteratively.
This issue of the Community Development Investment Review attempts to do two things. The first is to serve as a comprehensive resource for the most current thinking on the origins, models, and potential implications of Pay for Success. The second is to encourage readers to weigh its exciting potential against its possible pitfalls. Pay for Success is a tantalizing idea but it raises important questions. Are we privatizing important government services that should remain under public control? How can we accurately measure and enforce “success?” Can we guard against fraud? Can we effectively balance our often-conflicting goals of equity, efficiency, and efficacy? Understanding and answering these, and other, questions is a crucial first step before widespread adoption of Pay for Success tools.
ICS has developed templates for use in conducting a feasibility study for jurisdictions exploring Pay for Success for early childhood programs. Several of these templates are provided here for jurisdictions exploring Pay for Success on their own, or interested in learning more about ICS’s feasibility study technical assistance process.
In an effort to assist decision-makers in evaluating the quality of published studies that use health-related retrospective databases, a checklist was developed that focuses on issues, which are unique to database studies or are particularly problematic in database research. This checklist was developed primarily for the commonly used medical claims or encounter-based databases but could potentially be used to assess retrospective studies that employ other types of databases, such as disease registries and national survey data.
New Economy research helps agencies to identify the costs and benefits of new ways of working. We have developed and continue to refine a Cost Benefit Analysis (CBA) model that can identify the fiscal, economic, and social value of project outcomes, and specify which public agency sees this benefit.
Agencies are using our model to rethink whether activities previously funded and delivered by one agency can be better funded and delivered by partnerships. Topics upon which the model has been applied include support for troubled families, health and social care provision and redesigns of the criminal justice system.
You can explore this site according to your needs and interests. If you are new to Pay for Success, start with 'Basics.' If you already understand the basics, learn more according to your areas of interest or potential role in a project. Have any questions? Check out our Glossary and our FAQ page. Choose an entry point below.
Despite the rapidly growing interest in Pay for Success contracting in the United States, little attention has been given to the enabling environment, including regulatory policy. The regulatory situation, principally state and local legislation, is an essential yet overlooked component of these interventions. Given the direct impact, predominance and progress of state- and local-level PFS legislation, this paper focuses on state and local legislative initiatives, analyzing the choices legislative bodies should consider when drafting and revising PFS legislation. We analyze history, enactment, and primary features across jurisdictions.
The PFS Project Assessment Tool (PAT) helps people answer a fundamental question: What makes for a strong PFS project? It describes core elements of PFS projects, explains why those elements are important, provides a scoring system to help distinguish the strengths and weaknesses of a proposed project, and generates recommendations for improving those weak areas. The PAT is designed for individuals, governments, and organizations working through PFS projects or, even earlier on, simply considering engagement with PFS. Broadly termed "stakeholders”, PAT users include government officials and advisors, public agency leadership, program managers, service providers, and others who are interested in learning whether PFS might work for their community. Completing the PAT also helps build the business case for a proposed project if that project scores well in each area.
The purpose of the SIB self-assessment tool is to provide an indication of where the challenges and opportunities would lie in developing a successful Social Impact Bond.
The tool asks a number of questions related to:
- The social issue you want to address
- The current cost to the Government related to the social issue
- The target population
- The potential outcome metric
- The counterfactual or baseline
- The intervention program
Responses to these questions are used to calculate a score and to provide you with a high-level assessment of viability.