State of the Pay for Success Field II: 

Emerging Literature, Updates, and Tools 

April 2016
The mission of the Corporation for National and Community Service is to improve lives, 

strengthen communities, and foster civic engagement through service and volunteering. 

Each year, CNCS provides opportunities for more than two million Americans of all ages 

and backgrounds to serve their communities and country through AmeriCorps, Senior 

Corps, the Social Innovation Fund, and the Volunteer Generation Fund. 

The Social Innovation Fund (SIF), a program of the Corporation for National and 

Community Service (CNCS), combines public and private resources to grow the impact of 

innovative, community-based solutions that have compelling evidence of improving the 

lives of people in low-income communities throughout the United States. The SIF invests in 

three priority areas: economic opportunity, healthy futures, and youth development. 

Suggested Citation 

Corporation for National and Community Service, Office of Research and Evaluation (2016). State of the Pay For Success 

Field II: Emerging Literature, Updates, and Tools. Washington, D.C.: Author.

Acknowledgements 

Abt Associates would like to thank the following individuals for their contributions, revisions, and insights on this 

document: Lily Zandniapour, Ph.D. – Evaluation Program Manager and Contracting Officer’s Representative, 

Corporation for National and Community Service; Jennifer Stoff –Senior Program Officer, Social Innovation Fund Pay for 

Success Program, Corporation for National and Community Service; and Mary Hyde, Ph.D. – Director of Research and 

Evaluation, Corporation for National and Community Service. 

Disclaimers 

This report is a product of an independent study commissioned by CNCS. Views expressed in the document do not 

necessarily reflect the official viewpoints of the agency or its staff. This report is in the public domain. Authorization to 

reproduce it in whole or in part is granted. 

Authors 

The following researchers at Abt Associates prepared this report for the Corporation for National and Community 

Service: 

Jessica Blum 

Kimberly Burnett 

Marjorie Levin 

Tyler Moazed 

Allan Porowski 

Alicia Sparks 

1201 New York Avenue, NW 

Washington, DC 20525 

(202) 606-5000 │ TTY: (202) 606-3472 

info@cns.gov │nationalservice.gov
nationalservice.gov/SIF i 

Table of Contents

I. Introduction .............................................................................................................................................................................. 2

Purpose and Organization of Document ............................................................................................................................... 3

II. Themes from Recent Literature............................................................................................................................................. 4

Focus on Outcomes and Targeted Feasibility Assessment ................................................................................................. 5

Assessment and Outcomes of Existing PFS Projects ................................................................................................. 5

PFS Feasibility in Specific Social Service Areas ......................................................................................................... 6

Evaluation of Interventions within Pay for Success Projects .............................................................................................. 6

Defining Appropriate Outcomes ................................................................................................................................. 7

Evaluation Design.......................................................................................................................................................... 7

Endorsements and Critiques of the PFS Model .................................................................................................................... 8

The Future of PFS ..................................................................................................................................................................... 9

Sustaining Successful PFS Projects ............................................................................................................................ 10

Increased and Alternative Funding Sources ............................................................................................................ 10

Focus on Service Improvement over Cost-Effectiveness ........................................................................................ 11

III. 2015 Developments in Pay for Success Projects ............................................................................................................... 12

Updates for PFS Projects Initiated Prior to April 2015 ...................................................................................................... 12

Newly Implemented PFS Projects ........................................................................................................................................ 17

Other PFS Projects Nearing Implementation ...................................................................................................................... 21

IV. Budgetary and Legislative Proposals ................................................................................................................................. 23

Federal Support....................................................................................................................................................................... 23

State Legislation ...................................................................................................................................................................... 24

Philanthropic Support ............................................................................................................................................................ 24

V. An Inventory of Pay for Success Tools .............................................................................................................................. 26

References Cited................................................................................................................................................................................... 32

Appendix A: Glossary of Key Terms ................................................................................................................................................ 37

Appendix B: Annotated Bibliography of Key Sources ................................................................................................................. 40
State of the Pay for Success Field II 

Emerging Literature, Updates, and Tools 

Corporation for National and Community Service 

Office of Research and Evaluation 

nationalservice.gov/SIF 2 

I. Introduction1

Pay for Success (PFS) is an innovative contracting model that ties funding for an intervention to the achievement of 

outcomes or impacts in the community. PFS offers a way to deliver better outcomes, enabling government or other payors 

(for example, school districts or hospitals) to pay only for outcomes achieved – that is, to pay only for what works. PFS 

contracts 2 are often used with PFS financing, which catalyzes philanthropic and private sector investments to bridge gaps 

in the timing of service provision and government payments for services. Since the first domestic project involving PFS 

financing3 was launched in 2012, interest in and utilization of the PFS model has grown significantly. In the past year 

alone, dozens of articles and reports were published on the topic of PFS, two new PFS deals were signed, and numerous 

other projects are being explored. 

The Corporation for National and Community Service (CNCS) has been a key contributor to the growth of PFS. In 2010, 

CNCS launched the Social Innovation Fund (SIF) program (now called “SIF Classic”), which funds grantmaking 

intermediaries to identify and grow nonprofits that address pressing social problems in three focus areas: youth 

development, economic opportunity, and healthy futures. The SIF’s intermediary structure, and its focus on publicprivate partnerships to leverage investments in evidence-based programs, provides a new model for social finance. 

Recent evaluation results of the SIF Classic program have validated the model’s promise (CNCS, 2015a). In 2014, the SIF 

launched a new initiative to support the expansion of PFS. The initiative, known as the SIF PFS program, funded eight 

grantees in its inaugural year to provide technical assistance to state or local governments or nonprofit organizations to 

assess PFS feasibility and build capacity to develop projects involving PFS financing (i.e., Feasibility Assessment/Capacity 

Building Grantees), or to implement deal structuring activities for PFS initiatives (i.e., Transaction Structuring Grantees) 

in CNCS’s three focus areas. The SIF PFS program aims to: 

 Strengthen and diversify the pipeline of governments and nonprofit organizations that are prepared to engage in PFS

projects.

 Assess the potential of PFS to address a variety of social issues relating to diverse populations in diverse geographic

contexts.

 Attract capital to high-performing institutions seeking to strengthen, grow, and sustain effective solutions for

challenges facing low-income communities.4

Together, the SIF Classic and the SIF PFS program use innovative structures to increase the return on taxpayer dollars and 

direct services to communities where they are most needed. 

This document serves as an update to CNCS’ April 2015 publication, Social Innovation Fund: State of the Pay for Success 

Field, and offers a snapshot of the 2015 PFS landscape including themes within recent literature, PFS-related tools and 

resources, and new PFS projects implemented since the last report. The report content is fully based on publicly available 

sources of information. 

1 This report was developed by Abt Associates under contract to CNCS as a component of the second year of the CNCS Process 

Evaluation of the SIF PFS program.

2 Please note that the term “contract” is used loosely in this document and in the Pay for Success contexts more generally. Contracts 

at the federal, state and local government levels are subject to applicable procurement laws and regulations. 

3 The term “social impact bond” is sometimes used to refer to PFS financing.

4 A full description of the PFS program is available on CNCS’s website: http://www.nationalservice.gov/programs/socialinnovation-fund/pay-success
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Purpose and Organization of Document 

The purpose of this document is to describe recent developments in the PFS field. This includes: 

 Updates on recent PFS literature that has emerged since the publication of the State of the Pay for Success Field report in 

April 2015; 

 A brief summary of newly implemented PFS projects (since April 2015) and updates on projects profiled in the State of 

the Pay for Success Field report; 

 An inventory of publicly available PFS tools that service providers, governments, and intermediaries can use as they 

strategize, implement, and evaluate PFS projects; and 

 A summary of federal, state, and philanthropic support driving recent PFS project construction and implementation 

in the United States. 

This report consists of five main sections and two appendices. Following this Section I overview, Section II reviews recent 

published literature on PFS and how it fits within the existing body of knowledge on PFS. Section III then provides 

updates on existing PFS projects in the United States (initially summarized in CNCS’s 2015 State of the Pay for Success Field 

report), summaries of two new PFS projects that signed contracts in 2015, and a brief overview of additional PFS projects 

nearing deal completion. Section IV outlines the landscape of political and financial interest in PFS financing and project 

implementation. Section V then presents an inventory of publicly available PFS tools, such as feasibility assessment 

worksheets for service providers and government actors, and databases of unit costs for intermediary use in setting 

outcome repayment benchmarks. The report concludes with two appendices. Appendix A contains a detailed glossary of 

PFS-related terms and associated organizations referenced throughout this document; Appendix B includes a short review 

of newly published key documents in the PFS field that focus on PFS concepts, components, and projects, which is 

intended as a starting point for those interested in further reading on the topic. 
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II. Themes from Recent Literature 

As interest in PFS and the number of active projects continues to grow, there is a distinct shift in the focus of much of the 

recent PFS literature. Whereas PFS literature developed between 2010 and early 2014 largely focused on the concept and 

drivers of PFS, its potential to scale up proven interventions, and associated risks and financial incentives (Tan et al., 

2015), the literature from late 2014 through 2015 focuses more on lessons learned from early applications of PFS projects. 

Many articles published in the last year concentrate on the minutiae of current and in-process deals—e.g., key players in 

existing deals, components of successful transactions, and drivers of preliminary successes and failures—and implications 

of existing activity for the future of the PFS field (see Section III for more detail about current PFS projects and others 

nearing implementation). 

This section of the report highlights four key themes that characterize the focus and content of this emerging body of 

applied PFS literature: (1) focus on outcomes and targeted feasibility assessment; (2) evaluation of interventions within 

PFS projects; (3) endorsements and critiques of the PFS model; and (4) the future of PFS. Areas of consensus from the 

recent literature related to each of these themes continue to advance and provide nuance about the PFS landscape. These 

include: 

 Healthcare and housing mobility are prime areas for PFS expansion. 

 Determining appropriate outcomes for PFS projects that are both meaningful and measurable is a complex process. 

 Effective PFS evaluation designs are important, but the degree of rigor (and associated cost) should take into account 

the requirements of outcome funders. 

 Technical assistance to help interested parties design effective evaluations for PFS projects will help address a lack of 

evidence of successful evaluation practice within the field of social finance. 

 Key benefits of applying the PFS model include increased cross-sector collaboration, encouraged innovation within 

the service delivery sector, increased service delivery capacity, and enhanced potential for long-term improvement of 

provider data. 

 PFS arrangements present risks of prioritizing financial return over long-term improvement in social service delivery. 

 Increased transparency and knowledge sharing in the field are important prerequisites for continued growth and 

expansion of PFS. 

 Careful definition of “success” and impact seeking, not return seeking, will spur the growth of the PFS model. 

 Proliferation of the PFS financing mechanism has inspired innovative models of impact investing. 

The analysis presented in this section was informed by the identification and review of 30 PFS-related resources 

published and/or released between June 1, 2014 and December 10, 2015. Resources were identified using a series of 

standard search terms, including “pay for success,” “social impact bond,” and “social benefit bond,” through Google, 

Google Scholar, and PFS content aggregators (e.g., Nonprofit Finance Fund’s Pay for Success Learning Hub, Utah Policy 

Innovation Lab’s Knowledge Portal). Search results were then narrowed to include only those reports, articles, and other 

resources (e.g., podcasts) with a primary focus on PFS and/or closely related social financing mechanisms. The search 

identified 20 reports, 4 articles from online periodicals or peer-reviewed journal articles, 1 fact sheet, 1 presentation, and 1 

podcast. In addition, 3 news articles/press releases reporting results of current PFS projects are referenced to capture 

recent project updates. Among the identified reports, the majority (18) were produced by nonprofit research/policy 

organizations or public agencies interested in the growth of social financing and investment, while the remainder (2) 
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presented project-specific experiences of entities involved in current PFS projects. All content in this section is based on 

publicly available sources of information. 

Summaries of identified resources as well as key take-away points can be found in Appendix B. 

Focus on Outcomes and Targeted Feasibility Assessment 

The first broad category of PFS literature published between June 2014 and December 2015 focused on: (1) assessment and 

outcomes of existing PFS projects, and (2) PFS feasibility in specific social service areas. 

Assessment and Outcomes of Existing PFS Projects 

Approximately one third (11) of recent PFS-related publications analyze trends among active PFS projects or present final 

and/or intermediate outcomes. Literature that scans the current PFS landscape frequently presents characteristics of

existing PFS projects and case studies, and successes and challenges that emerged. For example, Gustafsson-Wright, 

Gardiner, and Putcha (2015) present detailed characteristics of each of 38 PFS projects currently active worldwide, 

including upfront capital commitment, presence or absence of a technical assistance provider, outcome evaluation 

method, and maximum return value. In addition, the past year witnessed the release of the first formal PFS outcomes 

measurement reports, related to the Peterborough Social Impact Bond (SIB)5 and New York City (NYC) PFS project 

(Jolliffe & Hedderman, 2014; Vera Institute, 2015).

Key articles that fall within this sub-topic span the following PFS projects (or groups of projects) and settings. Additional 

details related to U.S.-based projects completed or near completion can be found in Section III: 

 Peterborough SIB (Disley & Rubin, 2014; Jolliffe & Hedderman, 2014) 

 New York (NY) State PFS project (Bradley, Dudding & Wenner, 2015) 

 New York City (NYC) PFS project (Vera Institute, 2015; MDRC, 2015) 

 Salt Lake City, Utah PFS project (Popper, 2015; UWSL, 2015) 

 Summary/analysis of US-based PFS projects (Shiffman, 2015) 

 Summary/analysis of 38 PFS projects worldwide (Gustafsson-Wright et al., 2015) 

 Summary/analysis of 10 PFS projects in the US and abroad reflecting diverse policy areas and stages of 

implementation (Government Accountability Office (GAO), 2015) 

 Summary/analysis of nine PFS projects implemented through seed funding from the UK Social Enterprise Investment 

Fund in 2013 (Tan et al., 2015) 

 

5

 Note that the term “Pay for Success” is sometimes used interchangeably with “Social Impact Bonds” (SIB) in PFS literature. 

However, PFS refers to the procurement of social services or environmental interventions where payment is released only on the 

basis of outcomes, while SIBs are a financing mechanism. It is important to recognize that PFS projects are not limited to SIB 

financing models. One alternative form of PFS financing is the Development Impact Bond (DIB), where some or all outcomes 

payments are provided by an external funder, such as a development agency, in partnership with a developing country 

government (Center for Global Development & Social Finance, 2013). As the PFS field matures, it is likely that variants in existing 

models and completely new models of PFS financing will emerge. 
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PFS Feasibility in Specific Social Service Areas 

To date, active PFS projects across the globe have primarily focused on four key areas of social service—education, 

employment, criminal justice, and social welfare (Gustafsson-Wright et al., 2015). Within each of these areas, different PFS 

projects have experimented with multiple service delivery approaches, varying based on the target population, local 

partnerships, service provider preferences, and funding sources. In late 2014 and 2015, a new subset of literature began to 

emerge, exploring the feasibility of PFS beyond these four main social service areas. The most commonly referenced 

emerging fields include healthcare and housing. One article additionally explored the potential for philanthropic 

investment in PFS feasibility studies and projects to improve early childhood outcomes from birth to five years of age 

(Pritzker, Bradach & Kaufmann, 2015). 

Healthcare. A number of recent articles explore the feasibility of applying PFS financing to scale healthcare interventions 

for underserved populations. For example, Dubno, Dugger, Gordon, Levin & Peterson (2014) explore the feasibility of 

implementing a PFS project to improve the health of Virginia youth through community-based pregnancy care 

partnerships. They conclude that a PFS project would be beneficial and cost-effective despite a number of challenges to 

PFS implementation in Virginia, including: insufficient acquisition and sharing of data on individual child outcomes; 

delays between the intervention investment and the financial return; the conflicting priorities of the multiple governments 

with jurisdiction; and resistance to paying PFS investors from public funds. Galloway (2015) suggests a number of 

additional areas of healthcare service provision where the PFS model could be applied, including childhood obesity, 

Hepatitis C transmission, and poor health from chronic homelessness. Others recommend that PFS be considered to scale 

service provision for the elderly and families more broadly (Wilson, Silva & Ricardson, 2015). 

Housing. There is ample evidence demonstrating the societal benefits and cost savings of linking vulnerable populations 

to lasting affordable housing, making housing interventions a prime target for a SIB (Miguel & Abughannam, 2014; 

Rinzler, Tegeler, Cunningham & Pollack, 2015). The MaRS Centre for Impact Investing and PFS advisory firm Social 

Finance developed a framework for determining the scenarios in which a SIB would be appropriate for Housing First 

interventions, an approach to ending homelessness that centers on providing individuals or families experiencing 

homelessness with housing as quickly as possible, and then providing services as needed (Miguel & Abughannam, 2014). 

Rinzler et al. (2015) identify both potential benefits and pitfalls of applying a SIB to housing mobility interventions. They 

caution that PFS may not be the most effective model for improving housing mobility due to the large transaction and 

evaluation costs, and the potential for reduced support for an intervention if the targets are not met. However, they 

simultaneously demonstrate the potential for PFS to help foster collaboration across sectors and levels of government that 

impact housing and health, and to improve the evidence base around the social and financial impacts of specific housing 

interventions, ultimately encouraging future investment and policy change (Rinzler et al., 2015). In tandem with this 

increased focus on housing in the PFS literature base, four of the nine PFS projects profiled in Section III provide housingrelated interventions, and three of these four projects were implemented in 2015. 

Evaluation of Interventions within Pay for Success Projects 

Rigorous and independent evaluation was consistently discussed in the literature as a necessary component of any PFS 

project. This topic is becoming more relevant as the earliest PFS projects, such as the Peterborough SIB and the NYC PFS 

project, are in the process of conducting intermediate and final outcomes assessments. Two key areas of focus within the 

broader discussion of PFS evaluation include defining appropriate outcomes for specific social interventions and effective 

evaluation design. Each of these sub-topics is described in greater detail below. 
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Defining Appropriate Outcomes 

Determining appropriate outcomes for PFS projects 

that are both meaningful and measurable is a 

complex process. Gustafsson-Wright et al. (2015) 

highlight the challenge of identifying long-term 

outcomes to predict whether PFS projects altered an 

individual's life course as intended. Those involved 

in a PFS project must have the tools to calculate the 

selected outcomes as well as the systems to 

accurately and consistently measure them 

throughout the course of the project and, ideally, 

beyond it. Outcomes must also be created with the 

duration of the PFS project in mind; project teams 

must carefully balance identifying outcomes that can 

both be tied to tangible cost savings and measured after the end of the intervention. PFS advisory firm Social Finance 

identifies a number of fundamental questions to consider when defining outcome metrics, and encourages close attention 

to variables such as the availability and applicability of surrogate outcomes as interim indicators of success, as well as the 

potential for perverse incentives (Social Finance, 2015). Similarly, the Organisation for Economic Co-operation and 

Development (2015) explains that outcomes defined by a social intervention should meet a number of standards, 

including being predefined, measurable, valid, repeatable, and independent. 

Recent discussion around the validity and measurement of outcome targets for the Utah Pre-K PFS project highlights both 

the complexity and critical importance of establishing appropriate outcomes that clearly demonstrate improved social 

outcomes for the target population. Following the United Way of Salt Lake’s announcement of its initial successes in 

preventing the need for special education services in kindergarten among at-risk students, concerns have been raised 

regarding the validity of the outcome selected to measure students’ “risk level” for needing special education services and 

the potential for skewed measurement of the intervention’s success (Popper, 2015; UWSL, 2015). (See Section III for more 

detail on initial findings from the Utah Pre-K PFS project.) Safeguarding against potential criticisms of selected outcomes 

through careful metrics development at the outset of a PFS project is critical to the advancement and maturation of the 

field. 

Key Questions to Define an Outcome Metric (Social 

Finance, 2015): 

o What does success look like for the project? 

o What objective measures are available? 

o Of these measures, which ones are linked to existing 

data sources that can practically be used? 

o Would this be a meaningful assessment in terms of 

reflecting genuine positive improvements in people’s 

lives? 

o If this data does not already exist, could it be captured 

objectively and without requiring significant additional 

resources? 

Evaluation Design 

Several articles were released on the topic of evaluation design specific to PFS interventions in 2015, an area left relatively 

unaddressed in past literature. Flynn, Young & Barnett (2015) and Wilson et al. (2015) note a general scarcity of evidence 

of successful evaluation practice within the field of social finance and impact investment, and state the importance of 

identifying quality evaluation approaches. While a large array of tools and approaches exist to evaluate social finance 

models and social impact investments, some of the most used tools are metrics and rating-based systems; these 

mechanisms only satisfy a first step in assessing outcomes and must be used with other evaluation methods for a 

complete analysis. In the cases of the Peterborough, NYC, and London PFS projects, external evaluators used either 

propensity score matching (PSM) or other quasi-experimental methodologies to assess outcomes (Flynn et al., 2015). 

Recent publications also offer initial recommendations for addressing this lack of evidence and helping interested parties 

design effective evaluations for PFS projects. Wilson et al. (2015) present a checklist of considerations to take into account 

when designing an evaluation of a social intervention, and suggest evaluations of publicly funded interventions should 
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be compulsory in order to build the evidence base. 

Flynn et al. (2015) reinforces the need for evaluation 

approaches based on theories of change to help gain 

further insight into causal mechanisms underlying 

the intervention and to test assumptions made in 

evaluation design. 

Alternatively, others explain that rigorous, 

experimental evaluations are not always necessary to 

measure impact and determine repayment in the 

context of a PFS project. While the most rigorous 

evaluation possible is generally recommended, 

experimental or quasi-experimental evaluations of 

PFS projects are not always necessary, depending 

upon the risk appetite of investors and the 

requirements of outcome funders (Gustafsson-Wright et al., 2015). PFS advisory firm Social Finance (2015) further 

indicates that effective PFS evaluation design depends upon a range of considerations, including cost (where more robust 

measurement is generally associated with higher cost) and the quality of existing evidence available; ultimately, effective 

evaluation design is dictated by the satisfaction of commissioners, providers, and investors that a measure will robustly 

record impact. 

In 2015, QinetiQ and the University of Leicester released the first official outcomes evaluation report of a PFS project, 

reporting on the first cohort of offenders who received services through the Peterborough SIB. The report includes a 

detailed analysis of the evaluators’ use of propensity score matching and a thorough description of analytic methods 

(Jolliffe & Hedderman, 2014). The results showed an 8.39% reduction in reoffending rates within the cohort, which was 

insufficient to trigger repayment for the first cohort (minimum 10% reduction required). Independent assessors 

concluded that the evaluation design was sufficiently robust to support a viable reconviction analysis (Jolliffe & 

Hedderman, 2014). 

Checklist of Questions for Consideration in Designing 

Appropriate Evaluations (Wilson et al., 2015): 

o What aspects to evaluate: Clarify whether the whole 

intervention or aspects of it will be evaluated. 

o Who to evaluate: Assess whether intervention 

recipients, control groups, or extended populations will 

be included. 

o When to evaluate: Expected outcome should be 

timetabled in advance of the intervention. 

o How to evaluate: Consider piloting and identifying 

suitable control groups for control trials; use 

longitudinal cohort data if long-term returns are 

expected; incorporate cost benefit analysis, and 

describe governance and implementation practice. 

Endorsements and Critiques of the PFS Model 

As the PFS landscape continues to grow and more projects consider the feasibility of PFS financing, further attention is 

being paid to the value of the PFS model as a social financing mechanism. Several key benefits cited of applying the PFS 

model include: funding for prevention programs and potential cost savings; increased cross-sector collaboration between 

levels of government as well as the private, nonprofit, and public sectors; encouraged innovation within the service 

delivery sector; and increased potential for long-term improvement of service provider data and service delivery capacity 

(ACFS, 2015; Bridges Ventures, 2014; Disley & Rubin, 2014; GAO, 2015; Gustafsson-Wright et al., 2015; Rangan & Chase, 

2015, Rinzler et al., 2015). These recently cited benefits echo those identified in earlier PFS literature. CNCS’s State of the 

Pay for Success Field report (2014) highlighted the model’s potential benefits to different stakeholders in a PFS project: 

 Governments can test whether new or existing interventions are effective and scalable without drawing upon its own 

often-constrained budgets until outcomes are achieved; 

 Service providers gain access to a steady stream of financing that frees up resources to focus on the organization’s 

mission and building data capacity; 

 Investors can create positive social impact and earn a return if outcomes are achieved; and 
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 People in need can benefit from additional funded services and be better served in the future as services are improved 

and funding is reallocated to effective models based on the evidence uncovered by PFS projects. 

The recent development of PFS is not without controversy, and a number of issues have also emerged in recent literature 

related to the structure and implementation of the PFS model. A coalition of organizations focused on accountability and 

transparency of government activity, including In the Public Interest (ITPI) and the American Federation of State, County, 

and Municipal Employees, suggest there are five key pitfalls of PFS projects, including: (1) higher long-term costs to 

taxpayers relative to direct government funding of service providers to scale their interventions; (2) undue focus on 

financing mechanisms that fail to address the root causes of social problems rather than investment in policy change; (3) 

non-straightforward nature of isolating and measuring impact in the context of a PFS project; (4) compensation to 

investors for minimal risk taken since PFS service interventions often already have rigorous evidence base; and (5) risksharing rather than risk transfer from the government (ITPI et al., 2015). 

Other authors echo these concerns about the limited applicability and potential pitfalls of the PFS model. Bradley et al. 

(2015) and Rangan & Chase (2015) suggest the PFS model may only be appropriate for a narrow cohort of service 

providers who can effectively deliver and measure their impacts and translate those impacts into monetary benefits. 

Others critique the model’s focus on immediate profit over long-term progress, since private sector investors may place 

their desire for profit and fiscal return on investment above the interest of a target population, which ultimately may 

change the values and prioritization of social and health care projects (Rinzler at el., 2015; Tan et al., 2015). Further, 

Baldini (2015) expresses concerns about the potential for “creaming” the target population to ensure outcomes are met 

and returns on investment achieved. 

These criticisms may or may not prove to be premature. As more PFS projects reach the outcome measurement phase, the 

field can expect a more nuanced set of endorsements and critiques that stem from PFS project-specific findings and 

experiences. RAND Europe offers one such set of preliminary assessments based on the second phase of the Peterborough 

SIB project. They highlight a variety of strengths of Peterborough’s model. These included its flexibility, which allowed 

for course-correction, and its partnership building in the community through strategic linkages. They also highlighted the 

model’s weaknesses, including the difficulties experienced in trying to evaluate the project due to lack of a defined 

intervention model or theory of change (Disley & Rubin, 2014). A final process evaluation report on the Peterborough SIB 

project offers an additional set of lessons learned to guide future PFS projects.6 Despite the Peterborough service 

intervention’s failure to reach the 10% reduction in reoffending rates needed to trigger first cohort repayment, service 

recipients expressed satisfaction with the support they received, felt the intervention helped prevent situations that 

commonly lead to re-offending, and emphasized that the intervention represents an improvement over prior post-release 

support (Disley, Giacomantonio, Kruithof and Sim, 2015). Reports of the benefits of PFS programming despite a project’s 

failure to reach outcomes benchmarks are echoed in discussions of the NYC PFS project (see Section III). 

The Future of PFS 

Uptake of PFS has expanded across the U.S. and abroad in the past year, and the PFS model itself continues to evolve. 

This proliferation of the PFS financing mechanism has inspired innovative models of impact investing. For example, in 

2015 the city of Richmond, CA implemented a bond-financed project focused on revitalizing and reselling abandoned 

 

6 Findings from the final process evaluation report for the Peterborough SIB were integrated into this section of the report despite a 

publication date of December 17, 2015 (outside inclusion criteria) since this is the first, final outcomes report of any PFS project. 
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homes (RCF, 2015). While the project lacks a back-end payor7, it contains many elements of the PFS model. The local 

foundation serving as project coordinator and service provider is also considering whether and how to measure the 

longer-term impacts of improved housing conditions such as reductions in crime, and hopes that their successful pilot 

will spawn replications in other cities where PFS financing through a back-end payor would be necessary (J. Genser, 

personal communication, Dec 16, 2015). 

As PFS expands and variations in the model emerge, PFS thought leaders have begun turning their attention to 

sustainability, both of the PFS model itself and the service interventions they fund. Recent literature speaks to three main 

components of a strategy to facilitate the continued growth and advancement of the PFS model: (1) scaling and sustaining 

successful PFS projects, (2) increasing funding opportunities and exploring alternate funding sources, and (3) changing 

the conversation from a focus on return on investment to a focus on improved services and social impact. 

Sustaining Successful PFS Projects

Articles by Schaeffer, Shumway, and Brumme (2015) and Gustafsson-Wright et al. (2015) focus on the importance of 

sustaining social service interventions after a PFS project expires, assuming the intervention proves successful in meeting 

predetermined outcomes. Schaeffer et al. (2015) advocate for including an “achievement compact” in PFS contracts—a 

statement of intent from the government payor to integrate successful interventions and performance-based funding 

mechanisms into ongoing or new funding streams—to shift government contracting behavior toward a stronger focus on 

evidence- based interventions. Gustafsson-Wright et al. (2015) explain that PFS financing in itself can help promote an 

environment of sustained social impact through its multiyear contracting model, capacity to demonstrate the benefits of 

preventive services that may lead to longer government commitment, and potential in shifting public perception of 

outcomes, monitoring, and evaluation in relation to performance. As expressed by Shelton and the Beeck Center (2015), 

“to improve social outcomes and increase opportunity for all its citizens, government needs to do more of what works, 

and less of what does not” (p. 41). 

Increased and Alternative Funding Sources 

In response to a 2015 article by Rangan & Chase, PFS subject matter experts George Overholser, Tracy Palandijan, and Jeff 

Shumway argue that direct philanthropic and/or private sector funding should not be the long-term focus of PFS 

financing. Instead, they envision scenarios where loans made to finance PFS projects are recycled for use in later PFS 

projects, and where service providers may use their own balance sheets to help finance PFS contracts. To date, there has 

been enormous variation in the structure of PFS financing, mechanics, and deal structuring roles, indicating a likelihood 

for continued flexibility as the model matures (Gustafsson-Wright et al., 2015). If the PFS model proves effective, over 

time the government may demand lower payment rates, which will de-incentivize private investment, and continue to 

change the PFS financing landscape (Rangan & Chase, 2015). There is consensus in the recent literature that increased 

transparency and knowledge sharing in the field are important to continue to grow and expand PFS financing and its 

scope of application. The Government Accountability Office (2015) recommends instituting a formal mechanism for 

federal agencies to share knowledge and information on PFS and to encourage further federal PFS involvement in the 

roles of outcome payor, funder of capacity building activities, and loan guarantor. 

In the longer term, Shelton and the Beeck Center (2015) view PFS as a critical first step toward a larger shift in outcomesfocused government. They call for more substantial budgetary commitments and new funding sources from both the 

 

7

 There is no need for a government-backed repayment schedule at this stage of the Richmond project due to the likelihood of 

sufficient profit from high local property costs. Measured returns/outcomes for resold housing are purely financial. 
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public and private sectors to move the needle toward lasting outcomes-focused service delivery expansion and 

innovation (Shelton & Beeck Center, 2015). 

Focus on Service Improvement over Cost-Effectiveness 

The expansion of the PFS model into new social service areas is intricately tied the definition of “success” within a PFS 

transaction. Kohli, Golden, Coletti & Bo’sher (2015) caution government actors against valuing outcomes for PFS 

transactions solely in terms of cashable savings calculations. Instead, they propose a calculation that takes into account 

three distinct factors: (1) well-being benefits, (2) public’s willingness to pay, and (3) cashable savings. A value calculation 

limited to cost savings likely undervalues the true benefit of social outcomes to government actors and narrows the 

circumstances to which PFS can be applied (Kohli et al., 2015). According to Rangan & Chase (2015), impact seeking, not 

return seeking, will spur the growth of the PFS model. 
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III. 2015 Developments in Pay for Success Projects

This section provides updates on the eight active domestic projects involving PFS financing, followed by a brief overview 

of other PFS projects nearing implementation. Six of these projects were profiled in CNCS’ State of the Pay for Success Field 

report, with two additional contracts executed in California and Massachusetts following that report’s publication in 

April 2015. 

Updates for PFS Projects Initiated Prior to April 2015

The New York City ABLE Project for Incarcerated Youth 

Lead Organization: City of New York 

Intermediary: MDRC 

Service Provider: Osborne Academy and Friends of the Island Academy 

Focus Area: Juvenile justice (3,400 high-risk minority young men at risk for 

reincarceration) 

Service Location: Rikers Island Jail (NY) 

Target Outcomes: Reduction in rates of recidivism 

Contract Execution Date: August 2012 

Investment Amount: $9.6 million

The Adolescent Behavioral Learning Experience (ABLE) project provided cognitive behavioral therapy as well as 

counseling, training, and educational services to approximately 3,400 young, primarily Black and Latino men (16-18 years 

old) incarcerated at Rikers Island Jail. The purpose of the training was to improve personal responsibility skills, decision 

making skills, and problem-solving skills, as well as to reduce idleness and increase opportunities for teamwork 

(Goldman, 2012; New York City Office of the Mayor, Goldman Sachs, Bloomberg Philanthropies & MDRC, 2012). The 

program was discontinued when the intervention did not meet the predetermined goals. Initial findings from the 

evaluation of the New York City ABLE Project at Rikers Island Jail by the intermediary, MDRC, show that the 

intervention failed to demonstrate sufficient reductions in recidivism, thus failing to trigger the City of New York’s

repayment of Goldman Sachs’ $7.2 million investment (down from the $9.6 million they would have invested if the 

program had continued for the full four years). Bloomberg Philanthropies, which provided a financial guarantee, repaid 

Goldman Sachs $6 million, resulting in a $1.2 million loss for the investor. Despite this, both investors and intermediaries 

designated the project an overall success because 87% of adolescents who entered the jail during the program period 

attended at least one ABLE session, translating into more than 4,000 young men who received additional rehabilitation 

services (MDRC, 2015; Vera, 2015). James Anderson from Bloomberg Philanthropies and Andrea Phillips from Goldman 

Sachs determined that the PFS financing mechanism was and will continue to be a success for the following reasons: 

 Shifts risk away from taxpayers. Though the ABLE program was not successful, it did not cost New York taxpayers

any money and benefited the Rikers community by connecting prison staff with service providers who worked

together to change the recidivism climate in the prison (Burton, 2015).

 Improved data. PFS projects require that rigorous and scientific data be collected in order to show that outcomes are

met. They allow governments, investors, and nonprofit service providers to understand what does and does not work

in advancing social service provision and improving client outcomes.

 New and innovative approaches. Private investment allows governments to secure financing for promising social

service approaches to be tested and evaluated that may not have otherwise been financially feasible.
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While the effort was not a success as defined by the attainment of outcome targets, many involved with the ABLE project 

praised program logistics and implementation efforts, and validated the perceived value of PFS as a financing mechanism 

(Anderson & Phillips, 2015; Burton, 2015). 

Utah Pre-K Project 

Lead Organization: State of Utah 

Intermediary: United Way of Salt Lake 

Service Provider: Six organizations, including public school districts and private 

educational providers

Focus Area: Early childhood education

Service Location: Park City School District and Granite School District (UT) 

Target Outcomes: Avoidance of special education or remedial education services 

Contract Execution Date: June 2013 

Investment Amount: $6.8 million

The Utah Pre-K project funds the extension of an existing school-readiness curriculum to 3,500 additional preschoolers 

(grouped into five cohorts) in two school districts—Park City and Granite. To address early educational deficits, Utah 

developed a targeted curriculum for three- and four-year-olds from low-income families. Success is defined in terms of a 

child’s use or non-use of special education or remedial services each year between kindergarten and grade six. Each year 

that a student does not use a special education or remedial service generates a PFS payment. In October 2015, United Way 

(UW) of Salt Lake announced the early success of the Utah Pre-K Project. Initial findings show that of the 110 three- and 

four-year-olds who were targeted by the intervention and attended the high-quality preschool funded by the PFS project, 

only one child needed special education services upon reaching kindergarten. UW of Salt Lake estimates that this 

reduction in need for special education saved the state $281,550, which will trigger an initial payment to investors of 

$267,473 (95% of the total savings). As outlined in CNCS’s 2015 State of the Pay for Success Field report, investors will 

receive subsequent payments for each year these students continue to avoid special education through the sixth grade 

(UWSL, 2015). 

In response to UW of Salt Lake’s announcement, concerns have been raised regarding the validity of the outcomes 

reported. Critics attribute the measured success to a faulty definition of who constitutes a “likely” candidate for special 

education. They argue that there is little evidence of the correlation between a low score on an aptitude test and whether a 

specific child in the Utah Pre-K program would have needed special education in the absence of preschool, and 

furthermore attribute a portion of the 110 students’ qualifying scores to low English proficiency (Popper, 2015). As the 

project continues, these criticisms are likely to be explored and addressed further. 
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Chicago’s Child-Parent Center Pay for Success 

Initiative/SIB

Lead Organization: City of Chicago

Intermediary: Metropolitan Family Services

Service Provider: Chicago Public School District

Focus Area: Early childhood education

Service Location: Chicago (IL)

Target Outcomes: (a) Reduction in need for special education classes in schools; (b) 

increased third grade literacy rate

Contract Execution Date: October 2014

Investment Amount: $16.6 million 

This project funds pre-kindergarten education for 2,620 Chicago public school children over four years, and works with 

both parents and students to improve educational outcomes. The intervention caters to both children and their parents, 

and provides not only preschool services but also support services for parents who must remain strongly engaged in the 

program. Though initial results of the Chicago PFS Initiative are not yet available, there are reports that the project started 

slowly due to stalled recruitment (Sanchez, 2015). The preschool expansion program opened mid-school year, so children 

were already engaged in other daycare options. Additionally, fewer children enrolled in preschool overall due to a 

change in the preschool application process in Chicago (Sanchez, 2015). The PFS financing ended up paying for more fullday preschool spots than expected, rather than partial day spots, which may improve the overall outcome of the project, 

as research shows that children who attend full-day preschool at child-parent centers experience better academic 

outcomes than children in half-day programs (Reynolds et al., 2014). If there is a measured reduction in the number of 

students who would have needed special education in future school years according to pre-determined outcome 

benchmarks, the City of Chicago will make its first payment on Goldman Sachs’ loan in 2016. 

Massachusetts Juvenile Justice PFS Initiative 

Lead Organization: Executive Office for Administration and Finance, Commonwealth of 

Massachusetts

Intermediary: Third Sector Capital Partners, Inc. 

Service Provider: Roca, Inc. 

Focus Area: Juvenile justice (between 929 and 1,320 young men at-risk for recidivism) 

Service Locations: Areas surrounding Chelsea, Springfield, and Boston (MA)

Target Outcomes: (a) Employment gains; (b) bed days avoided 

Contract Execution Date: January 2014

Investment Amount: $21.3 million 

The Massachusetts Juvenile Justice PFS Initiative aims to improve life and employment outcomes for high-risk young 

men who are aging out of the juvenile detention and probation systems. The savings to the state are defined as savings 

accrued from avoided reincarceration. The project intends to deliver this intervention to 929 high-risk young men over a 

period of seven years. If the project proves successful, an additional 391 young men would be added, for a potential total 

of 1,320 high-risk young men served. 
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As of September 2015, Roca, Inc. had enrolled 384 young men at risk for recidivism into their programming across three 

service delivery sites. They reported having met or exceeded all internally set goals for 2015, and will continue to receive 

referrals and enroll individuals into their intervention through 2018 (Waters and Golden, 2015). December 2015 marks the 

completion of Phase 1 (2013 – 2015) of the two-phase Massachusetts PFS project. 

No additional information on this project was available at the time of publication. 

New York Increasing Employment and Improving Public Safety Pay for 

Success Project 

Lead Organization: New York State Department of Labor 

Intermediary: Social Finance Inc. 

Service Provider: Center for Employment Opportunities (CEO)

Focus Area: Formerly incarcerated men (2,000 recently released prisoners at-risk for 

recidivism)

Service Location: New York City and Rochester (NY)

Target Outcomes: (a) Employment gains; (b) bed days avoided; (c) transitional 

employment

Contract Execution Date: December 2013 

Investment Amount: $13.5 million 

The New York Increasing Employment and Improving Public Safety PFS project aims to improve economic and personal 

outcomes for men recently released from prison who are at high risk for re-offending. It is anticipated that the project will 

serve a total of 2,000 individuals in New York City and Rochester over 5.5 years. Participants will be served sequentially 

in two cohorts of 1,000 individuals each, with each cohort defined as a phase of the project. 

Similar to the Massachusetts project, December 2015 marks the completion of Phase 1 (2013 – 2015) of the two phase New 

York State PFS project. Phase 1 of the project was funded by the US Department of Labor, and Phase 2 will be funded by 

the New York State Department of Labor. 

As of September 2015, the Center for Employment Opportunities (CEO) had enrolled 928 individuals into programming, 

nearing their goal of enrolling 1,000 participants during Phase 1. Preparation for a randomized controlled trial evaluation 

is expected to be completed by the end of Phase 1 (Waters and Golden, 2015). 

Cuyahoga County Partnering for Family Success Program 

Lead Organization: Cuyahoga County Division of Children and Family Services

Intermediary: Enterprise Community Partners, Inc. 

Service Provider: FrontLine Services

Focus Area: Homelessness and child welfare 

Service Location: Cuyahoga County (OH) 

Target Outcomes: Reduction in out-of-home foster care placement 

Contract Execution Date: December 2014

Investment Amount: $4.0 million 

FrontLine Services, the service provider for this PFS project, will link homeless caregivers to housing though an 

established network of housing service providers, and will deliver “Critical Time Intervention” (CTI), an evidence-based 
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homelessness transition therapy program. FrontLine Services will provide the 12-15 month treatment program to 135 

families over a three-year period. For each day that the number out-of-home foster care days is reduced for children in the 

treatment group relative to children in the control group, Cuyahoga County will pay $75, which represents the combined 

average cost of foster care and related social services per child, per day. 

Project implementation began in early 2015, suggesting that the program is currently administering the CTI component of 

services (Pristow and Anderson, 2015). 

No additional information on this project was available at the time of publication. 
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Newly Implemented PFS Projects 

Project Welcome Home 

Lead Organization: The County of Santa Clara 

Intermediary: Third Sector Capital Partners

Service Provider: Abode Services

Focus Area: Homelessness 

Service Location: Santa Clara County (CA)

Target Outcomes: 80% of participants will maintain 12 months of continuous stable 

housing

Contract Execution Date: June 2015 

Investment Amount: $6.9 million 

Introduction 

Santa Clara County estimates it has over 2,200 individuals who can be classified as chronically homeless. These are adults 

(or families with at least one adult member) with a disabling condition, such as substance abuse or mental illness, who 

have experienced continuous homelessness for one year or more and/or who have experienced four or more episodes of 

homelessness within the past three years. Chronically homeless individuals are more likely to utilize expensive medical 

and behavioral health resources; those with more stable housing are more likely to experience improved health outcomes. 

To address the issue of chronic homelessness, the County of Santa Clara launched Project Welcome Home on August 14, 

2015 to provide housing and other support services to 150-200 chronically homeless individuals over six years (County of 

Santa Clara, 2015). 

Service Intervention 

Abode Services will work with the County of Santa Clara’s Office of Supportive Housing and Behavioral Health Services 

Department to provide chronically homeless individuals access to community-based clinical services and permanent 

supportive housing. The organization will use Assertive Community Treatment, an evidence-based approach to 

supportive services, and the “Housing First” approach. The ultimate goal of this service intervention is to help end 

homelessness, increase income for individuals experiencing homelessness, and provide these individuals with increased 

access to physical and behavioral health services. 

Project Partnership and Structure 

With the County of Santa Clara, California as the lead public entity, the key partners in this project include: 

 Intermediary: Third Sector Capital Partners 

 Service Providers: Abode Services 

 Funders/investors: The Sobrato Family Foundation, The California Endowment, The Health Trust, The Reinvestment 

Fund, Corporation for Supportive Housing, The James Irvine Foundation, and Google.org

 Evaluator: University of California, San Francisco 

Funding Strategy 

A group of eight funders is providing $6.9 million for this project (Third Sector Capital, 2015): 
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 The Reinvestment Fund will provide $500,000 in senior loan funding at 5% interest. 

 Corporation for Supportive Housing will provide $500,000 in senior loan funding at 5% interest. 

 The Sobrato Family Foundation will provide $1,500,000 in subordinate loan8funding at 2% interest. 

 The California Endowment will provide $1,000,000 in subordinate loan funding at 2% interest. 

 The Health Trust will provide $1,000,000 in subordinate loan funding at 0% interest. 

 The James Irvine Foundation will provide nearly $300,000 in subordinate loan funding at 0% interest. 

 Google.org will provide $500,000 in recoverable grants. 

 Abode Services will defer $500,000 of service fees over six years to be repaid only if successful outcomes are 

achieved. 

 Laura and John Arnold Foundation will provide over $1,000,000 in support for evaluation-related project costs. 

Evaluation 

The University of California, San Francisco will conduct a randomized controlled trial to determine whether the 

combination of services implemented by the service provider produces measurable changes in health and governmentfunded social service utilization for adults experiencing chronic homelessness in Santa Clara County. UCSF will evaluate 

the number of months for which participants maintain stable housing over the six-year project. 

Target Outcomes and Repayment Structure 

The County of Santa Clara will make success payments throughout the project when a chronically homeless individual 

stays in continuous, stable housing for more than 12 months. If 80% of the target population achieves 12 months of stable 

housing, the $6.9 million investment will be repaid. Any additional successes will be paid to a maximum of $8 million; 

any success payments beyond the invested $6.9 million will be divided between Adobe as a performance incentive (75%) 

and senior and subordinate funders (25%). If successful, the payments will be made as follows: 

Success Payment 

per Participant

Participant Milestone

$1,242 3 months of continuous tenancy 

$1,863 6 months of continuous tenancy 

$2,484 9 months of continuous tenancy 

$6,831 12 months of continuous tenancy 

$12,420 Cumulative payment through 12 months of continuous tenancy 

$1,035 Each month after the first year of stable tenancy 

 

8 The subordinate lenders will assume any financial burden before The Reinvestment Fund or the Corporation for Supportive Housing. 
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Chronic Individual Homelessness Pay for Success 

Lead Organization: Executive Office for Administration and Finance, Commonwealth of 

Massachusetts

Intermediary: United Way of Massachusetts Bay and Merrimack Valley

Service Provider: Massachusetts Housing and Shelter Alliance

Focus Area: Homelessness

Service Location: Massachusetts

Target Outcomes: Reduction in chronic homelessness and reductions in utilization 

of emergency resources 

Contract Execution Date: December 2014 

Investment Amount: $3.5 million 

Introduction 

The Commonwealth of Massachusetts is implementing a “Housing First” service model to reduce both chronic 

homelessness and state expenses for Medicaid, shelter, and incarceration. This program expands on the Massachusetts 

Housing and Shelter Alliance’s Home & Healthy for Good permanent supportive housing approach. The integrated

housing and health care services have resulted in significantly lowered public emergency costs for the Commonwealth 

since 2006 (Commonwealth of Massachusetts, 2014). 

Service Intervention 

The alliance will provide 500 units of stable and supportive housing for up to 800 individuals experiencing chronic 

homelessness in the Commonwealth of Massachusetts over six years. The “Housing First” model provides leased, 

community integrated, independent apartments or shared-living arrangements for eligible participants. Individuals living 

in these units have access to medical and mental health care, substance use treatment, case management, vocational 

training, and life skills training. The service providers engaged in the PFS project will be eligible to receive Medicaid 

reimbursement for the services they provide (Commonwealth of Massachusetts, 2014). 

Project Partnership and Structure 

With the Commonwealth of Massachusetts as the lead public entity, the key partners in this project include: 

 Intermediary: United Way of Massachusetts Bay and Merrimack Valley 

 Service Providers: Massachusetts Housing and Shelter Alliance 

 Funders/investors: Corporation for Supportive Housing, Santander Bank, United Way of Massachusetts Bay and 

Merrimack Valley 

 Evaluator: Root Cause 

Funding Strategy 

The funders for this project include the Corporation for Supportive Housing, a national housing nonprofit based in New 

York, providing $500,000; Santander Bank, investing $1.25 million; and United Way of Massachusetts Bay and Merrimack 

Valley, investing $1.75 million. In addition to these private and philanthropic investments, this program will also leverage 

public resources, including Massachusetts Rental Voucher Program subsidies from the Department of Housing and 

Community Development, which will be used to maintain many of the housing units beyond the PFS initiative. 
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Evaluation 

Root Cause, an organization that brings together nonprofits, philanthropies, governments, and businesses to improve the 

performance of those working on social issues, will help the Massachusetts Housing and Shelter Alliance establish 

benchmarks and collaborate with partners to verify their progress. 

Target Outcomes and Repayment Structure 

The Commonwealth will pay up to $6 million if the project is successful in housing individuals continuously for a year. 

 If 80% or less of the individuals remain in housing for a year, the investors will suffer a loss. 

 If 85%-99% of the individuals remain in housing for a year, the investors receive a 3.33% return. 

 If 90% of the individuals remain in housing for a year, the investors will receive the maximum 5.33% return. 

Massachusetts has a $50 million Social Innovation Financing Trust Fund designed specifically for PFS projects that will be 

used to fund investors’ payments should this project prove successful (United Way, 2015). 
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Other PFS Projects Nearing Implementation 

Despite the relatively small number of executed PFS contracts in the U.S., a number of new PFS projects are nearing 

implementation. The growth of these new and emerging PFS projects is driven by federal and philanthropic efforts to 

spur the development of PFS projects and financing. 

The SIF PFS program awarded one Transaction Structuring grant to the Nonprofit Finance Fund (NFF) in 2014. NFF 

stipulated within their request for proposals for subgrantees that applicant teams be on track to sign PFS contracts within 

12 months. As of November 2015, NFF awarded transaction structuring grants to nine existing PFS projects nearing 

implementation (NFF, 2015a): 

At the time data collection for this report was completed (December 2015), one of these projects was close to signing a 

final contract. The Housing to Health Initiative aims to provide supportive housing to 250 chronically homeless individuals 

in Denver with the goals of improving quality of life and reducing frequent, high-cost utilization of criminal justice and 

emergency health services. Enterprise Community Partners, Inc. and the Corporation for Supportive Housing are 

coordinating the PFS deal.9 Other awarded projects are listed below: 

 A Tuscaloosa, AL based project aims to expand individual job placement and support services for unemployed 

veterans who have been diagnosed with one or more mental health illnesses at Veterans Administration medical 

centers across the country. 

 Santa Clara County (CA) is working to launch a project serving at least 250 individuals who are frequent users of the 

County's emergency and inpatient psychiatric services. 

 The Illinois Dually-Involved Youth Project will deliver comprehensive services throughout Illinois to adolescent youth 

involved in both the criminal justice and child welfare systems. 

 The Massachusetts Adult Basic Education Initiative is designed to serve nearly 2,500 adult learners from Greater Boston, 

where large concentrations of immigrants and long waitlists for English language instruction are significant barriers 

to employment. The program will combine vocational training, contextualized English for Speakers of Other 

Languages instruction, and job search assistance. 

 The Nurse-Family Partnership project aims to expand the reach of its pre- and post-natal home visiting program in 

Michigan. 

 The Intensive Community Asset Program is designed to provide youth involved with the juvenile justice systems in 10 

counties of upstate New York with an alternative to placement that helps create pathways to success in home, school, 

and community. 

 A Greenville, SC based project aims to deliver community paramedical services to vulnerable populations in a multicounty, rural area to improve participants' self-management of chronic conditions and reduce unnecessary emergency 

room visits and hospitalizations. 

 Salt Lake County (UT) intends to launch three simultaneous projects in the areas of maternal and child health, 

homelessness, and criminal justice. 

In addition, seven projects receiving funding and technical assistance through the California PFS Initiative—funded by 

NFF and the James Irvine Foundation—are expected to close by 2016. These projects span Alameda, Los Angeles, Orange, 

San Diego, San Francisco, and Santa Clara counties and are currently focused on feasibility assessments, cost/benefit 

 

9

 Two contracts for this project were approved by the Denver City Council on January 25, 2016. 
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analyses, and return on investment analyses for PFS projects (NFF, 2015b). Project Welcome Home in Santa Clara County is 

the first active project involving PFS financing to stem from the California PFS Initiative (County of Santa Clara, 2015). 
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IV. Budgetary and Legislative Proposals

Federal Support 

There have been significant increases in federal support for PFS over the past three years. The fiscal year (FY) 2012

President’s Budget called for $100 million of funding for discretionary spending programs that focus on recidivism, 

workforce training, and homelessness; and the 2013 President’s budget called for $109 million for PFS programming. 

However, neither of these proposals was approved by Congress (Shah & Costa, 2013). The President's FY 2014 budget 

request for PFS increased considerably to approximately $500 million. Modeled on the U.K.’s Outcomes Finance Fund, 

which helps to fund a portion of the expenses for PFS projects beyond what local governments are able to finance, in FY 

2014 and subsequent years, the President’s budget proposed a $300 million Pay for Success Incentive Fund to partially 

fund cities’ and states’ outcome payments and provide partial guarantees to philanthropic organizations that engage in 

PFS deals (Shah & Costa, 2013). The FY 2015 budget requested $82 million and the FY 2016 budget requested $64 million 

to support PFS initiatives at the U.S. Departments of Education, Labor, and Justice and the Corporation for National and 

Community Service in the areas of job training, education, criminal justice, housing and other human services. The FY 

2015 and FY 2016 budgets also proposed a new demonstration allowing the U.S. Department of Housing and Urban 

Development to use a PFS model to finance energy-efficient retrofits in HUD-assisted housing that would lead to 

reductions in utility costs (White House, 2014; White House, 2015). Additionally, $50 million was budgeted in FY 2016 

specifically for the Social Innovation Fund, up to 20 percent of which can be used for PFS projects. The FY 2016 budget 

also proposed $15 million to fund a PFS initiative for early identification of and intervention for learning and 

developmental delays as part of the President’s Preschool for All proposal (New Profit, 2015). 

In FY 2015, Congress continued to deliberate on several key articles of PFS legislation in both the House and Senate. In 

March 2015, Representatives Young [R-IN] and Delaney [D-MD] re-introduced the Social Impact Partnership Act (H.R. 

1336) to provide federal appropriations to fund states or local governments to engage in public-private social impact 

partnership projects. The companion bill to the Social Impact Partnership Act in the Senate (S.1089) was re-introduced by 

Senators Hatch [R-UT] and Bennet [D-CO] in April 2015.10 In addition, legislation to authorize a multifamily energy and 

water conservation PFS demonstration in affordable housing—Private Investment in Housing Act (H.R.2997)—was 

introduced in July 2015, and later included in Sec. 81001 of the FAST Act which became law in December 2015 (Public 

Law: 114-94). Further, both the House and Senate approved the inclusion of PFS initiatives as an allowable use of state 

and local funds in various titles of the Every Child Achieves (S.1177) and Student Access (H.R.5) Acts (Public Law 

114-95: the Every Student Succeeds Act, New Profit, 2015). 

Beyond federal legislation, PFS activity continues to expand through several existing federal grant programs 

administered by the Department of Labor, CNCS, and the Department of Justice (CNCS, 2015b). In October 2015, the 

Department of Housing and Urban Development and the Department of Justice further released a notice of funding 

award to support an $8.6 million PFS permanent supportive housing initiative for individuals continuously cycling 

between the criminal justice system and homeless services (HUD, 2015). In addition, the Government Accountability 

Office (GAO) released a report in 2015, recommending that the director of the Office of Management and Budget 

(OMB) establish a formal means for federal agencies to collaborate on PFS. The report was developed in response to a 

congressional request for more information about PFS and its implementation to date, 

10 H.R. 1336 was first introduced in FY2014 as the “Social Impact Bond Act” and S. 1089 was first introduced in FY2014 as the “PayFor-Performance Act.”
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and the appropriate role for the federal government within PFS projects. GAO identified potential roles for the federal 

government in PFS including: (1) outcomes payor; (2) funder of capacity building activities; and (3) loan guarantor (GAO, 

2015). 

State Legislation 

In FY2015, three states—Colorado, Idaho, and Texas—passed PFS-enabling legislation: 

 Colorado: HB 15-1317 was signed into law in May 2015, establishing the Colorado Pay for Success Contracts Program.

The bill allows the Colorado Office of State Planning and Budgeting to enter into Pay for Success contracts with one

or more lead contractors (organization or local government) for program-eligible interventions. The bill further

establishes a state Pay for Success fund containing the government’s cost savings to be used to pay the lead contractor

if performance targets are met.

 Texas: In June 2015, HB 3014 was signed into law, creating a Success Contract Payments Trust Fund in Texas. The

trust fund establishes a reserve from which the comptroller, as trustee, may make success contract payments due in

accordance with contract terms without an appropriation.

 Idaho: The Pay for Success Contracting Program (HB 170) was signed into law in April 2015, allowing the state

Department of Education to enter into PFS contracts.

These three states joined four other states that passed legislation in 2014 (Utah, Massachusetts, Oklahoma, and California). 

Among these states, California and Oklahoma have released subsequent state-level requests for proposals in 2015. 

In addition, New Hampshire, New Jersey, Pennsylvania, and Washington introduced legislation related to PFS in 2015.11

New Jersey’s companion bills (A-2771/S-452) to pilot a five-year social innovation loan program within the New Jersey 

Economic Development Authority passed the Assembly and Senate and were sent to the Governor for consideration in 

June 2015. 

Philanthropic Support 

In addition to Federal support, philanthropic entities play a significant role in driving the PFS field forward—funding 

feasibility studies and pilot projects, supporting technical assistance efforts in the field, and providing up-front 

investments and/or financial guarantees for PFS deals. To date, 12 foundations have invested in currently active US-based 

PFS deals, including: Bloomberg Philanthropies (NYC PFS project); Cleveland Foundation (Cuyahoga PFS project); 

George Gund Foundation (Cuyahoga PFS project); James Irvine Foundation (Santa Clara PFS project); JB and MK Pritzker 

Family Foundation (Utah, Chicago PFS projects); Kresge Foundation (MA Juvenile Justice PFS project); Laura and John 

Arnold Foundation (NY State, Santa Clara PFS projects); Robin Hood Foundation (NY State PFS project); Rockefeller 

Foundation (NY State PFS project); Sisters of Charity Foundation of Cleveland (Cuyahoga PFS project); and the Sobrato 

Family Foundation (Santa Clara PFS project). 

11 New Hampshire SB 69 would establish a commission to study Social Impact Bond funding for early childhood education for atrisk students; Washington HB 1501 would authorize the office of financial management to procure and enter into a multiyear PFS 

contract related to juvenile reentry; Pennsylvania HB 1147 would allow the state to enter into PFS contracts. 
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Key foundation-driven initiatives and brief descriptions are listed in the table below. 

Initiative & Funder Initiative Overview 

California Pay for Success Initiative 

James Irvine Foundation & Nonprofit Finance 

Fund 

A $5 million, 3-year effort that provides flexible funding and expert 

support to help nonprofit and government leaders structure Pay for 

Success agreements in California (NFF, 2015b). 

Strong Families Fund 

Kresge Foundation & Robert Wood Johnson 

Foundation (RWJF)

Funded by a number of banks and philanthropic partners led by The 

Kresge Foundation and RWJF, this $70 million-plus pilot pay-forperformance project finances social services coordination and 

quality, affordable housing for low-income families (The Kresge 

Foundation, 2015). 

Resilience Pay for Success Initiative 

Rockefeller Foundation & Social Finance 

Provides guidance and support to 100 Resilient Cities12 member 

cities in the U.S. exploring Pay for Success opportunities (100RC, 

2015). 

Pay for Success Grant Awards 

Laura and John Arnold Foundation (LJAF) 

Awards grants on an ongoing basis to key influencers in the PFS 

field, including $8.4 million to the Urban Institute to fund their PFS

initiative, and a $7.4 million grant to the Harvard Kennedy School in 

support of their Government Performance Lab, among others (LJAF, 

2015a; LJAF, 2015b). 

 

12

 100 Resilient Cities is a Rockefeller Foundation initiative launched in 2013 to help cities around the world become more resilient to 

the physical, social, and economic challenges that are a growing part of the 21st century. 
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V. An Inventory of Pay for Success Tools

In order for the PFS landscape to continue to grow and expand, standard templates and tools are needed that interested 

parties can leverage to assess and structure their own deals. At this time, the pool of available tools remains somewhat 

limited. The tools listed below were identified using a series of standard search terms, including “pay for success,” “social 

impact bond,” “social benefit bond,” “feasibility assessment tool,” and “SIB assessment tool” through Google, Google 

Scholar, and PFS content aggregators (e.g., Nonprofit Finance Fund’s Pay for Success Learning Hub, Utah Policy 

Innovation Lab’s Knowledge Portal). Of the 11 identified tools described below, 6 were from international organizations 

or governments, 3 were produced by the Nonprofit Finance Fund, and the remaining 2 were from U.S. based 

organizations engaged in the PFS field. These tools are meant to be used by a variety of audiences, including 

governments, service providers, and evaluators; the audience for each is specified below. 

This report takes a first step in facilitating and encouraging further development and sharing of tools by compiling 

existing, publicly available tools in a single location. It will be important to continue to identify and share newly 

developed tools that emerge as the PFS field grows. These will include resources, templates and models currently under 

development by the eight SIF PFS program grantees funded in 2015. 

For each tool, this section lists the developer, a summary of the tool format and purpose, and which actor(s) involved in a 

PFS project could benefit from its use. 

Deep Assessment Capabilities Due Diligence Tools 

Produced by: Nonprofit Finance Fund and McKinsey & 

Company 

Summary: These web-based tools provide a detailed framework 

to assess core capabilities for participation in a PFS transaction. 

They are designed to support advanced discussions and lay the 

groundwork for collaboration across the multiple stakeholders 

involved in a PFS transaction. Different tools are available for 

service providers, intermediaries, and evaluators. Each tool 

includes six modules: 

1. Introduction: what the tools do and how to use them

2. Data Request: worksheet providing comprehensive lists of

data that must be collected at different points in the due

diligence process

3. Data Request Inventories: worksheet to manage the overall

process of collecting data

4. Templates: forms to manage and organize the data that must

be collected at each stage

5. Interview Guides: interview questions used in the due

diligence process to assess management and governance

capacities

6. Scoring Rubric: matrix used to tally final scoring of

organizational capacity across every category

Beneficial for: Service providers, Intermediaries, Evaluators 

Link: http://www.payforsuccess.org/provider-toolkit/deepassessment-capabilities-due-diligence-tools
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Guidance on the Template Contract for Social Impact Bonds and Payment by Results 

Produced by: The United Kingdom Cabinet Office

Summary: This template contract provides a basic starting point 

for those initiating a Pay for Success or Pay for Performance 

project. The document includes details on what a Social Impact 

Bond is, the performance and payment risk spectrum, the parties 

involved, and examples of possible contract structures. 

Beneficial for: Intermediaries, Governments 

Link: https://www.gov.uk/government/publications/guidance-onthe-template-contract-for-social-impact-bonds 

Language for Inclusion in Social Impact Bond Agreements 

Produced By: Center for American Progress 

Summary: This document offers draft language that could be 

included in a SIB contractual agreement. It is meant to help 

readers understand some of the complexities of SIB 

arrangements and ways to address them through contract 

development. The developers note that the draft language is not 

intended to be legal advice and is not offered as a model 

contract for SIBs. 

Beneficial for: Intermediaries, Governments, Project 

coordinators 

Link: 

https://www.americanprogress.org/issues/general/report/2012/05

/07/11619/inside-a-social-impact-bond-agreement/
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Prenatal Home Visiting Feasibility Assessment 

Produced By: ReadyNation 

Summary: This Excel tool facilitates assessment of feasibility to 

engage in a PFS project. Pre-populated with data used to assess 

the feasibility of the Partners in Pregnancy program in Virginia, 

the spreadsheet includes entry fields for a variety of data related 

to project assumptions, cash flow analysis, and intervention 

analysis (including percent and number of target population 

receiving an intervention, cost of providing the intervention, etc.). 

The tool then automatically populates a series of key feasibility 

assessment results. 

Beneficial for: Intermediaries, Evaluators, Governments 

Link: http://readynation.s3.amazonaws.com/wpcontent/uploads/ReadyNation-Pay-for-Success-Report112114.pdf

Rapid Suitability Questionnaires (RSQ) 

Produced by: Nonprofit Finance Fund and McKinsey & 

Company 

Summary: These questionnaires enable those in the initial 

phases of considering PFS to quickly evaluate organizational 

suitability to pursue this model. The tool can be used by 

organizations to self-assess capacity or to assess suitability of 

potential partners. RSQs are available to assess the overall 

intervention as well as the six primary stakeholders involved in a 

PFS transaction—service provider, intermediary, government, 

investor, independent assessor, and evaluation advisor. Upon 

completion, each RSQ produces a report summarizing strengths, 

areas for growth, and areas of risk. 

Beneficial for: Governments, Service providers, Intermediaries 

Link: http://www.payforsuccess.org/provider-toolkit/rapidsuitability-questionnaires 
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Sample PFS Contracts, Legislation and Requests for Proposal 

Produced By: Nonprofit Finance Fund 

Summary: As part of the Pay for Success Learning Hub, the 

Nonprofit Finance Fund compiles sample contracts, legislation, 

and requests for proposals/response/information developed and 

disseminated for existing PFS projects in the U.S. This 

compendium of sample documents is intended to serve as a 

starting point to help guide those entering the PFS field who are 

looking for existing templates to emulate. 

Beneficial for: Governments, Policymakers, Service providers, 

Intermediaries 

Link: http://www.payforsuccess.org/provider-toolkit/contractissues 

Social Impact Bond Calculator 

Produced by: Social Finance, the Big Lottery Fund, the Cabinet 

Office, and the Local Government Association 

Summary: This web-based tool allows individuals to calculate 

the cost and gross savings of a SIB across a seven-year period, 

based on project specific inputs related to the outcome targeted, 

cohort size, and cost inputs. Once the necessary data are 

entered, it additionally produces values for savings per outcome, 

the number of outcomes, total gross savings, total cost of the 

program, total outcome payments, and total net savings. The tool 

was initially designed to educate new audiences about the 

application of SIBs, rather than for PFS projects to use in 

designing a project. 

Beneficial for: Intermediaries, Investors, Governments 

Link: http://www.sibtool.co.uk/ 
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Social Impact Bond Self-Assessment Tool 

Produced By: Government of South Australia 

Summary: The purpose of this Excel-based tool is to assess 

challenges and opportunities for SIB development related to a 

specific project and target population. An “Input” sheet presents a 

series of questions about the social issue an organization wants 

to address, the current cost to the government, the target 

population, the potential outcome metric, and the intervention 

program. An “Output” sheet provides a calculated score and 

high-level assessment of viability based on the inputs. 

Beneficial for: Service providers, Intermediaries, Governments 

Link: http://yoursay.sa.gov.au/pages/social-impact-bonds-selfassessment-tool/

Social Impact Bond Toolkit 

Produced by: Center for Social Impact Bonds, Cabinet Office 

Summary: This Toolkit offers practical tools to help practitioners 

develop SIBs in a quick and cost-effective manner. The toolkit 

includes a SIB Service Agreement Contract Template, costbenefit analysis guidance and a supporting model, and a unit 

cost database. Each of these tools provides guidance for a wide 

range of key players involved in the development and 

implementation of a SIB. 

Beneficial for: Intermediaries, Service providers, Governments 

Link: https://data.gov.uk/sib_knowledge_box/toolkit
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Social Impact Outcomes Matrix 

Produced by: Big Society Capital 

Summary: This web-based Outcomes Matrix, developed in the 

United Kingdom, helps organizations plan and measure their 

social impact and select relevant outcomes and measures for 

nine outcome areas and fifteen beneficiary groups. The nine 

outcome areas are: 

 Employment, Training and Education 

 Physical Health 

 Citizenship and Community 

 Housing and Local Facilities 

 Mental Health and Well-Being 

 Arts, Heritage, Sports and Faith 

 Income and Financial Inclusion 

 Family, Friends and Relationships 

 Conservation of the Natural Environment 

Beneficiary groups include homeless people, those with mental 

health needs, learning disabilities, addiction issues, offenders, 

and more. Outcomes and measures can be exported into a file 

that will allow editing and customization to meet the requirements 

of an individual organization. The Outcomes Matrix aims to 

develop a common language regarding social investment and 

impact assessment in the social sector. 

Beneficial for: Service Providers, Intermediaries 

Link: http://www.bigsocietycapital.com/impact-matrix

Unit Cost Database 

Produced By: New Economy (policy and research firm located 

in Manchester, UK), funded by UK Government 

Summary: This Excel-based unit cost database includes more 

than 600 unit cost estimates that can be used to calculate the 

costs of delivering specific services and the potential savings that 

can be achieved as a result. The database contains unit costs 

related to: crime; education and skills; employment and 

economy; fire; health; housing; and social services. Detailed 

explanations are provided regarding the sources and calculations 

of the estimates. 

Beneficial for: Governments, Service providers, Intermediaries, 

Evaluators 

Link: http://neweconomymanchester.com/our-work/researchevaluation-cost-benefit-analysis/cost-benefit-analysis/unit-costdatabase 
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https://www.youtube.com/watch?v=Rh1SLa6JVf8&feature=youtu.be 

White House (2014). The President’s Budget, Fiscal Year 2015. Opportunity for all: Building and using evidence to improve results. 

Retrieved from http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/fact_sheets/building-and-usingevidence-to-strengthen-results-in-government.pdf 

White House (2015). The President’s Budget, Fiscal Year 2016. Middle class economics: Building and using evidence to improve 

results. Retrieved from http://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/fact_sheets/buildingand-using-evidence-to-improve-results.pdf 

Wilson, K. E., Silva, F., & Ricardson, D. (2015). Social impact investment: Building the evidence base. Organisation for 

Economic Co-operation and Development. Retrieved from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2562082 
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Appendix A: Glossary of Key Terms 

Key Terms Definition

Corporation for National 

and Community Service 

(CNCS) 

Established in 1993, the Corporation for National and Community Service (CNCS) is a 

federal agency that engages more than 5 million Americans in service through its core 

programs -- Senior Corps, AmeriCorps, and the Social Innovation Fund -- and leads 

President Obama’s national call to service initiative, United We Serve. 

As the nation’s largest grantmaker for service and volunteering, CNCS plays a critical 

role in strengthening America’s nonprofit sector and addressing the nation’s challenges 

through service. 

Other Terms Used: N/A

Counterfactual The condition that would result in the absence of a given action or intervention. For 

example, in randomized controlled trial (RCT) evaluations, use of a control group 

establishes a counterfactual to estimate what would have happened in the absence of 

the intervention. 

Other Terms Used: N/A 

Evaluator The independent party responsible for implementing evaluation-related activities (e.g., 

random assignment), collecting and tracking data, and performing analyses to assess 

the effectiveness and integrity of a given Pay for Success intervention in achieving 

defined objectives/outcomes. 

Other Terms Used: Independent evaluator, Researcher 

Evidenced-based practices Practices, services, or activities that have been shown to be effective based on data 

and/or research. 

Other Terms Used: Promising practices 

Funder The entity or entities that provide up-front capital to fund PFS intervention operations, 

with the dual objectives of receiving financial and social returns. Funders may include 

foundations, nonprofits, investment banks, individual investors, and private banks. 

Other Terms Used: Investor

Guarantor Insurer on the initial investment made by the Pay for Success funder/investor to 

guarantee loans to reduce the investment risk. Not all Pay-for-Success transactions 

include a guarantor. For example, as part of the New York City ABLE Project for 

Incarcerated Youth, the primary lender for the project, Goldman Sachs, is supported by 

a financial guarantee from Bloomberg Philanthropies (the guarantor). 

Other Terms Used: N/A

Impact investing A general term used to describe socially conscious investment of funds to generate both 

social and financial (for-profit) returns. Social Impact Bonds and the PFS model are both 

forms of impact investing. 

Other Terms Used: Social innovation financing, Social impact investing, Socially 

responsible investing, Social financing, Social enterprise 

Intermediary The entity most often responsible for overall project management/coordination, investor 

recruitment, and negotiation of contracts among payors, service providers, and 

investors in PFS projects. Intermediaries are typically responsible for entering into direct 

contracts with the government funder, liaising with potential investors to secure capital 
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Key Terms Definition

commitments to the transaction, and serving as the primary liaison among key players 

in the Pay for Success relationship. 

Other Terms Used: Transaction coordinator, Project coordinator, Government advisor, 

Placement agent 

Intervention A model or program that offers a discrete set of products and/or services to address a 

specific social issue or challenge, and ideally achieve desired results. 

Other Terms Used: Program model

Outcome-based payments Payments from the payor to investors proportionate to the outcomes and/or impacts 

achieved through the intervention. 

Other Terms Used: Performance-based payments, Success payments 

Pay for Success (PFS) Pay for Success is the procurement of social services or environmental interventions 

whereby payment is released only on the basis of the outcomes, not on activity or 

compliance. That is, rather than paying for services regardless of their effects, payment 

is made only if the interventions achieve positive results. A PFS project may or may not 

involve PFS financing (see below). 

Other Terms Used: N/A

PFS Contract Contracts that release payment only when an intervention achieves positive outcomes at 

pre-set target levels. Please note that the term “contract” is used loosely in this document 

and in the Pay for Success contexts more generally. Contracts at the federal, state and local 

government levels are subject to applicable procurement laws and regulations. 

Other Terms Used: PFS agreement 

PFS Financing Capital that covers the upfront costs of service provision and at times other associated 

costs for the PFS project. 

Other Terms Used: Social Impact Bonds 

Payor The entity that is ultimately responsible for paying investors proportional to the agreed 

amount based on the level of measureable impact achieved. In the majority of cases, the 

Pay for Success payor is a government agency. 

Other Terms Used: Payer, Lead organization, Outcome payor, Back-end payor, 

Government payor 

Perverse incentives Outcomes incentivized by the Pay for Success payment structure that lead to adverse or 

unintended results. 

Other Terms Used: N/A 

Randomized controlled 

trial (RCT) 

An evaluation methodology commonly used to test the effectiveness of social and 

medical interventions. In its most basic form, an RCT measures the effect of an 

intervention on two groups randomly selected from a population—a “treatment” group 

that receives the intervention and a “control” group that does not receive the 

intervention. If randomization is conducted correctly, the only difference between the 

groups is the provision of the intervention; therefore, any differences between the two 

groups can be attributed to that intervention. 

Other Terms Used: Random control trial, Random assignment evaluation, 

Experimental study 
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Key Terms Definition

Service provider The entity that delivers a specific intervention financed by the Pay for Success 

transaction in order to achieve predefined and agreed upon outcomes and/or impacts. 

Other Terms Used: Social service provider 

Social impact The net effect of an intervention/program on individuals and the community at large. 

Other Terms Used: Social value 

Social Impact Bond (SIB) A Pay for Success financing mechanism through which private investors provide capital 

for an evidence-based social program. The principal investment is only returned (and 

possible additional returns are only distributed) when predetermined performance 

goals are met. The term Social Impact Bond is often used interchangeably with “Pay for 

Success;” however, SIBs are one of multiple mechanisms for PFS financing. 

Other Terms Used: Pay for success bond, Social benefit bond, Pay for Success financing 

Social Innovation Fund 

(SIF) 

The Social Innovation Fund (SIF), a program of the Corporation for National and 

Community Service (CNCS), combines public and private resources to grow the impact 

of innovative, community-based solutions that have compelling evidence of improving 

the lives of people in low-income communities throughout the United States. The SIF 

invests in three priority areas: economic opportunity, healthy futures, and youth 

development. 

In 2014, the SIF launched a new initiative to support the expansion of Pay for Success. 

The initiative, known as the SIF PFS program, funded eight grantees in its inaugural 

year to provide technical assistance to state or local governments or nonprofit 

organizations to assess PFS feasibility and build capacity to develop PFS projects 

involving PFS financing or to implement deal structuring activities for PFS initiatives. 

Other Terms Used: N/A

Validator The independent entity responsible for reviewing and confirming that the evaluation 

activities were implemented correctly and that the outcomes and/or impacts of a Pay for 

Success intervention were measured according to a predetermined evaluation 

methodology. 

Other Terms Used: Independent validator 
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Appendix B: Annotated Bibliography of Key Sources

Key Source Overview 

Australian Centre for Financial Studies 

(2015). ACFS roundtable: The future of 

social impact bonds. Financial Regulation 

Discussion Paper Series, 3. Retrieved from 

http://www.australiancentre.com.au/sites/

default/files/NewsDocs/FRDP2015-

3%20Social%20Impact%20Bonds%20%5Bfi

nal%5D_0.pdf

This paper summarizes a meeting of 19 participants, including investment managers and advisers, 

debt capital market bankers, credit analysts, legal professionals, and representatives of not-forprofit organizations. Participants discussed the costs and benefits of SIBS and provided 

recommendations to governments and policy makers to further increase uptake of SIBs in 

Australia. 

Key Take-Away(s): 

 The market for social impact bonds (SIB) is nascent on both a domestic and international 

scale. Some of the reasons for this lack of scale include the investment industry’s focus on 

short-term performance and its reluctance to devote time and resources to understanding 

what is still viewed as a niche asset class. Governments and/or large institutional investors 

may need to participate as cornerstone investors in order to lend credibility to new issues. 

 Social impact bonds are premised on the idea that financial returns and social returns can 

be achieved hand-in-hand. When an intervention financed by a social impact bond is 

successful, shared value is created and benefits accrue to both the public sector and private 

investors. 

Baldini, N.S. (2015). Pay for success: 

Financing research-informed practice. 

Cascade, Fall 2015 (89). Retrieved from 

https://www.philadelphiafed.org/communi

tydevelopment/publications/cascade/89/01_p

ay-for-success 

This article offers an overview of the Pay for Success (PFS) model, perceived benefits and pitfalls of 

its application, and a brief description of PFS activity in the US. Baldini views PFS financing as 

having the potential to drive research-informed practice by governments and generate cost 

savings, but identifies a variety of potential challenges. 

Key Take-Away(s): 

 Key challenges of the PFS model include: (1) high transaction costs and capacity needs due 

to the need for extensive coordination among PFS implementation partners; and (2) 

potential for “creaming” of the target population to ensure outcomes are met.

 PFS financing requires innovation on the part of a federal/state/county payor (e.g., 

openness to new legal and financial approaches) and may necessitate a culture shift and 

broad systemic change. 

Bradley, M., Dudding, B. & Wenner, Z. 

(2015). Thriving in an outcomes-based market. 

Washington, DC: The Aspen Institute. 

Retrieved from 

The Aspen Institute’s Report provides a brief background and framing of the SIB mechanism, and 

includes a detailed case study of the Center for Employment Opportunity’s PFS project, including 

components of success and challenges to implementation. The report discusses the role of 

scalability and replication in the lead up to a SIB transaction. 
State of the Pay for Success Field II Corporation for National and Community Service 

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Key Source Overview 

http://www.aspeninstitute.org/sites/default

/files/content/docs/pubs/ThrivingOutcome

sBasedMkt.pdf

Key Take-Away(s): 

 PFS aims to create a transactional landscape that empowers organizations as they 

aggregate, analyze, and improve their social outcomes. 

 Only 1% of service providers currently have the capacity to enter a PFS transaction. 

 For the Center for Employment Opportunity, keys to success included: a legacy of data 

collection, capacity building and growth capital, a randomized controlled trial, and 

performance management. 

Bridges Ventures LLP (2014). Choosing 

social impact bonds: A practitioner’s guide. 

Retrieved from 

http://bridgesventures.com/wpcontent/uploads/2014/10/ChoosingSocialImpac

tBonds_APractitionersGuide.pdf

This report provides three detailed sections on SIBs. The first section discusses unlocking better 

outcomes from the government or donor perspective, the delivery partner perspective, and the 

investor perspective, and concludes with potential for wider system change. The second section 

provides the design features needed to deliver the intended benefits of SIBs, the activities used for 

each design feature, and the persons or organizations typically responsible for each action. The 

final section includes recommendations and observations for governments and donors, service 

providers and investors. 

Key Take-Away(s): 

 SIBs enable creativity to develop new interventions, find better ways of delivering existing 

ones, and scale up what works. 

 Recommendations for governments and donors included ensure payment metrics directly 

relate to intended outcomes; clearly define target beneficiaries; identify the full cost to 

society of the issue being addressed; establish a way of accounting for the counterfactual; 

and ensure all parties will agree on whether outcomes have or have not been delivered, 

against which payment will be made. 

 Recommendations for service providers included embedding accurate and timely data 

collection and reporting systems; ensuring governance structure is empowered to respond 

decisively and creatively; driving appropriate referrals by engaging and incentivizing 

‘gatekeepers’ to the target group; tapping new sources of capital to avoid cannibalization 

of existing funding; and fully costing the required intervention and investment. 

 Recommendations for investors included matching investors financial risk-adjusted return 

expectations to outcome expectations; considering tiered capital structures; seeking top-up 

payments to create a financial upside opportunity that is linked to impact upside; and 

ensuring investors can engage and influence. 
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Key Source Overview 

Disley, E., & Rubin, J. (2014). Phase 2 report 

from the payment by results Social Impact 

Bond pilot at HMP Peterborough. Ministry 

of Justice Analytical Series. London: Rand 

Europe. Retrieved from 

https://www.gov.uk/government/uploads/

system/uploads/attachment_data/file/32573

8/peterborough-phase-2-pilot-report.pdf

Disley and Rubin outline qualitative findings/lessons learned from the second phase of the HMP 

Peterborough SIB, collected through qualitative interviews with project stakeholders, in line with 

the project’s five evaluation research questions. The report offers overviews of the HMP 

Peterborough intervention and contractual models, and outlines perceived benefits and pitfalls of 

each, concluding with lessons learned for future PFS projects of a similar nature. 

Key Take-Away(s): 

 Preliminary results of the pilot highlight the following potential strengths of the HMP 

Peterborough SIB model: (1) model flexibility where no theory of change was articulated 

for the intervention and contracts did not specify the intervention model to allow for 

course-correction; (2) partnership building in the community by building strategic links 

with a range of agencies, and ensuring sufficient length of the pilot to incentivize 

relationship-building in the community; (3) appointment of a local Project Director 

independent of any agency who led partnership building and monitoring/oversight 

activities; and (4) development of a customized case management database. 

 Preliminary results of the pilot highlight the following potential weaknesses of the HMP 

Peterborough SIB model: (1) a flexible model approach makes the process of evaluating the 

intervention’s effectiveness more difficult; and (2) failure to consider up-front how risk 

assessment data would be shared across partners. 

 Perceived benefits spanned beyond members of the HMP Peterborough cohorts, resulting 

in expanded trainings for staff, better engagement of inmates regarding post-release care, 

improved understanding of inmate needs, and prompting of critical assessment of existing 

services and processes. 

Dubno, J.A., Dugger, R.H., Gordon, D.L., 

Levin, D. & Peterson, P.A. (2014). Early 

health “pay for success” social impact finance: 

Scaling up prenatal health care in Virginia.

Washington, DC: ReadyNation. Retrieved 

from 

http://readynation.s3.amazonaws.com/wpcontent/uploads/ReadyNation-Pay-forSuccess-Report-112114.pdf

This report makes the case for using PFS to expand nurse visiting programs through Virginia’s 

Medicaid program to reduce premature and low birth weight (LBW) births, ultimately reducing 

healthcare costs and ensuring a future productive workforce to support economic growth. The 

authors cite successful outcomes of a pilot program in Virginia and the effectiveness of other nurse 

visiting programming as evidence that a PFS-funded intervention would be effective and 

worthwhile. 

Key Take-Away(s): 

 Barriers to implementing a PFS program for prenatal health care include: (1) limited 

comparison data on effectiveness of early health interventions in Virginia; (2) limited 

funding to acquire/analyze intervention data; (3) absence of a legislative framework for 
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Key Source Overview 

state involvement in PFS; and (4) disincentives for healthcare providers to participate in 

PFS, such as “churning” of Medicaid patients and downward adjustments in Medicaid 

service payments when a service or patient group is determined to cost less. 

 Recommendations to address these barriers include: (1) convene a workgroup of PFS 

advocates to identify challenges and solutions; (2) identify laws/regulations that may 

prevent effective financing of PFS in Virginia and enact enabling legislation if necessary; 

(3) issue RFPs to obtain applications for viable PFS arrangements; and (4) obtain funding to 

carry out feasibility assessments of promising RFP respondents. 

Federal Reserve Bank of St. Louis (2015, 

Sept 11). Engaging CDFIs in pay for 

success. 8 From the Eighth. Podcast 

retrieved from 

https://www.stlouisfed.org/communitydevelopment/multimedia/8-from-theeighth/engaging-cdfis-in-pay-for-success

This podcast offers two perspectives on the value of involving Community Development Finance 

Institutions (CDFIs) in PFS deals. Andy Rachlin, managing director of lending and investment at 

The Reinvestment Fund, and Joe Schmidt, director of strategic initiatives at the Illinois Facilities 

Fund (IFF), offer lessons learned based on their involvement with structuring the Chicago and 

Cuyahoga County PFS deals, respectively. 

Key Take-Away(s): 

 Large CDFIs are uniquely positioned to serve in intermediary/project coordinator roles 

within PFS deal-structuring activities due to their ability to bridge and translate between 

the policy and investment worlds, and their extensive networks and relationships within 

their communities. 

 Critical lessons learned from structuring existing deals include: (1) identifying a payor 

committed to PFS long term; and (2) creating innovative processes to translate the concept 

of PFS into loan agreements (e.g., through “conditions precedent to funding” in Cuyahoga 

deal). 

 The PFS field is likely to continue to grow and expand over the next 10 years as the market 

matures and documents and processes become standardized.

Flynn, J., Young, J. & Barnett, C. (2015). 

Impact investments: A literature review.

Brighton, United Kingdom: Centre for 

Development Impact Institute for 

Development Studies. Retrieved from 

http://opendocs.ids.ac.uk/opendocs/bitstre

am/handle/123456789/6820/Impact_invest

ments_a_literature_review.pdf?sequence=1

This article reviews the body of literature on evaluating impact investments. The authors identify a 

series of evaluation approaches and tools cited commonly throughout the literature, and offer a 

thorough review of evaluation methodologies for SIBs—a common focus area for newer literature. 

Key Take-Away(s): 

 While there is a large array of tools and approaches available to evaluate social impact 

investments, there is a predominant focus on metrics and rating-based systems that are not 

evaluative per se, but rather offer a complement to other methods. 
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Key Source Overview 

 Articles discussing the evaluations of three existing SIBs were included in the literature 

review—HMP Peterborough SIB, New York City Riker’s Island SIB, London Homelessness 

SIB. Propensity score matching (PSM) was used in the Peterborough and New York City 

SIBs and a baseline methodology was used for the London SIB. 

 Overall, there is a scarcity of literature on successful evaluation practice in impact 

investing. 

Fogel, A., Shumway, J. & Udpa, A. (2015). 

Roadmap for pay for success in Philadelphia. 

Boston, Massachusetts: Social Finance. 

Retrieved from 

http://www.phila.gov/mayor/pdfs/2015061

6_PFS%20Roadmap%20and%20Feasibility

%20Study%20Findings_vFINAL.pdf 

This report presents the findings of Social Finance’s four-month feasibility study of implementing a 

PFS project in the City of Philadelphia related to either recidivism or system-involved youth in outof-county residential facilities. The study found transitional employment for returning citizens as 

the most PFS-ready opportunity to reduce recidivism to the Philadelphia Prison System, and low 

readiness for implementation of an intervention for system-involved youth. 

Key Take-Away(s): 

 Social Finance recommends that the City of Philadelphia pursue a PFS project related to 

workforce reentry through transitional jobs. 

 Recommendations to the city in pursuing the PFS project include: (1) coordinate closely 

with the state to ensure alignment with any state-level processes and timelines; (2) 

continue to engage stakeholders external to the city to obtain buy in; and (3) consider 

sequencing multiple PFS projects over time. 

Galloway, I. (2014). Using pay-for-success 

to increase investment in the nonmedical 

determinants of health. Health Affairs, 

33(11), 1897-1904. Retrieved from 

http://content.healthaffairs.org/content/33/

11/1897.full.pdf+html

This article in Health Affairs describes existing pay-for-success health projects and related outcomes 

and provides suggestions for areas of future PFS projects, including childhood obesity, Hepatitis C 

transmission, and poor health from chronic homelessness. Galloway argues that a new market that 

values health, rather than health care, can buy better health through PFS. 

Key Take-Away(s): 

 Galloway recognizes a number of key challenges with the PFS model: public budget silos, 

government procurement and appropriations risk, and unreliable, unavailable, or 

inaccessible data. These three factors provide opportunities for policy reform in support of 

this model. 

Government Accountability Office (GAO). 

(2015). Pay for success: Collaboration among 

federal agencies would be helpful as 

governments explore new financing 

mechanisms. (GAO Publication No. 15-646). 

This report was developed in response to a congressional request for more information about PFS 

and its implementation to date, and the appropriate role for the federal government within PFS 

projects. The report examines: (1) how select PFS projects have been structured and what potential 

benefits they can provide; (2) how select PFS contracts have been structured to address potential 

project risks; and (3) the potential roles for the federal government’s involvement in PFS projects. 
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Key Source Overview 

Washington, D.C.: U.S. Government 

Printing Office. Retrieved from 

http://www.gao.gov/assets/680/672363.pdf 

A review of relevant literature and PFS project documents, and stakeholder interviews informed 

the report content. 

Key Take-Away(s): 

 GAO recommends that the Director of the Office of Management and Budget establish a 

formal means for federal agencies to collaborate on PFS. The key purpose of this 

collaboration would be to identify and broadly disseminate information on leading 

practices and lessons learned.

 Potential roles for the federal government to play in PFS projects include: (1) outcomes 

payor; (2) capacity building activities; and (3) loan guarantor. 

Gustafsson-Wright, E., Gardiner, S. & 

Putcha, V. (2015). The potential and 

limitations of impact bonds: Lessons from the 

first five years of experience worldwide. 

Washington, DC: Global Economy and 

Development at Brookings. Retrieved from 

http://www.brookings.edu/~/media/Resear

ch/Files/Reports/2015/07/social-impactbonds-potential-limitations/ImpactBondsweb.pdf?la=en

This comprehensive report provides an overview of SIBs and key actors involved with their 

development, an inventory of 38 active SIBs worldwide, and a review of key policies and 

legislation that have facilitated the field’s advancement. In addition, the report offers analyses of 

stakeholder motivations and key facilitators/challenges to SIB transactions, and an examination of 

10 common claims made about impact bonds. Research for this report consisted of over 70 

interviews with U.S.-based and international experts, and online surveys of 30 individuals 

involved with currently active SIBs. 

Key Take-Away(s): 

 Select conclusions from the report include: (1) SIBs have the potential to help improve 

social service delivery even though current deals have been complex and time- and 

expertise-intensive; (2) there has been enormous variation in SIB deal structure, mechanics, 

and roles, indicating a likelihood for continued flexibility as the model matures; (3) key 

factors to realizing a SIB transaction include measurable outcomes, evidence of 

intervention impact, government support, and dedication and collaboration of 

stakeholders; (4) rigorous evaluations (experimental) are not always necessary to measure 

impact and determine repayment; and (5) existing SIB deals are not achieving substantial 

scale in absolute terms. 

 Increased transparency and knowledge sharing are key to advancing the SIB model, 

including the development of communities of practice and easily accessible online content. 

In the Public Interest (ITPI), AFSCME, 

Minnesota Council of Nonprofits, 

Keystone Research Center, Oregon Center 

for Public Policy, Economic Opportunity 

This report proposes a variety of pitfalls of PFS projects and financing mechanisms. The authors 

provide an overview of the PFS model, list five key issues raised by PFS projects, and offer a list of 

key questions to consider prior to making the decision to enter into a PFS project. 

Key Take-Away(s): 
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Key Source Overview 

Institute, Center for Effective Government, 

& the ReFund America Project at the 

Roosevelt Institute. (2015). A guide to 

evaluating pay for success programs and social 

impact bonds. Retrieved from 

http://www.inthepublicinterest.org/wpcontent/uploads/ITPI-Pay-for-SuccessGuide-Dec-2015.pdf

 Five key issues with PFS raised by the authors include: (1) higher costs to taxpayers longterm relative to direct government funding of service providers to scale their interventions; 

(2) undue focus on financing mechanisms that fail to address the root causes of social 

problems rather than investment in policy change; (3) non-straightforward nature of 

isolating and measuring impact in the context of a PFS project; (4) compensation to 

investors for minimal risk taken since PFS service interventions often already have a 

rigorous evidence base; and (5) risk-sharing rather than risk transfer from the government. 

 Key questions to ask when considering PFS relate to examining options, intervention 

selection, contract development, contract terms, measurement and evaluation, costs to the 

government and public, service delivery, ensuring transparency and accountability, and 

government capacity and expertise. 

Jolliffe, D. & Hedderman, C. (2014). 

Peterborough Social Impact Bond: Final report 

on cohort 1 analysis. Leicester, United 

Kingdom: QinetiQ. Retrieved from 

https://www.gov.uk/government/uploads/

system/uploads/attachment_data/file/34168

4/peterborough-social-impact-bondreport.pdf

This report offers a detailed analysis of the evaluation methodology for the first cohort of the HMP 

Peterborough SIB, including a validation of the Propensity Score Matching (PSM) methodology, 

and an assessment of reconviction data to determine whether payment is due to investors. 

Independent assessors concluded that the model was sufficiently robust to support a reconviction 

analysis. Further analysis showed an 8.39% reduction in reoffending rates within the cohort, which 

is insufficient to trigger repayment for the first cohort (minimum 10% reduction required). 

Key Take-Away(s): 

 The process of gathering and agreeing upon the sample of data to be evaluated and 

obtaining missing data for the first cohort took 11 months. 

 While the reduced reoffending rate was not sufficient to trigger outcome payments for the 

first cohort, repayment could still be triggered at a future date if a 7.5% reduction across all 

cohorts is measured. 

Kohli, J., Golden, M., Coletti, J. & Bo’sher, 

L. (2015). From cashable savings to public 

value: Pricing program outcomes in pay for 

success. Center for American Progress. 

Retrieved from 

https://www.americanprogress.org/issues/

economy/report/2015/09/01/120300/fromcashable-savings-to-public-value/

This brief report cautions governments in valuing outcomes for PFS transactions solely through 

cashable savings calculations, and instead propose a calculation that takes into account three 

distinct factors: (1) well-being benefits, (2) public’s willingness to pay, and (3) cashable savings. A 

value calculation limited to cost savings undervalues the true benefit of social outcomes to 

government actors and narrows the circumstances to which PFS can be applied. 

Key Take-Away(s): 

 Of the three factors that comprise Kohli et al.’s value calculation, no single element is 

essential to a PFS initiative’s viability (e.g., programs with little cash savings but high 
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Key Source Overview 

public support and well-being benefits may generate enough value to support a PFS 

contract). 

 Key benefits of PFS for governments include: creating accountability for outcomes; paying 

only for success and sharing risk of failure; integrating funding streams to achieve results; 

incentivizing private investors to help achieve societal outcomes; and delaying payment 

for preventive programs. 

 Government valuation of outcomes needs to shift in order to enable PFS to realize its full 

potential. 

MDRC. (2015). MDRC statement on the Vera 

Institute’s study of the Adolescent Behavioral 

Learning Experience (ABLE) program at 

Rikers Island. Retrieved from

http://www.mdrc.org/news/announcement

/mdrc-statement-vera-institute-s-studyadolescent-behavioral-learning-experience

This statement by MDRC, intermediary for the New York City ABLE PFS project, offers a response 

to the evaluation findings released by Vera Institute indicating the PFS project was not successful 

in meeting its predefined success threshold. Despite outcomes targets not being met, MDRC 

explains that the PFS project was valuable in testing the implementation of the SIB financing 

arrangement, illuminating key lessons about challenges associated with scaling and replicating 

evidence based programs, and in potentially leaving a positive lasting legacy at Rikers Island. 

Key Take-Away(s): 

 The SIB financing mechanism worked properly in the case of the ABLE project; since the 

program did not meet the impact requirements, New York City is not paying for a 

program that did not produce results. 

 The implementation of the ABLE intervention faced a number of challenges, including 

reaching adolescents who did not attend the Rikers school and the indeterminate lengths 

of stay for many of the young people. 

 The ABLE project was able to generate significant buy-in from Rikers management, nonuniformed staff and uniformed staff, and school personnel, ultimately helping to drive a 

culture of sound decision-making and nonviolence inside Rikers. 

Miguel, A. & Abughannam, S. (2014). 

Housing first social impact bond feasibility 

study. Toronto, Canada: MaRS Centre for 

Impact Investing and Social Finance. 

Retrieved from 

http://www.marsdd.com/wpcontent/uploads/2014/10/Housing-FirstSocial-Impact-Bond-Feasibility-Study2014.pdf

This paper determines whether a SIB would be a suitable tool for funding a housing intervention in 

the United Kingdom, providing scenarios and keys to the consideration of this model. 

Key Take-Away(s): 

 The key features of a SIB model include: a defined target population; a strong intervention 

model; the ability to scale with service providers with a track record of success; 

quantifiable outcomes and an effective measurement framework; and quantifiable 

economic benefit. 
State of the Pay for Success Field II Corporation for National and Community Service 

Emerging Literature, Updates, and Tools Office of Research and Evaluation 

nationalservice.gov/SIF 48

Key Source Overview 

 There are five primary inputs of a SIB model: intervention scope, intervention costs, public 

sector value, payment mechanism, and investment structure. 
State of the Pay for Success Field II Corporation for National and Community Service 

Emerging Literature, Updates, and Tools Office of Research and Evaluation 

nationalservice.gov/SIF 49

Popper, N. (2015). Success metrics questioned 

in school program funded by Goldman. New 

York Times DealBook. Retrieved from 

http://www.nytimes.com/2015/11/04/busin

ess/dealbook/did-goldman-make-thegrade.html?_r=3 

This article calls into question the initial success reported by the Utah Preschool PFS project, and 

contends that the project had a flawed evaluation design and faulty definition of who constitutes a 

“likely” candidate for special education (target population). Field researchers argue little evidence 

of correlation between a low score on an aptitude test and whether a specific child in the Utah 

Preschool program would have needed special education in the absence of preschool, and the 

authors furthermore attribute a portion of the measured success to low English proficiency among 

incoming students. The article cites a need for more rigorous measurement of impact in PFS 

projects. 

Key Take-Away(s): 

 Nine early-education experts who reviewed the Utah Pre-K program for The New York 

Times reported a number of irregularities in how the program’s success was measured, 

that they found to have led to an overstatement of the effect that the investment had 

achieved in helping young children avoid special education. 

 It is difficult to properly structure public-private partnerships like SIBs, which depend on 

easily verifiable and commonly agreed-upon methods of measuring success for goals that 

can be hard to define, such as student success. 

 Criticism of the Utah program points to issues that could hinder the wider adoption of the 

concept of SIBs. 

Pritzker, J.B., Bradach, J.L. & Kaufmann, K. 

(2015). Achieving kindergarten readiness for 

all our children: A funder’s guide to early 

childhood development from birth to five.

Chicago, IL: Pritzker Children’s Initiative 

& The Bridgespan Group. Retrieved from 

http://www.bridgespan.org/getattachment/

feb8d3d3-042c-4a7b-a828-

3b5bda8283a9/early-childhood-funderguide-2015.aspx. 

This report presents a series of tangible investment opportunities for philanthropists to pursue to 

improve early childhood outcomes from birth to five years of age, or “kindergarten readiness.” 

Following an overview of lessons learned from current research, priority outcomes for young 

children, and barriers to outcomes improvement, the authors identify five overarching areas for 

philanthropic investment: (1) continuous quality improvement; (2) standardized and universal 

health and developmental screenings; (3) training and compensation for educators; (4) expansion 

of evidence-based programming; and (5) research and development. 

Key Take-Away(s): 

 The potential of PFS in improving early childhood outcomes lies in demonstrating what 

works to increase kindergarten readiness, and potentially changing the way government 

invests in these programs (SIBs are not a substitute for public funding). 

 Philanthropic investment can support PFS by: directly investing in PFS contracts with the 

goal of establishing proof points to attract private capital and expand pressure for 

additional public funding; and funding technical assistance efforts for government entities 

and service providers. 
State of the Pay for Success Field II Corporation for National and Community Service 

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Rangan, V.K. & Chase, L.A. (2015). Up for 

debate: The payoff of pay-for-success. Stanford 

Social Innovation Review. Retrieved from 

http://ssir.org/up_for_debate/article/the_pa

yoff_of_pay_for_success

Rangan and Chase provide a review of existing PFS contracts and posit that PFS will only work for 

certain service providers who can secure philanthropic funding. They argue that the PFS model 

will shift as projects are or are not successful, but there are larger benefits, including improving 

data collection and collaboration, that will outlast the surge in PFS projects. George Overholser, 

Tracy Palandijan, and Jeff Shumway provided responses and argue that philanthropic funding is 

not going to be the future of PFS, but instead loans will be recycled, partial PFS arrangements will 

increase the power of loans to redirect government allocations, and some providers may use their 

own balance sheets to finance PFS contracts. This paper provides a debate on the future of Pay for 

Success as a model. 

Key Take-Away(s): 

 The PFS model is only appropriate for a narrow cohort of nonprofits who can effectively 

deliver and measure their social impact and who can translate that impact into financial 

benefits or cost savings. 

 Impact seeking, not return seeking, will spur the growth of PFS. 

 As the PFS model is proven effective, the government may demand lower payment rates, 

which will de-incentivize private investment. 

Rinzler, D., Tegeler, P., Cunningham, M. & 

Pollack, C. (2015). Leveraging the power of 

place: Using pay for success to support housing 

mobility [Working Paper]. San Francisco, 

CA: Federal Reserve Bank of San Francisco. 

Retrieved from 

http://www.frbsf.org/communitydevelopment/files/wp2015-04.pdf

Rinzler et al. discusses the role of PFS financing in housing interventions, providing costs and 

benefits of this model as well as providing a hypothetical PFS scenario for housing mobility. This 

case study argues that PFS would be a valuable tool to support and sustain an innovative housing 

intervention. 

Key Take-Away(s): 

 There are potential downsides to the PFS model, including the potential for reduced 

support for an intervention if positive results are not immediately found. 

 PFS can facilitate collaboration across sectors and levels of government, can support or 

expand programs in the short-term while generating lessons for policy and practice, and 

can build the case for future investment and changes in government policy. 

Roman, J.K. (2015). Solving the wrong pockets 

problem: How pay for success promotes 

investment in evidence-based best practices.

Washington, DC: Urban Institute. 

Retrieved from 

http://www.urban.org/sites/default/files/alf

resco/publication-pdfs/2000427-Solvingthe-Wrong-Pockets-Problem.pdf

Roman defines the “wrong pockets” problem as a situation where a governmental entity that bears 

the costs of implementing a PFS project (payor) does not receive all of the benefits involved (e.g., 

because outcomes of the PFS project produce benefits for a different governmental entity). He 

makes suggestions related to: the role of the government, within a single agency and across 

multiple units of government; prevention efforts; regional governance; nonfederal spending of 

federal investments; and PFS programs that benefit citizens rather than the government. In each 
State of the Pay for Success Field II Corporation for National and Community Service 

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case, the report presents a PFS solution, including drug courts and the establishment of a central 

authority for PFS projects. 

Key Take-Away(s): 

 There are six types of program underfunding that can be attributed to the wrong pockets 

problem: intra-agency, interagency, time, regional governance, intergovernment, and 

noncashable savings. 

 There are three primary reasons why governments do not receive compensation for the 

projects they implement: many benefits occur farther in the future; there are real benefits 

per capita but they are relatively small; and returns are very hard to measure. 

Schaeffer, S., Shumway, J. & Brumme, C.R. 

(2015). After pay for success: Doubling 

down on what works. Stanford Social 

Innovation Review. Retrieved from 

http://ssir.org/articles/entry/after_pay_for_

success_doubling_down_on_what_works

This article focuses on the sustainability of social service interventions after a PFS deal expires, 

assuming the intervention proves successful in meeting predetermined outcomes. The authors 

advocate for including an “achievement compact”—a statement of intent from government to 

integrate successful interventions and performance-based funding mechanisms into ongoing or 

new funding streams—in PFS contracts to ultimately shift government contracting behavior 

toward a stronger focus on measuring impact. 

Key Take-Away(s): 

 The authors proposes the following policy recommendations, among others: 

- Federal: OMB should require government applicants to PFS solicitations to include 

sustainability plans and investigate ways to provide preferred federal contracting 

status to “proven” PFS interventions; 

- State level: States should create commissions to monitor active PFS projects in their 

jurisdictions charged with sharing data and lessons learned from projects and 

advocating for sustainable funding for successful projects; 

- Philanthropy: Philanthropic stakeholders should indicate to government stakeholders 

the importance of the achievement compact to their investment in PFS deals and fund 

technical assistance to help governments design performance-based contracts. 

Shelton, J. & Beeck Center for Social Impact 

and Innovation. (2015). Smarter government 

for social impact: A new mindset for better 

outcomes. Retrieved from 

http://www.driveimpact.org/report/ 

This report cites a need for the U.S. government to embrace an outcomes-focused mindset, and 

offers guidance for policymakers and public sector leaders on how they can begin to work toward 

this systemic transformation. The authors outline the following four steps to reach this goal and 

corresponding action steps to achieve them: (1) creating an outcomes mindset; (2) rallying support 

for change; (3) developing necessary supporting infrastructures, and (4) building an outcomes 

marketplace. 

Key Take-Away(s): 
State of the Pay for Success Field II Corporation for National and Community Service 

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 Within the present government mindset, spending and contracts are linked to the 

performance of activities without necessarily linking them to achieving set outcomes, 

incentivizing compliance, and disincentivizing innovation. 

 While the authors view PFS as a critical first step toward outcomes-focused government, 

they call for more substantial budgetary commitments from the public and private sectors 

to move the needle toward “smarter government.”

Shiffman, H. (2015). An update on pay-forsuccess contracting and social impact bonds: 

Lessons learned from executives who are 

making it work [PowerPoint slides]. Open 

Minds Strategy and Innovation Institute. 

Retrieved from 

https://www.openminds.com/email/strateg

y/061615SIIsocialimpact.pdf

This presentation offers an overview of PFS contracting and the SIF PFS program, and presents 

lessons learned from on-the-ground experts from Denver and the New York City ABLE project. 

The presentation concludes with summaries of seven active PFS projects. 

Key Take-Away(s): 

 Interest and involvement of federal and state actors in PFS continues to grow. 

 The NYC ABLE PFS project continues to adapt in order to meet predefined outcomes 

targets and overcome challenges (e.g., since the adolescent jail population in 2014 was too 

low to meet contractual requirements, the program expanded to a new age group and 

additional facilitation staff were hired to expand program). 

Social Finance. (2015). Technical guide: 

Designing effective outcome metrics and 

measurement systems. Retrieved from 

http://www.socialfinance.org.uk/wpcontent/uploads/2015/02/Tech_Guide_2_De

signing_Effective.pdf

This guide provides detailed steps and considerations for determining appropriate outcome 

measures for PFS projects. Social Finance identifies five key processes for the establishment of 

outcome metrics: identifying the outcome to represent the social value; establishing a baseline; 

valuing the outcome; creating a way to measure and attribute the impact of the intervention; and 

evaluating the intervention. 

Key Take-Away(s): 

 Outcome identification will have multiple stages and may not be a linear process. 

 There are fundamental concepts that should be considered when determining the 

outcomes, including time scales, surrogate outcomes, binary vs. frequency, and perverse 

incentives. 

 Outcome metrics must be rigorously evaluated, objectively determined, and consistently 

evaluated. 

Tan, S., Fraser, A., Giacomantonio, C., 

Kruithof, K, Sim, M., ... Mays, N. (2015). 

An evaluation of social impact bonds in health 

and social care: Interim report. London, 

United Kingdom: Policy Innovation 

Research Unit. Retrieved from 

http://www.piru.ac.uk/assets/files/Trailbla

This report offers initial evaluation findings related to nine projects that received seed funding 

through the UK Government’s Social Enterprise Investment Fund in 2013, collectively referred to 

as the SIB “Trailblazers.” The report first presents a literature review on SIBs (2010-2014), then 

provides in-depth descriptions of the nine Trailblazer models and their implementation status, and 

concludes with a summary of thematic findings based on a series of 36 semi-structured interviews 

with the SIB project stakeholders. 
State of the Pay for Success Field II Corporation for National and Community Service 

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zer%20SIBs%20interim%20report%20Marc

h%202015,%20for%20publication%20on%2

0PIRU%20siteapril%20amendedpdf11may.

pdf

Key Take-Away(s): 

 Recurring themes in existing literature on SIBs include the roles of: competing values, 

measurement, risk, financial incentives, and innovation and/or scaling-up proven 

interventions as drivers of SIB development. 

 A review of the nine Trailblazer programs suggests that there is no standard/typical health 

and social care SIB contractual model. 

 Based on the two operational Trailblazer SIBs (Manchester, Thames Reach) and 

operational Essex model, two aspects of successful SIB implementation include: (1) 

clarifying data requirements and increasing data tracking capacity prior to project launch; 

and (2) establishing collaborative working relationships among all SIB stakeholders to 

ensure ongoing communications. 

United Way of Salt Lake. (2015). Social 

impact bond for early childhood education 

shows success. Retrieved from

http://www.uw.org/news-events/newsreleases/2015-news-releases/10-07-2015-

20sib-20news-20release-20final-2.pdf 

This press release by the United Way of Salt Lake, intermediary for the Utah Pre-K PFS Project, 

publicizes the initial measured success of the project. Of 595 low-income three- and four-year-olds 

who attended high-quality preschool financed by the PFS project in the 2013-14 school year, 110 of 

the four-year-olds were identified as likely to use special education in grade school. Results 

showed that of those 110 students identified as at risk, only one used special education services in 

kindergarten. 

Key Take-Away(s): 

 The project’s achievement of successful results triggered the first investor payment for any 

PFS project in the U.S. to investors Goldman Sachs and J.B. Pritzker, equal to 95% of 

savings calculated for the first year cohort. 

Vera Institute. (2015). Impact evaluation of 

the Adolescent Behavioral Learning Experience 

(ABLE) program at Rikers Island. Retrieved 

from 

http://www.vera.org/sites/default/files/reso

urces/downloads/adolescent-behaviorallearning-experience-evaluation-rikersisland-summary-2.pdf 

This report by the independent evaluator for the New York City ABLE PFS project, Vera Institute, 

provides an overview of the PFS service intervention and the evaluator role, a description of the 

research design, and a summary of findings. Vera’s evaluation determined that the program did 

not meet the pre-defined threshold of success of a 10 percent reduction in recidivism bed days 

(RBD). 

Key Take-Away(s): 

 Vera implemented a quasi-experimental approach that compared RBDs for eligible 16- to 

18-year-olds to a historical group who passed through the jail before the program was 

established using a statistical technique called propensity score matching. 

 The measured change in recidivism among the study group was not statistically significant 

when compared to the matched historical comparison group: the study group was found 

to display similar trends in rates of recidivism over time, indicating that any shifts were 

the result of factors other than the ABLE program. 
State of the Pay for Success Field II Corporation for National and Community Service 

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Wilson, K. E., Silva, F., & Ricardson, D. 

(2015). Social impact investment: Building the 

evidence base. Organisation for Economic 

Co-operation and Development. Retrieved 

from

http://papers.ssrn.com/sol3/papers.cfm?abs

tract_id=2562082

This extensive report provides a background on SIBs, including their history, framework, and key 

components. It discusses topic areas that social impact investing may be useful for, and discusses 

how to evaluate the impact of social service provision. The report makes recommendations about 

data collection at the local and federal level to improve evaluation and resulting indicators. The 

report concludes with policy actions and implications, including developing common definitions, 

building data infrastructure, and primary impact measurement. 

Key Take-Away(s): 

 There are four main phases of the impact measurement process: (1) agreeing upon impact 

goals and the strategy to achieve them; (2) building the evidence base to include collecting, 

storing, and validating data; (3) assess the quality, level and efficacy of the impact based on 

the analysis of data gathered; and (4) review the impact and measurement process to 

provide input to future improvements in impact investment. 

 SIBs should be considered for health and care needs of the elderly; unemployment, 

inactivity; school drop-outs; housing affordability and quality; policing, safety, and crime; 

and family care and the employment of women.