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Pay for Success – Social Innovation Financing

ABOUT THE EFFORT

Pay for Success – Social Innovation Financing is an innovative approach to financing social services that funds what works. Project Welcome Home and Pay for Success for Acute Mental Illness are the first Pay for Success projects in California and are led by

PROGRESS ON PAY FOR SUCCESS

On June 23, 2015, the Santa Clara County Board of Supervisors unanimously approved $6 million in financing over a six-year period for Pay for Success for Chronic HomelessnessProject Welcome Home. The funding will allow Abode Services, the lead agency to provide housing and other supportive services to those who are the most frequent users of County resources. This pilot is set to reduce chronic homelessness in Santa Clara County, ending homelessness and increasing stability and improved health for our community members, including children, youth, seniors and chronically homeless families. The project would also improve the supportive housing delivery system in Santa Clara County.

On August 25, 2015, the Santa Clara County Board of Supervisors approved the selection of Telecare Corporation as the service provider for its second Pay for Success project, Partners in Wellness. Telecare Corporation has been providing community-based, wraparound services for individuals with serious mental illness in the Bay Area and in California since 1994 and is one of the nation’s most experienced providers of adult community behavioral health services, specializing in serving individuals with serious mental illnesses and complex needs The project is designed to improve overall wellness and reduce utilization of costly emergency and inpatient mental health services for County residents suffering from severe mentally illness. Click below to read more about the Partners in Wellness program and frequently asked questions.
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BACKGROUND

In 2012, Step Up Silicon Valley received a $10,000 grant from the City of San Jose to investigate Pay for Success (PFS). The opportunity to continue to pursue PFS became possible after Step Up was successfully awarded a $150,000 grant from The Health Trust to explore these “social impact bonds,” a financing method that would potentially shift the way nonprofits are funded. The initial seed funding spurred Step Up Silicon Valley to contract with Third Sector Capital Partners to launch the initiative. On August 27, 2013, the Santa Clara County Board of Supervisors unanimously approved the PFS proposal with pilot areas focusing on chronic homelessness and mental illness. Step Up played a key role throughout the process by leading community engagement and education efforts on Pay for Success-Social Innovation Financing.

ABOUT PAY FOR SUCCESS

Pay for Success (PFS) is a form of contracting between government entities and providers of social services, where the government only makes payments if the contracted service providers achieve an agreed-upon level of social outcomes.

PFS contracts are often suited to social challenges where the provision of a preventive social service is more cost-effective than treating on a remedial basis. This arrangement differs from traditional cost reimbursement or throughput contracts, where governments typically pay social service providers without regard to the ultimate outcomes they bring about.

Social Innovation Financing (SIF) enhances PFS contracting by providing service providers with the working capital needed to bridge timing gaps between the provision of services and future government payments. Social Impact Bonds (SIBs) are a form of Social Innovation Financing where philanthropic and/or commercial investors provide the initial funds required for the provision of services. In return, if the service provider achieves its target outcomes, the investors receive a portion of the resulting savings accrued by the government partner.

ARTICLES

Report: Towards a Performance-Based Social Sector: A Service Provider Perspective on Trends in Government Contracting
Project Welcome Home – San Jose Mercury
Santa Clara County Selects Telecare Corporation for Innovative “Pay for Success” Project

KEY PARTNERS

The Health Trust
County of Santa Clara
Catholic Charities of Santa Clara County
Silicon Valley Community Foundation
Sobrato Foundation
Third Sector Capital Partners