Pay for Success - Social Innovation Financing

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

Project Welcome Home – San Jose Mercury

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