State of the Pay for Success Field: 

Opportunities, Trends, and Recommendations 

April 2015 
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. (2015) State of the Pay for Success 

Field: Opportunities, Trends, and Recommendations. Washington, D.C.: Author.

Acknowledgements

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

document: Lily Zandniapour, PhD - Evaluation Program Manager and Contracting Officer Representative, Corporation 

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

Corporation for National and Community Service; Stephen Plank, PhD – Director of Research and Evaluation, 

Corporation for National and Community Service; and John Tambornino, PhD - HSP/Office of the Assistant Secretary for 

Planning and Evaluation, U.S. Department of Health and Human Services.

Authors

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

Service:

Jessica Blum

Michelle Ciurea

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

This report is in the public domain. Authorization to reproduce it in whole or in part is granted. Upon request, this 

material will be made available in alternative formats for people with disabilities.
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Table of Contents

I. Introduction.............................................................................................................................................................................. 1

Purpose of Document............................................................................................................................................................... 3

Organization of Document...................................................................................................................................................... 4

II. Project Descriptions ................................................................................................................................................................ 5

Peterborough Social Impact Bond.......................................................................................................................................... 5

Current Project Profiles............................................................................................................................................................ 6

The New York City ABLE Project for Incarcerated Youth....................................................................................... 8

Utah Pre-K Project ....................................................................................................................................................... 10

New York Increasing Employment and Improving Public Safety Pay for Success Project............................... 12

Massachusetts Juvenile Justice PFS Initiative .......................................................................................................... 15

Chicago’s Child-Parent Center Pay for Success Initiative/SIB............................................................................... 18

Cuyahoga County Partnering for Family Success Program .................................................................................. 21

III. PFS Activity in Development.............................................................................................................................................. 25

CNCS Social Innovation Fund PFS Grantees...................................................................................................................... 25

PFS Projects with Executed Contracts, Pre-Implementation............................................................................................ 26

Other Pay for Success Projects Nearing Implementation.................................................................................................. 26

Federal Support....................................................................................................................................................................... 27

State Legislation...................................................................................................................................................................... 28

IV. Emerging Themes .................................................................................................................................................................. 31

Looking Forward.................................................................................................................................................................... 32

References ............................................................................................................................................................................................. 35

Appendix A: Glossary of Key Terms................................................................................................................................................ 40

Appendix B: Annotated Bibliography of Key Pay for Success Documents.............................................................................. 45

Appendix C: Summary of Legislative Actions at the State Level ............................................................................................... 58

nationalservice.gov/SIF i 

Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

I. Introduction

For decades, government has largely paid for the promise of results, not actual impact. In fact, former Office of 

Management and Budget Directors Jim Nussle and Peter Orzag have estimated that only one percent of federal nondefense discretionary spending is backed by evidence. Meanwhile, critical social problems persist.

Pay for Success (PFS) strategies seek to address these issues by tying funding for an intervention to its impact in the 

community. Instead of paying for services regardless of their effects, government (or other entities) only pay if programs 

actually achieve positive outcomes for the people they are designed to benefit. Where government employs PFS 

strategies, taxpayers no longer bear the risk of paying for programs that are not effective. 

One challenge that arises in PFS contracts is that service providers may not have the resources to fund the intervention 

upfront on their own. To address this concern, PFS contracts often incorporate PFS financing, which covers the costs of 

service provision until success is achieved and payments are triggered. PFS financing is sometimes referred to as a social 

impact bond (SIB). 

Because recent PFS activity in the United States involves SIBs, the PFS activity considered in this report focuses on PFS 

contracts that involve SIBs / PFS financing. For simplicity’s sake, we will use the term “PFS” for the rest of this report to 

refer to this specific type of projects – projects that have used or seek to use a PFS contract and SIB for PFS financing. But 

we recognize that PFS projects are not limited to this model. 

The roles of principal stakeholders in typical PFS transactions are shown in Figure 1. Philanthropies, high net-worth 

individuals, financial institutions, or others provide the investment to cover the cost of a service provider delivering an 

intervention. An independent party evaluates the impact of the service delivered and determine whether outcome goals 

were met. If they were, the government will provide investors with “success payments,” including the principal and a 

modest return. Often the government entity contracts with an intermediary to coordinate the PFS project. The 

intermediary’s responsibilities may include raising capital from investors, facilitating contract negotiations and 

agreements between partners (including defining outcome goals), overseeing project implementation, and commissioning 

evaluation activities. 

nationalservice.gov/SIF 1 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Figure 1. Principal Stakeholders in a PFS Project

 

nationalservice.gov/SIF 2 

Program evaluation is indeed a key component of a PFS project, as it allows PFS programs to assess the effectiveness of 

their intervention and measure the extent to which performance benchmarks are achieved in order to determine whether 

(and, sometimes, to what extent) success payments should be made to investors. All performance benchmarks must be 

carefully defined, with evaluation metrics specified, in advance of the start of service provision. To ensure that 

evaluations are conducted rigorously and the determinants of “success” are legitimate, PFS projects sometimes contract 

independent evaluation experts (often referred to as “evaluation validators”) to monitor evaluation activities (e.g., 

random assignment, data collection). These experts are involved with every stage of the PFS project and ultimately 

examine the validity of the findings as a precondition for approval of success payments to investors.

Among the benefits of a typical PFS approach:

• Government can test whether interventions (new or long-standing) are effective or scale evidence-based 

interventions without drawing upon its own often-constrained budgets until outcomes are achieved;

• Service providers can benefit from rigorous research identifying and unpacking any impact of their interventions 

while also accessing a steady stream of funding that frees up resources to focus on the organization’s mission, not 

fundraising;

• Investors can pursue a double bottom line, creating positive social impact and earning a return if outcomes are 

achieved; and

• People in need can benefit from the additional services provided through these PFS projects. They also will be 

better served in the future as services are improved and funding is reallocated to effective models based on the 

learnings uncovered by PFS projects.
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Recognition of these benefits has fueled momentum in the PFS space. The first ever PFS project was launched in the 

United Kingdom (U.K.) in 2010, and the first domestic PFS project was initiated in 2012 at Rikers Island Jail in New York 

City. Since then, more projects have come online, and there are currently approximately 20 active PFS projects around the 

world. These projects are primarily taking place in Western Europe and increasingly in the United States (U.S.), where six 

PFS projects are currently in operation and many more are under consideration or under development. Although the PFS 

field is still in its infancy, an exciting body of knowledge is emerging, illustrating the variety of forms that PFS projects

can take and the span of issues they can address.

By applying a private-sector investment mentality to the provision of social sector services, PFS offers tremendous 

potential for promoting a “double bottom line”—providing effective solutions for social problems while simultaneously 

rewarding risk-bearing investors for their support of successful initiatives. 

Amidst general enthusiasm about the potential of PFS, however, some stakeholders caution the field to consider 

potentially negative and/or unanticipated outcomes of such a model when not constructed carefully. Several experts in 

the field have expressed concerns regarding perverse incentives, or incentives that produce unintended negative results, 

when PFS is implemented poorly (Roman et al., 2014; Preston, 2012). One concern is that tying conditional success 

payments to diminished- or non-use of a social service creates the incentive to withhold that service. A second concern is 

that PFS’ reliance on evaluation metrics to gauge success may create the incentive to poorly implement (or simply not 

comply with) a seemingly rigorous evaluation design, resulting in inaccurate or ambiguous results. For this reason, some 

existing PFS projects, such as those supported by the U.S. Department of Labor, have insisted that independent 

validators, external to the success payment relationship, review evaluation activities, analyses, and results.

These concerns about perverse incentives are not necessarily unique to the PFS model, nor inherent to it. Wiselystructured PFS projects may circumvent these pitfalls. However, these factors warrant significant consideration when 

conceptualizing and implementing PFS projects. 

Purpose of Document

This report was developed by Abt Associates under contract to the Corporation for National and Community Service 

(CNCS) as a component of the CNCS Process Evaluation of the Social Innovation Fund (SIF) Pay for Success Grant 

Program. In 2010, CNCS launched the SIF, 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 public-private partnerships to leverage investments in evidence-based 

programs, provides a new model for social finance that is currently being evaluated. In 2014, the SIF launched an 

initiative to support the expansion of another public-private partnership model of social finance, pay for success (PFS). 

The initiative, known as the “PFS Grant Program,” funded eight grantees in its inaugural year to either provide technical 

assistance or implement deal structuring activities for PFS initiatives in the SIF’s three focus areas. According to CNCS, 

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. 

nationalservice.gov/SIF 3 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

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

challenges facing low-income communities.1

Together, the SIF and the SIF PFS grant programs use innovative structures to increase the return on taxpayer dollars and 

direct services to communities where they are most needed. 

The purpose of this document is three-fold: 

• To provide a brief historical context of PFS projects and descriptions of the six PFS projects currently being 

implemented in the United States, based on publicly available documentation.

• To provide a brief summary of key formative and conceptual literature in the PFS field to date, and various themes 

and recommendations that may inform the continued development of the PFS model.

• To provide information that can be used as a reference for CNCS and stakeholders interested in the Social Innovation 

Fund’s PFS Grant Program.

The original intent of this document was to present a review of existing literature in this emerging field. As the research 

began, however, the team realized that a wealth of knowledge on the PFS model had already been collected and 

synthesized. Upon further review and screening, it became apparent that a number of existing documents (broadly 

summarized in Section IV and presented in Appendix B) contained thorough reviews of existing PFS literature and 

resources in the field. Rather than duplicate existing work, the focus of this document was shifted to focus on a survey of 

the current PFS landscape in the U.S., and a review of key articles and documents that present and/or analyze the 

concepts and themes of PFS, describe specific projects, or discuss the current state of the literature surrounding PFS. This 

decision was made in collaboration with CNCS to ensure that this document will address the interests and meet the needs 

of the anticipated audience. 

Organization of Document

The core of this document lies in Section II, which provides a brief history of the earliest PFS project and descriptive 

profiles of the six PFS projects currently being implemented in the U.S. As the inaugural PFS projects in the U.S. are still in 

their infancy, no data are available on program impacts. Notwithstanding this limitation, in Section III we provide an 

overview of emerging developments in the PFS field along with relevant federal and state legislation that may shape the 

future of these types of projects. Section IV of the document includes recommendations from our own analyses as well as

the PFS literature that can inform the scale-up of this emerging model of social finance. The report then concludes with a 

series of Appendices: Appendix A contains a detailed glossary of PFS-related terms and associated organizations 

included in this document; Appendix B includes a short review of key documents in the PFS field that focus on PFS 

concepts and components, points of emphasis, and specific PFS projects, intended as a starting point for those interested 

in further readings on the topic; and Appendix C provides a summary of state legislative actions related to PFS.

1 A full description of the PFS grant program is available on CNCS’s website: http://www.nationalservice.gov/programs/socialinnovation-fund/pay-success

nationalservice.gov/SIF 4 

 

Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

II. Project Descriptions 

Section II of this report provides descriptions of several existing PFS projects, beginning with a description of the widely 

referenced Peterborough Social Impact Bond in the United Kingdom (U.K.). Next, we present profiles of each of the six 

PFS projects with signed PFS contracts currently being implemented in the U.S. (As explained below, a contract had been 

signed, but implementation had not yet begun, for a seventh project when this report was written.) These snapshots of 

PFS projects were compiled using information and data from Google and Google Scholar, PFS project reports, evaluation

reports, requests for information/proposals, and PFS contracts (when available). The content in this section is fully based

on publicly available sources of information.

It should be noted that throughout the documents reviewed, the term “social impact bond” (SIB) was often used 

interchangeably with the term “pay for success.” However, SIBs are one of multiple mechanisms for PFS financing. For 

the purposes of this report, we therefore use the term “pay for success” when referring to PFS activities, unless the text of 

relevant documents reviewed related to a specific discussion or project used the term “social impact bond.” We opted to 

maintain consistency with the language used by study authors in order to preserve the intent and meaning of the 

discussion.

Peterborough Social Impact Bond

The first PFS project—the Peterborough Social Impact Bond (SIB)—was launched in September 2010 at the Peterborough 

Prison located approximately 75 miles north of London, U.K., and continues through 2016. The project is facilitated by 

Social Finance U.K., a nonprofit social investment organization, and the U.K. Ministry of Justice, with supplemental 

funding provided by the Big Lottery Fund, an executive non-departmental public body that distributes both National 

Lottery and non-Lottery funds throughout the U.K. to support health, education, environment and charitable projects 

(Disley, Rubin, Scraggs, Burrowes & Culley, 2011; Big Lottery Fund website, n.d.). The goal of the Peterborough SIB is to 

reduce recidivism among approximately 3,000 short-term incarcerated young men released from Peterborough Prison by 

providing comprehensive services and support to facilitate their reentry to the community. A small group of community 

and social service agencies, called the “One Service,” provide assistance and support to participants in areas such as 

housing, budgeting, family support, health, and employment and training. The project obtained a commitment of £5 

million (almost $8.0 million) from 17 private individuals, trusts, and foundations, including the Barrow Cadbury 

Charitable Trust, Esmée Fairbairn Foundation, Friends Provident Foundation, the Henry Smith Charity, Johansson Family 

Foundation, the Monument Trust, Panahpur Charitable Trust, Paul Hamlyn Foundation and the Tudor Trust (Disley et 

al., 2011). 

The key performance benchmark is set as a 10% reduction in the number of reconviction events for each cohort of 1,000 

participants, or a 7.5 percent reduction across the three cohorts compared to a control group (Ministry of Justice, 2014). 

The payback arrangement is graduated such that investors receive larger returns (up to a maximum of 13%) as the 

reconviction rate decreases (Hughes, 2014; Social Impact Investment, n.d.). The Ministry of Justice has contracted 

independent assessors from QinetiQ and the University of Leicester to conduct data analysis and compare the 

reconviction rates of offenders who receive services from One Service, compared with members of the control group 

(Disley et al., 2011). In addition, the Ministry of Justice has contracted with RAND Europe to conduct a separate 

independent evaluation of the project. 

In August 2014, Social Finance U.K. released a first set of results of the project, indicating a reduction in reconviction 

events among the first cohort of 1,000 ex-prisoners, but reported that the results were not strong enough yet to trigger an 

outcome payment to investors (Hughes, 2014). Concurrently, the U.K. Ministry of Justice reported that it is transitioning 

to a new nationwide program that will replace existing probation services for medium- and low-risk prisoners, and will 

also include a “payment-by-results element aimed at reducing reoffending” (Ainsworth, 2014). The new program, 

Transforming Rehabilitation, will replace existing probation services and contract services for all medium and low-risk 

nationalservice.gov/SIF 5 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

prisoners with a group of providers from the private and voluntary sectors. As one of these new service providers will be 

responsible for working with prisoners from the Peterborough Prison, the U.K. Ministry of Justice announced that they 

would be closing the Peterborough SIB before completing the third cohort in order to allow the new service provider to

begin service provision (Ainsworth, 2014). The Ministry of Justice will provide funding for the current SIB project to 

maintain service provision to the first two cohorts of prisoners until the new program is in place and transition plans can 

be made for the third cohort. 

Current Project Profiles

Since the implementation of the Peterborough SIB, the U.K. has witnessed continued activity in the PFS field. Other 

countries, including Australia, Belgium, Canada, France, Germany, Ireland, Israel, Korea, the Netherlands, and the U.S., 

have followed suit and begun exploring and implementing PFS projects in the criminal justice arena, as well as in health, 

child welfare, early childhood education, housing, and workforce development (Ganguly, 2014; Patton, 2013). According 

to the U.K. Cabinet Office Centre for Social Impact Bonds website, there are currently 17 SIBs funded, 15 in development, 

and another 11 being explored throughout the world (Centre for Social Impact Bonds, n.d.). 

The first PFS project in the U.S. was launched in August 2012 at Rikers Island Jail by the New York City Department of 

Correction. At the time of publication of this report, five additional PFS projects were underway in Illinois, 

Massachusetts, New York, Ohio, and Utah, with dozens more being explored and developed across the U.S. The six PFS 

projects that are currently being implemented in the U.S. are described throughout the remainder of Section II. In this 

section, we describe the current PFS initiatives operating in the U.S., starting with the first project implemented at Rikers 

Island Jail in New York City, and working chronologically through to the most recent initiative in Cuyahoga County, 

Ohio. While many local governments and states are exploring the establishment of PFS projects and taking initial steps to 

develop partnerships and financing strategies, to the best of our knowledge, these six projects are the only currently 

operational PFS initiatives with signed contracts in the U.S. 

The key players in the majority of PFS projects include: the lead organization, typically a public-sector agency held 

accountable for the project; an intermediary that coordinates and structures the project, obtains financing, and manages 

repayments; service providers; investors and other funders; and evaluators responsible for determining if success 

benchmarks are attained. (More detailed descriptions of these key players can be found in the Glossary of Key Terms, 

located in Appendix A of this report.)

It is important to note that among the PFS project descriptions that follow, key partners and their roles are identified, but 

the terms used to describe them sometimes differ. For example, the entity that coordinates the PFS project is usually 

called the “intermediary,” but a few of the projects refer to this partner as the “project coordinator.” For purposes of 

consistency, we will refer to the partners according to the terms most commonly cited in the literature (i.e., lead 

organization, intermediary, service provider, funder/investor, and evaluator) unless there are additional partners, in 

which case we refer to them by the title used by the project (e.g., project coordinator). Two PFS projects (in the 

Commonwealth of Massachusetts and New York State) that are part of a U.S. Department of Labor PFS grant program 

were also required to identify an independent evaluation validator to ensure that evaluations are conducted rigorously 

and the determinations of “success” are legitimate.

nationalservice.gov/SIF 6 

Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

nationalservice.gov/SIF 8 

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 Outcome: Reduction in rates of recidivism

Contract Execution Date: August 2012

Investment Amount: $9.6 million

Introduction

In 2012, Goldman Sachs (GS) approached the New York City (NYC) Mayor’s Office upon hearing that NYC and MDRC 

were in talks about a potential PFS project to reduce the 50 percent recidivism rate among adolescent men released from 

Rikers Island Jail (Chen, 2012). GS offered to provide an initial investment to the program and was therefore given the 

opportunity to review the capabilities of the service provider and the intermediary, as well as the program design in 

order to better understand the players, the intervention, and the risks involved. The project is set to last four years and 

includes an ongoing evaluation component. This PFS project is the first to be implemented in the U.S.

Service Intervention

The Adolescent Behavioral Learning Experience (ABLE) intervention was developed as part of the Young Men’s 

Initiative, an existing program at Rikers Island Jail. The Young Men’s Initiative is a $30 million dollar program funded by 

the City of New York under former Mayor Bloomberg that aims to reduce racial disparities among young male inmates 

related to employment, health, education, and recidivism. ABLE provides cognitive behavioral therapy to young Black 

and Latino men (16-18 years old) at Rikers Island Jail as well as counseling, training, and educational services to 

approximately 3,400 young incarcerated men. The purpose of the training is 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). Service 

providers include two nonprofit organizations, the Osborne Association and Friends of Island Academy. 

Project Partnership and Structure

With the City of New York as the lead public agency, the key partners in this project include: 

• Intermediary: MDRC serves as the intermediary and is responsible for program design, oversight of day-to-day 

operations, management of the service providers, and repayments to Goldman Sachs. 

• Service Provider: The Osborne Association and Friends of the Island Academy are nonprofit organizations that

offer extensive experience working with incarcerated youth. Together, they provide the services for this program. 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

• Funder/investor: The primary lender for this project is Goldman Sachs, supported by a financial guarantee from

Bloomberg Philanthropies.

• Evaluator: The Vera Institute of Justice, an independent, non-partisan, nonprofit organization committed to

issues of justice policy, is conducting the third-party evaluation.

Funding Strategy

Goldman Sachs invested $9.6 million in this project, supported by a $7.2 million (75 percent) guarantee from Bloomberg 

Philanthropies. The financial guarantee made by Bloomberg Philanthropies is relatively large. For comparison, 

philanthropic guarantees typically range from 10 percent to 75 percent (Finn & Hayward, 2013).

Evaluation

The Vera Institute of Justice will conduct 12- and 24-month post-release evaluations to determine rates of recidivism. 

Recidivism rates are determined by the total number of days in the evaluation period divided by the total number of jail 

days avoided. As in some other juvenile-justice PFS projects, there is no denial of service for participants referred to the 

program through an alternate source. 

Targeted Outcomes and Repayment Structure

This project seeks to reduce recidivism rates among young men incarcerated at Rikers Island Jail from 50 percent to 40 

percent. The maximum total repayment amount is $11.7 million. 

Repayment amounts are graduated based on the percentage decline in recidivism rates, as demonstrated in Exhibit 1

below. It is important to note that repayment amounts from NYC are channeled through the intermediary, MDRC. 

Exhibit 1. Repayment Schedule, ABLE PFS Project

Percent Reduction in

Reincarceration Rate

City Payment to 

MDRC ($)

Project Long-Term City

Net Savings ($)*

≥20.0 percent $11,712,000 $20,500,000

≥16.0 percent $10,944,000 $11,700,000

≥13.0 percent $10,368,000 $7,200,000

≥12.5 percent $10,272,000 $6,400,000

≥12.0 percent $10,176,000 $5,600,000

≥11.0 percent $10,080,000 $1,700,000

≥10.0 percent

(breakeven)

$9,600,000 $≥1,000,000

≥8.5 percent $4,800,000 $≥1,000,000

*Savings after repayment and continued funding for program delivery.

Source: New York City Office of the Mayor, 2012

nationalservice.gov/SIF 9 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

nationalservice.gov/SIF 10

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, Utah

Target Outcomes: Avoidance of special education or 

remedial education services

Contract Execution Date: June 2013 

Investment Amount: $6.8 million

Introduction

This project is the first PFS initiative in the U.S. to focus on early childhood education. A longitudinal study conducted as 

a pilot to this project demonstrated that nearly 33 percent of low-income students in Utah would likely need special 

education services during their primary school years (UWSL, 2013). This number presents a challenge to meeting Utah’s 

state goals of 90 percent proficiency in core subjects, a 90 percent high school graduation rate, and 66 percent of Utahans 

attending post-secondary education (UWSL, 2013). There are also large achievement gaps in Utah between low-income 

and high-income students in language arts, math, and the need for special education (UWSL, 2013). 

Service Intervention

This 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. The program had been piloted by Voices for 

Utah Children, the Granite School District, and the United Way of Salt Lake (UWSL) from 2006-2009. It uses a locallydesigned, structured curriculum to prepare children for kindergarten and to reduce the need for special education 

programming (UWSL, 2013). The pilot program demonstrated a 95 percent reduction in the need for special education 

among children who were at-risk and savings of an estimated $2,067 per student, per year, for twelve years (UWSL, 2013). 

Additional cost savings were identified for local communities, the school district and the state, totaling to a $1.8 million 

reduction in the need for special education services with just three cohorts of students (737 children total) over the twelve 

year period. 

Project Partnership and Structure 

With the State of Utah as the lead public entity, the key partners in this project include: 

• Intermediary: United Way of Salt Lake is the intermediary for this project, responsible for the overall 

implementation of the project and for managing repayments to the lenders. Utah has established a separate 

Performance Account Manager, under the auspices of the Park City Community Foundation, responsible for 

holding the repayment funds in a performance account and then distributing repayments as appropriate. 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

• Service Providers: The Granite School District, Park City School District, Guadalupe School, YMCA of Northern

Utah, Children’s Express, and Lit’l Scholars are providing the program services to low-income three- and fouryear-olds.

• Project Coordinator: Voices for Utah Children, a nonprofit child advocacy group, is providing research and

analytic support.

• Funders/investors: Goldman Sachs and the J.B. and M.K. Pritzker Family Foundation are the primary investors

for the initiative, providing loans of $4.6 million and $2.4 million respectively.

• Evaluator: Utah State University’s Early Intervention Research Institute is the third-party evaluator.

Funding Strategy

Goldman Sachs contributed $4.6 million in the form of a senior loan, while the J.B. and M.K. Pritzker Family Foundation 

contributed $2.4 million in the form of a junior loan—or guarantee loan—to reduce the risk to Goldman Sachs, for a total 

investment amount of $6.8 million. 

Evaluation 

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 6 (K-6); each year that a student does not use a special education or remedial service will generate 

a PFS payment. 

In preschool, children are given the Peabody Picture Vocabulary Test (PPVT), a diagnostic test that predicts whether the 

child is likely to need special education or remedial services in elementary school. Preschoolers thus identified as likely to 

need special education or remedial services will be tracked until 6th grade for their use of such services. As described in 

more detail below, if a participating child utilizes services in a particular year, there is no repayment to investors. If he or 

she does not utilize services, repayments are triggered. 

Target Outcomes and Repayment Structure

Success will be measured in terms of the cost savings accruing from children not utilizing special education and remedial

services. If a child does not utilize special education or remedial services in a particular year between grades K-6, 

investors are paid an amount equal to 95 percent of the state’s cost savings ($2,470). Thereafter, repayments drop to 40 

percent of the cost savings, or $1,040 per child per year, for every year the child does not utilize these services. On 

average, school districts receive $2,600 per child, per year from the State of Utah to provide special education and 

remedial services. This amount is therefore deemed the value of cost savings to the state if a child does not use these 

services in a particular year. 

nationalservice.gov/SIF 11
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

nationalservice.gov/SIF 12

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

Contract Execution Date: December 2013 

Investment Amount: $13.5 million

Introduction

This project aims to improve economic and personal outcomes for men recently released from prison who are at high risk 

for re-offending. Rates of recidivism are high throughout the state of New York: it is estimated that approximately 41

percent of the 24,000 inmates released in 2013 will return to prison within three years, or nearly 10,000 individuals will 

return per year. The New York Department of Corrections estimated in 2012 that high-risk offenders spend an average of 

460 days (1.2 years) in prison in the five years after their release, with an average incarceration cost of $60,000 per year, 

per person. 

The objective of this project is to reduce recidivism for 2,000 recently-released criminal offenders. The project model is 

based on a central premise that employment is the critical path by which individuals can reestablish themselves in society 

after their time in prison. The benefits of such an outcome accrue for both the ex-offenders as well as the community at 

large. By becoming self-sufficient members of their communities, ex-offenders improve their personal and economic 

prospects. In addition, society benefits from reduction in crime, less money spent on incarceration and public assistance, 

and higher tax revenues from ex-offenders’ successful employment. 

This PFS project began in 2012 when the Governor of New York established as a priority the state’s use of a PFS approach 

to reduce recidivism and improve employment opportunities among ex-offenders. The state contracted with Social 

Finance Inc. to serve as the project intermediary. Social Finance Inc. then selected the service provider, Center for 

Employment Opportunities, Inc. (CEO), which has a long track record of implementing successful, evidence-based 

interventions with ex-offenders across the state. Working together over the course of the following year, the partners 

designed and developed this project. New York’s project, formally launched is 2013, is the first state-led PFS project 

initiated in the U.S. 

Service Intervention 

The service provider (CEO) is utilizing an intervention model that was deemed successful on a smaller scale by a prior 

evaluation. It is predicated on the belief that in order to succeed in life after prison, ex-offenders need to become attached 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

to their communities and the job market as soon as possible after release. Accordingly, provision of core services begins 

immediately upon release. Core services include: intensive life skills training for five days; immediate placement into a 

part-time subsidized transitional job (typically nine weeks of work over a period of four months); job placement into an 

unsubsidized job as participants are assessed to be job-ready; and job retention support for one year. 

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. Each phase of the project will entail: the drawdown of funds to serve the cohort; random assignment of 

participants into a treatment or control group for evaluation purposes; service delivery; observation of outcomes for three 

years after entry into the program; outcome measurement and evaluation; and performance-based payment if target 

outcomes for the cohort are met. 

Project Partnership and Structure

With the State of New York as the lead public entity, the key partners in this project include: 

• Intermediary: Social Finance, Inc., a nonprofit organization that specializes in social impact bonds, is serving as

project intermediary.

• Service Provider: Center for Economic Opportunities (CEO) is a nonprofit organization that provides

employment services to individuals with recent criminal convictions throughout New York State, as well as in

California and Oklahoma.

• Funders/investors: Major funders include approximately 40 "impact investors" brought in by Bank of

America Merrill Lynch, as well as the Rockefeller Foundation, the Laura and John Arnold Foundation and 

the Robin Hood Foundation.

• Evaluator: The evaluation will be conducted by the research divisions of two agencies of the State of New York:

the Department of Corrections and Community Supervision, and the Department of Labor.

• Independent validator: Chesapeake Research Associates, a small evaluation research firm, specializing in datadriven evaluation methodologies, will independently validate the evaluation findings.

In addition, in the early stages of the project, the law firm Jones Day provided legal assistance in structuring contracts, 

and the Harvard Kennedy School Social Impact Bond Lab (Harvard SIB Lab) provided pro bono assistance on matters 

of project design and development. 

Funding Strategy

With a total maximum possible value of $21.5 million, this project was the largest in the U.S. at the time of its launch (it 

has since been exceeded in size by the Commonwealth of Massachusetts’ PFS project, which launched one month later). 

The project brings together funding from federal and state governments, private investors, and philanthropic sources.

Social Finance and Bank of America Merrill Lynch recruited over 40 individual and institutional investors to contribute

$13.5 million in equity for the project.

A distinctive feature of the financing for this project is that it mobilized individual and institutional investments through

a brokerage firm. Over $13 million was raised in less than 60 days and the investments were made through a Private 

Placement Agreement vehicle established by the intermediary, called the Social Finance NYS Workforce Re-entry 2013 

LLC. The investment option was made available only to high-net-worth and institutional clients of Bank of America 

Merrill Lynch and U.S. Trust. The minimum investment was $100,000, with an average investment of $300,000. 

nationalservice.gov/SIF 13
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

The 40 investors were split nearly equally between individuals and institutions, with the majority of the institutions

comprising of personal or established foundations. If program benchmarks are met, investors stand to receive a return on 

investment of as much as 12.5 percent annually. Repayment funds will come from the U.S. Department of Labor (DOL) 

PFS grant program and the State of New York. 

Evaluation

This PFS project is noteworthy in that it was the first in the U.S. to utilize a randomized controlled trial (RCT) evaluation 

methodology. This approach generates the most rigorous empirical results, as it allows evaluators to identify impacts that 

can be directly attributable to the intervention. In this instance, the evaluation will be conducted by the research divisions 

of the Department of Corrections and Community Supervision, and the Department of Labor, of the State of New York. 

Independent validation of the evaluation will be conducted by the evaluation research firm Chesapeake Research 

Associates. As in other PFS projects, there will be no denial of service (in contrast to classic random-assignment 

evaluations, where control-group participants would be denied services in order to maintain a sharp distinction between 

“treated” and “untreated” individuals). In this study, some treatment-group participants may choose not to participate in 

the intervention and some control-group participants may enroll in CEO’s services of their own volition. Services will not 

be denied to any applicant. To account for this in the measurement of impacts, the evaluation methodology will employ a 

“treatment on the treated” measure to develop the instrumental variable estimates.2 The project also specifies a backup 

evaluation plan: in the event that randomization proves unworkable in practice (for example, because of unresolvable 

implementation problems or “treatment contamination”), the team will use a difference-in-differences approach, 

comparing outcomes before and after implementation.

Target Outcomes and Repayment Structure 

Three benchmarks define success in this project: (1) engagement in transitional (subsidized) jobs; (2) employment in an

unsubsidized job one year after release from prison; and (3) reduced rates of recidivism (using jail/prison bed-days as the

metric). Minimum benchmarks are also defined for each benchmark. For example, in order for investors to be repaid, the 

program must improve employment rates by 5 percentage points and/or reduce recidivism by 8 percent. If impacts 

exceed the minimum performance targets, investors receive repayment proportional to the state’s estimated cost savings 

and benefits. To calculate these metrics, impact levels will be multiplied by a pre-established “price per outcome” to 

determine the public-sector benefit. The pricing methodology ensures that the payouts never exceed the public-sector’s 

cost savings. Payouts are capped at $11 million for Phase I (the first cohort) and $10.5 million for Phase II (the second 

cohort). 

2 More detail on these evaluation methods is available in the State of New York Budget Office’s, “Investing in What Works: Pay for 

success in New York State, Increasing Employment and Improving Public Safety Detailed Project Summary,” published in March 

2014. 

nationalservice.gov/SIF 14
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

nationalservice.gov/SIF 15

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

Introduction

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

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

accrued from avoided reincarceration. 

The idea for this project originated in 2011, when the Commonwealth of Massachusetts solicited input about “areas of 

government activity where success-based contracting strategies have the potential to improve outcomes and/or reduce 

costs.” The focus on young men in juvenile detention was proposed by entities that would later form the core of the PFS 

project: Third Sector Inc., a nonprofit organization that helps various entities to develop and implement PFS initiatives; 

Roca, Inc., a service provider that serves high-risk youth; and New Profit, Inc. a venture philanthropy firm that funds 

innovations in social enterprise. 

By January 2012, the Commonwealth had defined its intended target population as high-risk youth aging out of the 

juvenile corrections system. Each year, approximately 4,000 young men in Massachusetts age out of the juvenile justice 

system or are released from probation. Their life and employment prospects are poor; nearly two-thirds (64 percent) are 

re-incarcerated within five years, with an average prison stay of 2.4 years. This is estimated to cost the state 

approximately $280 million each year (Kodali, Grossman & Overholser, 2014A).

In July 2012, the Massachusetts Legislature passed enabling legislation that created the Social Innovation Financing Trust 

Fund and authorized the state to enter into PFS contracts in the value of $50 million, backed by the full faith and credit of 

the Commonwealth—a legislative provision that provides the maximum possible protection to investors. The project 

intermediary (Third Sector) and service provider (Roca) were selected in August 2012 through a competitive process and 

the PFS project was formally launched in January 2014 (as one of the two PFS initiatives in the DOL PFS grant program). If 

successful, this project will have the potential to help as many as 1,320 young men to improve their life prospects and to

reduce reincarceration bed days by at least 40 percent. 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Service Intervention 

This four-year service delivery model provides two years of intensive engagement with high-risk young men and two 

years of follow-up services. The approach is characterized by: intensive outreach and case management; multidimensional programming in life skills, education and vocational training; and work opportunities through community 

partners. Roca has successfully delivered this intervention model in Massachusetts since 1988 and reports that the

approach has reduced three-year incarceration rates by 33 percent (Third Sector Capital Partners, 2014d). 

Roca 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. 

Project Partnership and Structure

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

• Intermediary: Third Sector, Inc., the intermediary for this project, is a nonprofit organization that works with 

government, commercial and nonprofit entities to develop and implement PFS initiatives. A separate nonprofit 

organization, Youth Services, Inc., was created within the intermediary organization to house and manage this 

PFS project.

• Service Provider: Roca, Inc., a nonprofit organization that has been working with high-risk youth in the Boston 

and Springfield areas for 25 years, will provide services for this project. 

• Funders/investors: The senior lender for this project is Goldman Sachs and junior lenders include the Kresge 

Foundation and Living Cities. The project has also obtained a number of smaller philanthropic grants. 

• Evaluator: SIBalytics, Inc., a small evaluation firm, will conduct the PFS evaluation. 

• Independent validator: Public Consulting Group (PCG), a large management consulting firm that works 

primarily with public-sector clients to achieve their performance goals, is the independent evaluation validator 

for this project. Having an independent validator was a requirement of the DOL PFS grant program. 

In addition, several local law firms provided pro bono assistance to the PFS project partners in developing and reviewing 

the project contracts, and the Harvard SIB Lab provided pro bono assistance through a full-time Harvard SIB Lab fellow 

based in the state’s Executive Office for Administration and Finance related to project development and design. 

Funding Strategy

This project is one of two DOL PFS grant programs that could receive up to $11 million from the DOL if benchmarks are 

met. Including the potential DOL funds, the total investment in the project is $21.3 million, with a cap on success 

payments of $27 million. Investor financing is composed of $12 million in loans and $6.0 million in “recyclable” grants 

(whose payouts would go toward continued services). The largest lender, Goldman Sachs, contributed a $9.0 million 

senior loan, while Living Cities and the Kresge Foundation provided junior loans totaling $3.0 million. Other investors 

provided recyclable grants ranging from $300,000 to $3.7 million. The financing also includes $3.31 million in deferred 

service fees by the intermediary and service provider; payment of these fees is conditional upon program success. 

Evaluation

The evaluation of this project employs a randomized controlled trial (RCT) design. However, unlike most random 

assignment evaluations, services will not be denied to young men in the control group if they come to Roca on their own 

or through a referral outside of the initiative. In order to avoid “treatment contamination” (providing treatment to 

control-group participants), Roca agreed to serve a larger number of young men than would have otherwise been 

necessary for evaluation purposes. As in the NY State project, this project also specifies a backup evaluation plan. In the 

nationalservice.gov/SIF 16
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

event that randomization proves unworkable in practice (for example, because of unresolvable implementation problems 

or “treatment contamination”), the team will use a difference-in-differences approach to compare Roca’s outcomes to 

those in matched cities where Roca did not provide services.

Target Outcomes and Repayment Structure 

Repayment is based on three target metrics, where participants’ outcomes will be compared to those of control-group 

members. These include: 

• Reduction in days of incarceration, 

• Increases in job readiness, and

• Increases in time employed. 

If reincarceration days are reduced by at least 40 percent, investor loans will be fully repaid with the associated level of

interest, and all deferred payments will be paid. Repayments will be administered in a tiered fashion: first the senior loan 

(to Goldman Sachs) will be repaid at 5 percent annual interest, followed by the junior loans at 2 percent interest, then 

deferred service fees will be repaid to the intermediary and service provider, and finally any remaining profits will go 

toward the recycling of grant funds. 

Increases in job readiness (compared with the control group) will be paid at $789 per participant that engages with the 

service provider nine or more times per quarter, and increases in time employed will be paid at $750 per participant for 

each participant’s additional quarter of employment compared to control group participants. 

If days of reincarceration are reduced by at least 40 percent, investors will receive $22 million in payments. If success rates 

exceed the benchmarks (a 70 percent reduction in reincarceration days), then the investors receive the maximum possible 

level of repayments—$27 million (and the state would save an estimated $45 million). If the project fails to meet the 

lowest benchmarks (approximately 5 percent reduction in reincarceration), the three lenders will receive no return on 

their investment. 

nationalservice.gov/SIF 17
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

nationalservice.gov/SIF 18

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

Introduction

Chicago has approximately 400,000 students in 664 public schools throughout the city, making it the nation’s third largest 

public school system in the nation (CPS, 2014). This PFS initiative is one of a number of early education programs piloted 

by Chicago Mayor Rahm Emanuel, who also established the Chicago: Ready to Learn! Initiative which coordinates and 

expands access to early childhood education programs across the city. He has also worked to implement full-day 

kindergarten and Science, Technology, Engineering and Math programs (STEM). These efforts have increased Chicago’s

graduation rates from 58 percent in 2011 to 69.4 percent in 2014 (Chicago’s Mayor’s Office, 2014). The PFS initiative was 

passed by the Chicago City Council in early November, 2014, and is now the fifth active PFS program in the United 

States. 

Service Intervention

This initiative 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. This 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. A 2002 study found this program to be effective and to result in a 41 percent reduction in the need for special 

education programs (Sanchez, 2014). Another study estimated that for every one dollar invested in early childhood 

education, nearly $11 are returned to society over the lifetime of the child—an 18 percent return on investment (Arthur et 

al., 2011). Arthur et al. also suggest that this specific child-parent early education program has the highest level of 

evidence base in the country among this type of program. 

In year one (the 2014-15 school year), the program will fund 374 half-day slots; in years two and three it will provide 782 

full-day slots; and in years four and five, it will fund 680 slots each. A total of six schools are involved that serve lowincome families in communities with a shortage of publically funded, high quality pre-kindergarten programs. 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Project Partnership and Structure

With the City of Chicago as the lead public agency, the key partners in this project include: 

• Intermediary: Metropolitan Family Services (MFS), the program intermediary, has extensive experience working 

with high-need and low-income families through parental engagement. MFS will help Chicago Public Schools 

identify the key best practices in early-childhood education to adapt to the Chicago model. 

• Service provider: Chicago Public Schools will provide services for this project. 

• Project coordinator: The Illinois Facility Fund (IFF) in Chicago, a lender and consultant to nonprofits, is acting as 

the project coordinator, responsible for the flow of funding between all funding partners and Chicago Public 

Schools. IFF will repay lenders and hold the contracts with additional partners, including MFS. 

• Funders/investors: Goldman Sachs and the Northern Trust are the primary lenders for this project. The J.B. and 

M.K. Pritzker Family Foundation, a longtime advocate of early childhood education, serves as subordinate lender 

and will assume any financial burden before Goldman Sachs or the Northern Trust if the program is 

unsuccessful. 

• Evaluators: The third-party evaluator had not yet been named when this report was published. 

Funding Strategy

The total value of investments for this project is $16.6 million. The primary lenders are Goldman Sachs and Northern 

Trust and the secondary lender is the J.B. and M.K. Pritzker Family Foundation. The Finnegan Family Foundation and the 

City of Chicago are providing funding for the project evaluation. 

Before funding is provided directly to the early education programs, $470,000 will go to IFF for its project coordination 

services; $200,000 will go to MFS for parent support and training; $170,000 will reimburse incurred audit fees; $75,000 will 

reimburse IFF’s legal fees, and $100,000 will reimburse legal fees for the City of Chicago and Chicago Public Schools 

(Sanchez, 2014). 

Evaluation

This project will evaluate students at the end of their kindergarten year using an existing kindergarten evaluation, and 

will use a comparison group of students from similar low-income neighborhoods who did not attend preschool in a 

Chicago Public School program or Head Start. In addition, third grade students will be evaluated using the Partnership 

for Assessment of Readiness for College and Careers (PARCC), which was administered for the first time in 2014 in 

Chicago Public Schools and is considered more rigorous than the prior tests. Children must score at or above the 25th 

national percentile on the reading portion of the PARCC to be considered for repayment. There are potential challenges 

with this evaluation method as Chicago Mayor Rahm Emanuel has committed to providing preschool education to all 

low-income four-year-olds by 2015, reducing the potential number of comparison group participants. Children with severe 

disabilities, such as autism and deafness, will be excluded from the study.

Target Outcomes and Repayment Structure

This program aims to reduce the number of children who use special education services for mild disabilities, including 

mild learning disabilities, emotional disturbances, developmental delays, and speech or language impairments. 

Additionally, the program seeks to improve kindergarten readiness and increase rates of third grade literacy among those 

involved in the preschool program. 

If there is a decrease in the need for special education services among program participants, lenders will be repaid $9,100 

per student, per year, with a 1.0 percent compounded interest rate per student. This value was calculated based on the 

nationalservice.gov/SIF 19
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

time teachers typically spend with students who have learning disabilities and the additional costs associated with the 

needs of these students. If there is an increase in kindergarten readiness, lenders will receive $2,900 per student. If there is 

an increase in third grade literacy, lenders will receive $750 per student who tests above the national literacy average. 

The lenders will be repaid by Chicago Public Schools and the City of Chicago. It is projected that Chicago Public Schools 

will pay approximately $21.5 million over the 16-year program in payments based on the reduction in need for special 

education services, and the City of Chicago will pay an additional $4.4 million for improvements in kindergarten 

readiness and third-grade literacy results. Overall, it is expected that investors will potentially earn twice the return on 

their initial investments if the program is successful (Sanchez, 2014).

nationalservice.gov/SIF 20
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

nationalservice.gov/SIF 21

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

Introduction

The issue of homeless caregivers has posed a serious problem for the government of Cuyahoga County (which 

encompasses the greater Cleveland area). Often faced with a number of issues, including domestic violence, substance 

abuse and mental illness, homeless caregivers often struggle to provide a safe and stable home environment—a 

requirement for reunification with their children. As a result, children of these individuals, approximately two-thirds of 

whom are under six years of age, spend a significantly longer period of time in out-of-home foster care than the children 

of caregivers with secure housing (Third Sector Capital Partners, 2014c). Cuyahoga County currently spends about $35 

million per year on foster care payments (Tobias, 2013). The extended period of time children are spending in foster care 

has historically been a leading cause of high human service costs to the county (Third Sector Capital Partners, 2014c). 

The PFS initiative in Cuyahoga County has been championed by former County Executive Edward Fitzgerald, who was 

inspired to explore the idea of a PFS model in the county after attending a White House PFS conference in 2011. In July of 

2014, Fitzgerald, along with County Councilman Dale Miller, sponsored and passed a bill that created the Social Impact 

Investing Fund in Cuyahoga, which set aside $1.0 million annually, with a cap of $5.0 million, to fund PFS initiatives in 

the county.

Local officials’ interest in PFS and the preeminent problem of out-of-home foster care led to the creation of the Partnering 

for Family Success Program. Working with a variety of partners, the program will provide 135 homeless caregivers with 

links to affordable housing while also providing them with intensive case management in the form of an evidence-based 

program called “Critical Time Intervention” (CTI). In July 2014, Cuyahoga County launched a pilot version of the 

program for 33 individuals funded by a $780,000 grant from the Laura and John Arnold Foundation. The pilot period 

allowed the service provider, FrontLine Services, to hire and train staff and to test the referral and random assignment 

process.

Service Intervention

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

established network of housing service providers, and will deliver CTI, an evidence-based homelessness transition 

therapy program. CTI aims to help vulnerable, homeless families to slowly reconnect to community support networks, 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

while settling successfully into newly attained housing. CTI participants will be provided age-appropriate, evidencebased trauma services that will strengthen healthy and secure caregiver-child relationships (Third Sector Capital Partners, 

2014c). The hope is that by providing housing and CTI services before reunification, the program will allow participants 

to more successfully participate in mental health services and substance abuse counseling, to find employment, and to 

achieve the level of stability necessary to regain visitation rights. By coordinating the service intervention with the 

County’s Division of Children and Family Services (DCFS) and their reunification checklist, the PFS project will empower 

DCFS to grant reunification decisions sooner and allow children to exit out-of-home foster care quicker (Third Sector 

Capital Partners, 2014b). 

FrontLine Services will provide the 12-15 month treatment program to 135 families over a three year period. To assist 

FrontLine Services, the PFS project partnered with a number of housing providers and referral partners—including the 

Cuyahoga Metropolitan Housing Authority, Emerald Development and Economic Network, Inc., and Famicos 

Foundation—to find affordable, stable and reunification-appropriate housing though public housing and voucher-based 

resources. In order to ensure enough participants for both the treatment and control groups for the project, the Partnering 

for Family Success PFS Program will coordinate referrals from the County’s Office of Homelessness, the Domestic 

Violence and Child Advocacy Center, and the County’s Division of Children and Family Services (Third Sector Capital 

Partners, 2014a). 

Project Partnership and Structure

With Cuyahoga County as the lead public entity, the key partners and roles in this project include: 

• Intermediary: Enterprise Community Partners, Inc., the Project Manager and Fiscal Agent, will be responsible for 

disbursing upfront payments from the funders to the service provider to cover project costs through Cuyahoga 

PFS, LLC, an affiliated entity. They will also disburse success payments to funders and monitor the program in 

accordance with the PFS contract, and will work to resolve any issues that arise throughout the life of the project. 

Third Sector Capital Partners will serve as an advisor to the government as well as the transaction coordinator for 

the project.

• Service provider: Frontline Services Inc. will function as the service provider for this project. 

• Funders/investors: The funders and investors include the Reinvestment Fund, the George Gund Foundation, the 

Nonprofit Finance Fund, the Cleveland Foundation, and the Sisters of Charity Foundation of Cleveland. 

• Evaluators: The Center on Urban Poverty and Community Development at the Jack, Joseph and Morton Mandel 

School of Applied Social Sciences at Case Western Reserve University will serve as the project evaluators. 

Funding Strategy 

The total value of investments for the main project is $4.0 million. Prior to raising these funds, the Laura and John Arnold 

Foundation donated $750,000 to conduct a pilot program, which is not included in the $4.0 million raised as part of the 

primary PFS investment. The Cuyahoga County Partnering for Family Success Program has a two-tiered loan structure. 

Senior loans, which were provided exclusively by the Reinvestment Fund, receive a 5 percent interest rate, while 

subordinate or junior loans receive a 2 percent interest rate. The Reinvestment Fund provided $1,575,000 in senior loans, 

while the George Gund Fund and the Nonprofit Finance Fund provided junior loans of $725,000 and $325,000, 

respectively. In addition, the Cleveland Foundation and the Sisters of Charity Foundation of Cleveland provided junior 

loans of undisclosed amounts, the George Gund Fund provided a $275,000 loan at 0 percent interest, and the Sisters of 

Charity Foundation of Cleveland donated two $75,000 recoverable grants (Third Sector Capital Partners, 2014a). 

nationalservice.gov/SIF 22
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Evaluation

The Center on Urban Poverty and Community Development at the Jack, Joseph and Morton Mandel School of Applied 

Social Sciences at Case Western Reserve University (CWRU) is serving as the evaluator and will conduct a randomized

controlled trial (RCT) to determine the impacts of the intervention. As the evaluator, CWRU worked with the partner 

organizations to identify the size, characteristics, and potential cost savings associated with the PFS program’s target 

families (Third Sector Capital Partners, 2014c). The result was a five-year evaluation where at least 270 eligible families 

will be randomly assigned at a one-to-one ratio to either the treatment or control groups. Random assignment will occur 

for the first three years of the program, with final impact determinations and payments occurring in the sixth year. The 

evaluation will examine the total number of out-of-home foster care days accumulated by families assigned to FrontLine 

Services as compared to the number of out-of-home foster care days accumulated by families served by the existing 

resources in the community (Third Sector Capital Partners, 2014b). In addition to the impact evaluation, CWRU will also 

conduct a process study during the first two years of the program to examine implementation challenges and successes 

(Third Sector Capital Partners, 2014c). 

Target Outcomes and Repayment Structure

For each day that the number out-of-home foster care days is reduced for children in the treatment group as compared 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. The target impact for the project is a 25 percent reduction in out-of-home 

foster care days for treatment group participants. If this level of impact is achieved, all investors will be reimbursed for 

their original investments plus the associated interest, and the County of Cuyahoga will net approximately $130,000 in 

savings (Third Sector Capital Partners, 2014c). At higher levels of impact, the subordinate/junior lenders could receive up 

to $1.0 million in success payments based on the additional savings to the county. Exhibit 2 lays out success payments 

and savings for the potential impact levels.

Exhibit 2. Government Savings and Success Payments by Level of Impact3

 

 Percent Reduction in 

OHP Days

Gross Savings for Cuyahoga 

County

Success Payments Paid by 

Cuyahoga County

Net Savings for Cuyahoga 

County

50 percent $8.5 million $5.0 million $3.5 million

40 percent $6.8 million $5.0 million $1.8 million

30 percent $5.1 million $4.55 million $550,000

25 percent $4.25 million $4.125 million $130,000

20 percent $3.4 million $3.4 million $0

10 percent $1.7 million $1.7 million $0

All success payments will be made in the sixth year of the program. The George Gund Foundation has pledged to use any 

success payments to fund future PFS projects, while the Sisters of Charity Foundation of Cleveland will reinvest any 

repaid grant funding into Frontline Services (Third Sector Capital Partners, 2014c).

3 http://www.thirdsectorcap.org/wp-content/uploads/2014/12/141204_Cuyahoga_PFS_Fact-Sheet.pdf

nationalservice.gov/SIF 23

 

Social Innovation Fund: Corporation for National and Community Service 

State of the Pay for Success Field Office of Research and Evaluation 

nationalservice.gov/SIF 25

III. PFS Activity in Development

In addition to the six existing PFS projects discussed in Section II, as of February 4, 2015 there are a number of other 

initiatives across the U.S. in different phases of exploration and development. This includes the eight grantees recently 

funded by the CNCS Social Innovation Fund Pay for Success Grant Program. These projects are described below, along 

with several other PFS projects discussed in the literature that are under development, but not yet executed. We also 

include a summary of a number of federal and state legislative efforts being undertaken that reflect the growing interest 

in the PFS model and may result in funding for future PFS activity. 

CNCS Social Innovation Fund PFS Grantees 

The eight grantees funded by the PFS Grant Program in October 2014 for up to three years in duration are described 

below. Seven of the grantees were funded to provide technical assistance in assessing project feasibility and developing 

capacity among subrecipients (i.e., government and nonprofit entities interested in using PFS financial models). The 

eighth grantee, the Nonprofit Finance Fund, will help subrecipients that have already confirmed the feasibility of 

implementing a PFS model in their target location to structure their PFS transactions by helping the stakeholders and 

partners to negotiate the terms of the PFS deal. Brief summaries of the grantees and their initial plans are provided below. 

 Green and Healthy Homes Initiative (GHHI): GHHI will receive approximately $1.0 million over two years to 

provide technical assistance and capacity building services to hospitals, managed care organizations and service 

providers focused on reducing asthma among low-income children across the country through the 

implementation of PFS projects in five cities or counties. GHHI will provide TA to one health care entity as the 

private payor and one nonprofit service provider per site, for a total of ten subrecipients funded through an open 

competition. 

 The Corporation for Supportive Housing (CSH): CSH will receive $750,000 over three years to focus on economic 

opportunity and healthy futures among homeless youth and families, and disabled residents of health care 

institutions who want to live in the community. CSH intends to identify evidence-based preventive interventions, 

conduct feasibility studies, prepare for PFS implementation, and analyze alternate social financing strategies. Up 

to 12 subrecipients will be selected from an open competition to receive technical assistance and participate in 

peer learning initiatives. 

 Institute for Child Success, Inc. (ICS): ICS will receive $782,000 over two years to provide technical assistance to 

subrecipients to help improve outcomes for children and families through early childhood interventions in the 

Southern U.S. Each jurisdiction will receive up to one year of specialized coaching to help analyze the feasibility 

of a PFS initiative, convene stakeholders, and prepare for PFS financing. 

 Third Sector Capital Partners, Inc. (Third Sector): Third Sector will receive $1.91 million over three years in order 

to help develop multi-government-level contracting and financing. Third Sector plans to create a laboratory 

through ten government subrecipients across two cohorts who have decision makers from multiple levels of 

government and/or have a high degree of PFS readiness. In partnership with these subrecipients, Third Sector 

will help develop PFS blueprints that can be translated to other audiences through lessons learned from working 

with multiple levels of government. 

 University of Utah Policy Innovation Lab: The University of Utah’s David Eccles School of Business Policy 

Innovation Lab (also known as the Policy Innovation Lab) will receive approximately $1.15 million for one year to 

facilitate PFS deals across the Western U.S. The lab will work with service providers to provide technical 

assistance and support, including back-office support, staff capacity building, impact measurement and reporting 

capacity, governance capacity, and general business support. The lab will also work directly with select 

government jurisdictions to analyze PFS viability and governmental support. 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

• Harvard Kennedy School Social Impact Bond Lab (Harvard SIB Lab): The Harvard SIB Lab will receive $1.93 

million in grant funding over three years to provide technical assistance to state and local governments. The 

Harvard SIB Lab will provide full-time technical assistance to ten local and state government partners over 15 

months. It will also test a cohort-based model for developing government capacity in sites where there are 

multiple government partners. Additionally, the Harvard SIB lab is funded to continue to publish key lessons 

from their technical assistance provision in order to help build capacity and disseminate information about PFS. 

• National Council on Crime and Delinquency (NCCD): NCCD will receive $864,000 over two years to assist three 

state or local governments or nonprofit organizations to determine the feasibility of using PFS to promote 

interventions focused on the positive development of youth involved or at-risk for involvement with the juvenile 

justice or child welfare systems. NCCD will target states with the highest rates of racial and ethnic disparities in 

juvenile justice and child welfare system involvement in order to support the capacity of these systems to 

implement evidence-based practices and create positive outcomes for system-involved youth. 

• Nonprofit Finance Fund (NFF): The NFF will receive $3.6 million over two years to: provide subgrants through an 

open and competitive process; create criteria to assess opportunities to create and close PFS transactions; and 

collect and share knowledge using the PFS Learning Hub website. NFF is expected to fund 12 subrecipients

through an open competition to structure and close PFS transactions within two years. 

PFS Projects with Executed Contracts, Pre-Implementation

In December 2014, the Commonwealth of Massachusetts announced a new PFS initiative to reduce chronic homelessness 

through a program that will provide 500 units of stable supportive housing for up to 800 chronically homeless individuals 

over six years. The initiative was initially conceptualized when Governor Deval Patrick signed “An Act Relative to 

Community Housing and Services” in March of 2012, legislation that increased government coordination and efficiency 

through commitments of an MOU, creating a demonstration program that would generate up to 1,000 new permanent 

housing units (Corporation for Supportive Housing, 2012). The PFS program is utilizing $1.0 million in philanthropic 

funding and $2.5 million in private capital investments from Santander Bank N.A., the Corporation for Supportive 

Housing (CSH) and United Way of Massachusetts Bay and Merrimack Valley. If successful, the Commonwealth 

anticipates generating up to $6.0 million to repay investors a maximum return rate of 5.33 percent and also covering all 

evaluation and intermediary costs. The intermediary for the initiative, the Massachusetts Housing and Shelter Alliance 

(MHSA)—created by the United Way of Massachusetts Bay and Merrimack Valley, the Massachusetts Housing and 

Shelter Alliance, and CNCS—will work with providers to secure housing, job training and medical care for tenants. This 

project is unique in that MHSA will sign contracts directly with service providers rather than the Commonwealth. Root 

Cause will then act as the independent evaluator for the PFS project, verifying the outcomes produced by the service 

providers (Commonwealth of Massachusetts, 2014). As of January 2015, some service provider contracts had been 

signed, but contracts with other key partners had not yet been executed. The Commonwealth anticipates that MHSA will 

begin coordinating service provision for chronically homeless individuals in February 2015. 

Other Pay for Success Projects Nearing Implementation

Outside of the CNCS SIF PFS grantees, there are at least three other projects nearly ready to execute a PFS contract and 

implement a PFS model. In Denver, the Denver’s Road Home organization is working with Social Impact Solutions, the 

Corporation for Supportive Housing, and Enterprise Community Partners to assist 300 homeless individuals by 

combining housing support with intensive case management services to address underlying issues of mental health and 

substance abuse (Denver Mayor’s Office, 2014). This project was selected after a 2012 request for information from the 

Denver Mayor’s office. The city hopes to raise $8.0 million for the PFS project and begin providing services in 2015.

nationalservice.gov/SIF 26
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

In October of 2012 in Fresno, CA, the California Endowment granted Social Finance and Collective Health a $220,000 pilot 

grant to test the efficacy of PFS initiatives in addressing childhood asthma. Through the Central California Asthma 

Collaborative and Clinica Serra Vista, 200 children with uncontrolled asthma received home visits from community 

health workers who provided education and support in reducing environmental asthma triggers (Childhood Asthma 

Leadership Coalition & Green and Healthy Homes Initiative, n.d.). This program aims to reduce asthma-related 

emergency room visits by 30 percent and decrease hospitalizations by 50 percent over two years, and will serve as the 

first step in establishing a PFS initiative around childhood asthma (Social Finance, 2013). 

In May of 2014, Illinois Governor Pat Quinn announced that the state of Illinois will pursue a PFS program to increase 

support for at-risk youth involved in both the juvenile justice and child welfare systems in the state. After a competitive 

request for proposals process in September 2013, the contract was awarded to One Hope United with the Conscience 

Community Network, which will implement a project based on the evidence-based Crossover Youth Practice Model to 

improve placement and reduce rates of recidivism among 700 youth involved with the Illinois Department of Children 

and Family Services. The project is expected to be operational by the middle of 2015 and is anticipated to generate 

approximately $30 million in direct investment. The Harvard SIB Lab will support the initiative through technical 

assistance. 

The projects listed above are just some of the PFS initiatives in early phases of planning and implementation. The Harvard 

SIB lab estimates that in 2015 there will be more than $200 million in PFS contracts within the U.S. dedicated to projects 

across the country (Lester, 2014). This growth in PFS projects may correlate to an increase in the number of specialized 

intermediaries helping to broker these transactions, including the Corporation for Supportive Housing, the Green & 

Healthy Homes Initiative, the National Council on Crime and Delinquency, and others. New investors have also become 

engaged in PFS projects, including for-profit banks such as Goldman Sachs and Community Development Financial 

Institutions such as the Nonprofit Finance Fund. There has been a broad and growing interest in the field of “impact 

investing” in general, and a noticeable shift in the availability of capital from private banks to local funders and 

foundations that has been encouraged by intermediaries such as Third Sector, which plans to give preference to projects 

with local funders and foundations in their call for proposals for the PFS Grant Program. 

It is clear that government support will be critical to the future development of the PFS model. As observers have noted 

(Shah, 2013b), different levels of government are better suited to play different roles in the PFS field. State and municipal 

governments appear to be best suited for implementing PFS projects, while the federal government is arguably best suited 

to remove administrative roadblocks to PFS implementation, to provide financial support that allows states and 

municipalities to undertake PFS projects, and to help set PFS standards. To further this discussion, we next explore the 

nature of support for PFS that currently exists at the federal and state levels.

Federal Support

In line with its focus on promotion of evidence-based programming, the Obama Administration has sought to advance 

PFS approaches in a number of ways. The White House included proposals for PFS funding budgets for fiscal years (FY) 

2012 and 2013: the 2012 budget called for $100 million of funding for discretionary spending programs that focus on 

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

However, neither of these proposals were approved by Congress (Shah & Costa, 2013b). 

The FY 2014 budget request for PFS increased considerably to approximately $500 million. Of these funds, $195 million 

were intended to fund discretionary spending in program areas identified in previous years’ requests, and to support PFS 

projects across nine programs the Departments of Labor, Education, and Justice. The budget request also included $300 

million for a new PFS Incentive Fund to be administered by the U.S. Department of the Treasury. Modeled on the U.K.’s 

Social Outcomes Fund which helps to fund a portion of the expenses for PFS projects beyond what local governments are 

able to finance, the Incentive Fund would provide support in two primary ways: (1) it would partially fund cities’ and 

states’ outcome payments for PFS deals; and, (2) through credit enhancements, it would fund partial guarantees to 

nationalservice.gov/SIF 27
Social Innovation Fund: Corporation for National and Community Service 

State of the Pay for Success Field Office of Research and Evaluation 

nationalservice.gov/SIF 28

philanthropic organizations that engage in PFS deals (Shah & Costa, 2013b). The proposal was not funded in FY 2014 or 

FY2015 (White House, 2014). The $300 million request was resubmitted again in the Administration’s FY 2016 budget 

(White House, 2015). 

In addition to the $300 million requested annually for the PFS Incentive Fund, 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 HUDassisted housing that would lead to reductions in utility costs (White House, 2014; White House, 2015). Additionally, $70 

million was budgeted in FY 2016 specifically for the Social Innovation Fund, up to 20 percent of which can be used for 

PFS projects (White House, 2015). 

At the time of publication, two PFS bills were in committee in Congress: the Social Impact Partnership Act in the House, 

and the Pay For Performance Bill in the Senate. Despite some setbacks at the federal appropriations level, PFS has also 

gained federal support in other ways. First, several federal grant programs have been developed to support PFS 

programs. One of these grant programs is the Workforce Innovation Fund, housed within the U.S. Department of Labor, 

which committed up to $20 million in 2012 to finance the New York and Massachusetts PFS projects described in Section 

II of this report. The 2014 Workforce Innovation and Opportunity Act (WOIA), also housed within the U.S. Department of 

Labor, contains a number of provisions that facilitate PFS projects focused on workforce preparation.4 The WOIA takes 

effect in July, 2015. Second, PFS has gained federal support through grant programs authorized through the 2008 Second 

Chance Act, housed in the U.S. Department of Justice. These grant programs focus on facilitating recently released 

inmates’ re-entry into society. In 2012, Second Chance grant programs began providing “priority consideration” to 

proposals that featured a PFS approach. Third, through the U.S. Office of Management and Budget’s Performance 

Partnership Pilots for Disconnected Youth (P3) program, which focuses on improving outcomes for at-risk youth aged 14-

24, several federal agencies (including the Departments of Education, Health and Human Services, and Labor, and the 

Corporation for National and Community Service’s Social Innovation Fund) will be allowed to enter into ten 

“performance partnership” agreements with local, regional, and state governments. Lastly, as described earlier in this 

report, the Social Innovation Fund at the Corporation for National and Community Service is sponsoring grants aimed at 

facilitating PFS at the state and local level. 

State Legislation 

It is beyond the scope of this report to inventory the full range of state efforts that promote PFS, but legislative efforts 

merit particular attention. A number of states have undertaken legislation to authorize PFS programs, including 

California, Colorado, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Utah, and 

Washington.5 Of these states, only two have passed bills through the full legislative process (Massachusetts and Utah) and 

the rest have proposed legislation that are currently under review by committees or have not been passed. 

 Utah: In 2014, Utah established H.B. 96—the Utah School Readiness Initiative—which allows the state to pay for 

PFS programs targeting early childhood education. It gives the School Readiness Board in the Governor’s Office 

of Management and Budget the authority to negotiate PFS contracts and an ongoing appropriation of $3 million. 

The bill was signed on April 1, 2014. 

 

4

 The WIOA essentially updates and supersedes the Workforce Investment Act (WIA). It establishes PFS as an eligible use of WIA 

funds, allows WIA funds to be used to help local workforce areas implement PFS projects, and makes new service providers—such 

as intermediaries, community based organizations, and others—eligible for PFS contracts (New Profit, Inc., 2014). 

5

 See Appendix C for a summary of legislative actions taken at the state level. 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

• Massachusetts: Massachusetts gave its Secretary of Administration and Finance the authority to enter into up to 

$50 million in PFS contracts backed by full faith and credit of the Commonwealth. This bill established a sinking 

fund and requires the Secretary to request appropriations in each year equal to the maximum performance 

payments that may ultimately be needed, based on the services delivered in that year, in order to ensure funds 

are available when performance payments are due.

• Oklahoma: In April 2014, the Oklahoma governor approved SB 1278 establishing a PFS revolving fund to provide 

payment to social service providers for the delivery of predefined criminal justice outcomes.

Taken together, the PFS projects currently in place, combined with a highly engaged body of stakeholders and legislative 

efforts at the state and federal level, are establishing momentum for the next wave of PFS initiatives throughout the 

country. We are seeing a PFS emergence in new fields, transitioning from mostly justice-related projects to projects

focusing on child welfare, early childhood education, workforce development, chronic conditions, and more. The projects 

and legislation listed here, and the myriad of others in progress, reflect the growth in political and financial investment in 

the PFS model, and the promise of future investment in the model moving forward. 

nationalservice.gov/SIF 29

Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

IV. Emerging Themes 

As the preceding chapters illustrate, the PFS field is nascent and evolving. Even though the first PFS project was launched 

only five years ago, there are currently six PFS projects with signed contracts in the U.S. and many more PFS projects in 

the development stage. Our initial literature search on the subject produced thousands of citations on this model of social 

finance: an initial search of peer reviewed and gray literature using the search terms “pay for success,” “social impact 

bonds,” “social benefit bonds,” “impact investing,” “social impact partnership,” “social impact financing,” and 

“development impact bonds” yielded over 25,000 results. It is clear from this literature base that the PFS model has 

captured a great deal of attention, and there is great interest in the field and its future. 

In this section, we briefly summarize some of the common themes derived from a review of key documents within the 

current body of PFS literature. The literature focusing on PFS can be grouped into three general categories: (1) articles 

providing a broad overview of the PFS model, its components, and potential benefits and risks;6 (2) articles offering a 

series of broad recommendations to advance the PFS field based on preliminary qualitative information-gathering;7 and 

(3) articles specific to newly conceptualized or implemented PFS models, often written by key players within a PFS 

relationship, offering themes, initial lessons learned and recommendations for future PFS programming.8 

As most PFS projects are so new—the first PFS project in the U.S. is yet to be completed—there is little information in the 

literature related to actual outcomes, or unintended consequences of PFS transactions. Overall, there is not yet sufficient 

evidence in the field to determine which interventions will prove effective, how contract structures and partner 

relationships will fare in the face of PFS transaction challenges, and whether stakeholders will ultimately confirm that 

their investments of time, energy, and funds were worth the gains that accrued to their organizations. 

As such, our ability to draw definitive conclusions about best practices, lessons learned, and recommendations is severely 

limited. However, there is still much to be learned from the early experiences of existing PFS projects both in the U.S. and 

abroad. A variety of themes have emerged across the literature that are highly suggestive of both the future direction of

the PFS field and best practices for key players implementing a PFS transaction. Those contemplating PFS projects can 

benefit from the current body of lessons learned related to launching a PFS project, and barriers and facilitators to a 

smooth implementation process. 

Overarching themes and lessons learned from the current body of PFS literature are summarized below. More detail 

about PFS project-specific lessons learned can be found in Appendix B, which provides descriptive overviews and key 

takeaways for nearly three dozen key PFS articles and reports reviewed for this report. 

Commonly cited insights about PFS implementation include: 

• Data-driven analysis is a key element of PFS initiatives. This includes data-based analysis of the social policy 

landscape, key players, and of community, government, and investor priorities (Disley, Rubin, Scraggs, Burrowes 

& Culley, 2011; Liebman, 2011; Mason, Lloyd, Andrew & Henry; Kodali, Grossman & Overholser, 2014a).

• Not all social interventions are well suited for PFS arrangements. Feasible interventions will offer: proven track 

records of success at small (and ideally large) scales; potential scalability; cost-effective programming able to 

produce fiscal savings for the government; measurable outcomes; credible approaches to impact assessment; and 

6 For example, Callanan & Law, 2012; CNCS, 2014; Kohli, Besharov & Costa, 2012b; Merrill Lynch & Social Finance, 2014

7 For example, information gathered from task force meetings or key informant interviews as in Giantris & Pinakiewica, 2013; 

Liebman & Sellman, 2013; Nonprofit Finance Fund & White House, 2012; Palandijan & Hughes, 2014; Social Impact Investment 

Task Force, 2014

8 For example, Mason, Lloyd, Andrews & Henry, 2014; Kodali, Grossman & Overholser, 2014b; Rudd, Nicoletti, Misner & Bonsu, 

2013; Third Sector Capital Partners Inc. & Rockefeller, 2013

nationalservice.gov/SIF 31

 
Social Innovation Fund: Corporation for National and Community Service 

State of the Pay for Success Field Office of Research and Evaluation 

nationalservice.gov/SIF 32

well-defined treatment populations (Azemati et al., 2013; Liebman & Sellman, 2013; Rudd, Nicoletti, Misner & 

Bonsu, 2013; Third Sector Capital Partners & Rockefeller, 2013). 

 Sustained cooperation and commitment of all key players are key to implementing and maintaining a long-term 

PFS program. This includes government actors, intermediaries, investors, service providers, and evaluators 

(Callanan, Law & Mendonca, 2012; Kodali, Grossman & Overholser, 2014a; Kodali, Grossman & Overholser, 

2014b; Palandijan & Hughes, 2014; Rudd, Nicoletti, Misner & Bonsu, 2013). 

 PFS arrangements should take into account the range of risks assumed by each key actor involved with a PFS 

transaction (Giantris & Pinakiewicz, 2013; Mason, Lloyd, Andrew & Henry). This includes risks to investors 

(Rudd, Nicoletti, Misner & Bonsu, 2013) as well as risks to nonprofit service providers (Schaeffer, 2014). 

 As PFS projects are in their infancy, there is not yet evidence to identify the most effective model types (Azemati 

et al, 2013; Mason, Lloyd, Andrews, Henry, 2014). A variety of models have been conceptualized or implemented, 

including: a standard PFS model where the intermediary serves as the link between the government and 

investors/evaluators; an “investor-provider partnership” model with no intermediary (Dermine, 2014); a PFS 

strategy with full or partial private investor guarantee; a hybrid structure of a Human Capital Performance 

(HuCap) bond paired with a PFS model with a private guarantee (providers receive working capital up front 

from private investors at no cost via HuCap bond proceeds) (Giantris & Pinakiewicz, 2013); and a tiered system of 

SIBs structured around levels of investor risk (Butler, Bloom & Rudd, 2013). 

 Impact evaluations are key to determining the effectiveness of PFS models, but they must address logistical and, 

in some cases, ethical concerns. Impact evaluations can best demonstrate whether a project has achieved costsavings outcomes for the government, and assess the utility of PFS as a replicable model for future programs 

(Butler, Bloom & Rudd, 2013; Rudd, Nicoletti, Misner & Bonsu, 2013; Social Impact Investment Task Force, 2014). 

Randomized controlled trials (RCT) are the gold standard for establishing counterfactuals in a PFS evaluation. 

However, PFS model implementers also identify the need to overcome logistical and ethical concerns associated 

with the evaluation of social service provision with innovative RCT designs (Dermine, 2014; Kodali et al., 2014b; 

NYS Government, CEO & Social Finance, 2014). 

 To expand commitment to and investment in PFS models, it is necessary to remove and/or adjust federal 

regulatory barriers. These include barriers inhibiting commission of PFS payments, cross-agency collaboration, 

and private investment. It is also necessary to develop streamlined and supportive PFS financing policy (Azemati 

et al., 2013; Burrowes & Culley, 2011; Liebman, 2013; Palandijan & Hughes, 2014; Social Impact Investment Task 

Force, 2014; U.S. National Advisory Board on Impact Investing, 2014). 

 Standardized processes and implementation resources would help advance the PFS field. Examples include 

standardizing contract terms and definitions, common pricing processes and diagnostic tools, and developing 

best practices for cost-benefit analyses (Burrowes & Culley, 2011; Callanan, Law & Mendonca, 2012; Palandijan & 

Hughes, 2014; Roman, Walsh, Bieler & Taxy, 2014; U.S. National Advisory Board on Impact Investing, 2014). 

Looking Forward 

This report has summarized the current state of a nascent field that is quickly evolving, even as we examine it. Factors 

that could have a major impact on the PFS field—including legislative infrastructure and the degree of federal and state 

funding support—are still in flux. With only six PFS projects operating in the U.S. at the time this report was written (all 

of them in the early stages), it is clear that insights about PFS projects are still emerging; at this point there are suggestive 

indications, but certainly not universal truths, about the best way to implement such projects or under which conditions 

they are most effective. 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

In this context, CNCS’s Pay for Success Grant Program will be an important contributor to the discussion about PFS in the 

U.S. moving forward. The program is well positioned to: further the growth of the PFS field by funding organizations 

committed to providing technical assistance to new stakeholders; provide critical capacity-building assistance to 

organizations seeking to engage in PFS transactions; and provide a forum for reflecting on what has been learned in the 

field so far, and disseminating this knowledge to those in a position to move the field forward. Furthermore, the 

evaluation of the PFS Grant Program is expected to provide important insights about many aspects of PFS 

implementation, including: 

• The effects of CNCS grant assistance in catalyzing PFS initiatives and bolstering organizations’ capacities to 

sustain them; 

• Lessons learned relative to the strengths of the CNCS grant program and challenges encountered in supporting 

PFS initiatives in diverse programmatic environments; 

• Lessons learned relative to the role of government support in advancing the PFS field; and

• Lessons learned relative to the status of the PFS model within the larger policy discussion of service provision. 

Among stakeholders in the public, nonprofit and for-profit sectors there is excitement about the potential of PFS to bring 

the necessary resources to bear in order to to address some of the most pressing social problems today. There are also 

unanswered questions about PFS’ appropriateness and effectiveness in various circumstances, as well as about the larger 

social implications of this model. As in any new field, it is important to temper excitement with patience, for not all PFSfinanced interventions described in this report will prove equally effective, sustainable, or replicable. Nonetheless, among 

them, some will surely meet expectations and perhaps even exceed them—and to the extent that PFS rewards those who 

bear the risk of failure, society can only stand to gain. 

nationalservice.gov/SIF 33

Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

References

Ainsworth, D. (2014). Peterborough social impact bond reduces reoffending but makes no payout yet to investors, Civil 

Society Finance. Retrieved from 

http://www.civilsociety.co.uk/finance/news/content/17960/peterborough_social_impact_bond_reduces_reoffending_but_

makes_no_payout_yet_to_investors 

Azemati, H., Belinsky, M., Gillette, R., Liebman, J., Sellman, A. & Wyse, A. (2013). Social impact bonds: lessons learned so 

far. Community Development Investment Review, 9(1). Retrieved from http://www.frbsf.org/communitydevelopment/files/social-impact-bonds-lessons-learned.pdf

Big Lottery Fund Website (n.d.). Big Lottery Fund. Retrieved from http://www.biglotteryfund.org.uk/

Butler, D., Bloom, D. & Rudd, T. (2013). Using social impact bonds to spur innovation, knowledge building and 

accountability. Community Development Investment Review, 9(1). Retrieved from http://www.frbsf.org/communitydevelopment/files/social-impact-bonds-spur-innovation-knowledge-building-accountability.pdf

Callanan, L. & Law, J. (2012). Will social impact bonds work in the United States? McKinsey on Society. Retrieved from 

http://payforsuccess.org/sites/default/files/will_social-impact-bonds_work_in_the_us.pdf

Callanan, L., Law, J. & Mendonca, L. (2012). From potential to action: Bringing social impact bonds to the US. Retrieved from 

http://mckinseyonsociety.com/downloads/reports/Social-Innovation/McKinsey_Social_Impact_Bonds_Report.pdf

Centre for Social Impact Bonds. (2013). Case studies- existing SIBs. Retrieved from 

http://data.gov.uk/sib_knowledge_box/case-studies-existing-sibs

Centre for Social Impact Bonds. (n.d.). Map of operational social impact bonds in Europe. Retrieved from 

http://data.gov.uk/sib_knowledge_box/map

Chen, D. W. (2012). Goldman to invest in city jail program, profiting if recidivism falls sharply, The New York Times. 

Retrieved from http://www.nytimes.com/2012/08/02/nyregion/goldman-to-invest-in-new-york-city-jailprogram.html?pagewanted=all&_r=0 

Chicago Mayor's Press Office. (2014). Mayor Emanuel announces expansion of pre-k to more than 2,600 Chicago public school 

children. Retrieved from http://www.cityofchicago.org/city/en/depts/mayor/press_room/press_releases/2014/oct/mayoremanuel-announces-expansion-of-pre-k-to-more-than-2-600-ch.html 

Chicago Public Schools. (2014). Expansion of pre-k to more than 2,600 Chicago public school children. Retrieved from 

http://cps.edu/News/Press_releases/Pages/PR2_10_07_2014.aspx

Childhood Asthma Leadership Coalition & Green and Healthy Homes Initiative. (2014). Issue brief: Using social impact 

financing to improve asthma outcomes. Retrieved from http://www.childhoodasthma.org/wpcontent/uploads/2014/10/Social-Impact-Financing-Asthma.pdf 

Cohen, R. (2014). Social impact bonds: Phantom of the nonprofit sector. Nonprofit Quarterly. Retrieved from 

https://nonprofitquarterly.org/policysocial-context/24560-social-impact-bonds-phantom-of-the-nonprofit-sector.html

Commonwealth of Massachusetts. (2014). Massachusetts launches pay for success initiative to reduce chronic individual 

homelessness. Retrieved from http://archives.lib.state.ma.us/bitstream/handle/2452/217588/ocn795183245-2014-12-

08b.pdf?sequence=1&isAllowed=y

Corporation for National and Community Service. (2014). Pay for success: A primer of social innovation. Retrieved from 

http://www.nationalservice.gov/sites/default/files/documents/SIF%20-

%20A%20Primer%20on%20Pay%20for%20Success_0.pdf

nationalservice.gov/SIF 35
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Corporation for Supportive Housing. (2012). Massachusetts announces statewide collaborative effort to create 1,000 units 

supportive housing by 2015. Retrieved from http://www.csh.org/2012/12/massachusetts-announces-statewide-collaborativeeffort-to-create-1000-units-supportive-housing-by-2015/

Corporation for Supportive Housing. (2014). Massachusetts Chronic Individual Homelessness Pay for Success Initiative first in 

nation. Retrieved from http://www.csh.org/2014/12/massachusetts-chronic-individual-homelessness-pay-for-successinitiative-first-in-nation/ 

County Council of Cuyahoga County. (2014). Ordinance No. O2014-0018. Retrieved from 

http://council.cuyahogacounty.us/pdf_council/en-US/Legislation/Ordinances/2014/O2014-0018.pdf

Cuyahoga County. (2013). Details released on Cuyahoga County social impact bond. Retrieved from 

http://payforsuccess.org/resources/details-released-cuyahoga-county-social-impact-bond

Cuyahoga County Office of the Executive. (2014). Nation’s first county-level Pay for success program aims to reconnect 

foster children with caregivers in stable, affordable housing. Retrieved from http://executive.cuyahogacounty.us/enUS/NationsFirstCtyLevel-PaySuccessPrgrm.aspx

Denver Mayor’s Office. (2014). Mayor Hancock announces plans to connect hundreds of homeless to supportive housing. 

Retrieved from http://www.denvergov.org/MayorsOffice/Newsroom/tabid/442244/newsid504977/8848/mid/

504977/Mayor-Hancock-Announces-Plans-to-Connect-Hundreds-of-Homeless-to-Supportive-Housing/Default.aspx

Dermine, T. (2014). Establishing social impact bonds in continental Europe. Retrieved from 

http://www.hks.harvard.edu/content/download/70653/1255422/version/1/file/dermine_final.pdf

Disley, E., Rubin, J., Scraggs, E., Burrowes, N. & Culley, D.M. (2011). Lessons learned from the planning and early 

implementation of the social impact bond at HMP Peterborough. Retrieved from 

http://www.rand.org/content/dam/rand/pubs/technical_reports/2011/RAND_TR1166.pdf

Field, A. (2014). $5M Ohio ‘Pay for Success’ targets homelessness and child welfare. Forbes. Retrieved from 

http://www.forbes.com/sites/annefield/2014/12/05/5m-ohio-pay-for-success-targets-homelessness-and-child-welfare/

Finn, J., & Hayward, J. (2013). Bringing success to scale: Pay for success and housing homeless individuals in 

Massachusetts. Community Development Investment Review, 9(1). Retrieved from http://www.frbsf.org/communitydevelopment/files/bringing-success-scale-pay-for-success-housing-homeless-individuals-massachusetts.pdf

Ganguly, B. (2014). The success of the Peterborough social impact bond. Rockefeller Foundation Blog (August 8). Retrieved 

from http://www.rockefellerfoundation.org/blog/success-peterborough-social-impact

Giantris, K. & Pinakiewicz, B. (2013). Pay for success - Understanding risk trade-offs. Community Development Investment 

Review, 9(1). Retrieved from http://www.frbsf.org/community-development/files/pay-for-success-understanding-risktrade-offs.pdf 

Gilbert, K. (2012). The latest in socially conscious investing: Human capital performance bonds. Retrieved from 

http://www.institutionalinvestor.com/Article/2958534/The-Latest-in-Socially-Conscious-Investing-Human-CapitalPerformance-Bonds.html

Goldman, H. (2012). Goldman Sachs to help fund NYC program to cut jail recidivism, Bloomberg. Retrieved from 

http://www.bloomberg.com/news/2012-08-02/goldman-sachs-to-help-fund-nyc-program-to-cut-jail-recidivism.html 

Goldman Sachs, J.B. and M.K. Pritzker Family Foundation, & United Way of Salt Lake. (n.d.). Fact sheet: The Utah high 

quality preschool program. Retrieved from http://www.goldmansachs.com/what-we-do/investing-and-lending/urbaninvestments/case-studies/impact-bond-slc-multimedia/fact-sheet-pdf.pdf 

nationalservice.gov/SIF 36
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Hughes, J. (2014). First official results demonstrate positive outcomes at Peterborough. Retrieved from 

http://socialfinanceusblog.wordpress.com/2014/08/07/first-official-results-demonstrate-positive-outcomes-atpeterborough-3/

Illinois Governor’s Office. (2014). Governor Quinn announces Illinois’ first pay for success project. Retrieved from 

http://www3.illinois.gov/pressreleases/ShowPressRelease.cfm?SubjectID=2&RecNum=12209

INET Human Capital and Economic Opportunity Working Group & ReadyNation. (2013). Applying “pay for success” social 

impact finance to early childhood education in Salt Lake City [PowerPoint slides]. 

Kodali, S., Grossman, J., & Overholser, G. (2014a). The Massachusetts Juvenile Justice PFS Initiative Project Brief: Third Sector 

Capital Partners. Retrieved from http://www.thirdsectorcap.org/wp-content/uploads/2014/06/TSCP_MAJJ-PFS-ProjectBrief.pdf 

Kodali, S., Grossman, G., & Overholser, G. (2014b). The Massachusetts juvenile justice PFS initiative: Lessons learned. 

Retrieved from http://www.thirdsectorcap.org/wp-content/uploads/2014/06/TSCP_MAJJ-PFS-Lessons-Learned.pdf

Kohli, J., Besharov, D.J. & Costa, K. (2012a). Fact sheet: Social impact bonds – A brief introduction to a new financing tool for 

social programs. Retrieved from http://cdn.americanprogress.org/wpcontent/uploads/issues/2012/04/pdf/sib_fact_sheet.pdf

Kohli, J., Besharov, D.J. & Costa, K. (2012b). Social impact bonds 101- Defining an innovative new financing tool for social 

programs. Retrieved from http://cdn.americanprogress.org/wp-content/uploads/issues/2012/03/pdf/sib101.pdf

Lester, P. (2014). Winning Social Innovation Fund applications suggest substantial growth ahead for Pay-for-Success funding. 

Retrieved from http://socialinnovationcenter.org/wp-content/uploads/2014/11/SIF-PFS.pdf 

Liebman, J. B. (2011). Social impact bonds: A promising new financing model to accelerate social innovation and improve 

government performance. Retrieved from http://cdn.americanprogress.org/wpcontent/uploads/issues/2011/02/pdf/social_impact_bonds.pdf

Liebman, J. B. (2013). Building on recent advances in evidence-based policymaking. Retrieved from 

http://www.brookings.edu/~/media/research/files/papers/2013/04/17%20liebman%20evidence%20based%20policy/thp_lie

bmanf2_413.pdf 

Liebman, J. & Sellman, A. (2013). Social impact bonds: A guide for state and local governments. Retrieved from 

http://payforsuccess.org/sites/default/files/social-impact-bonds-a-guide-for-state-and-local-governments1.pdf 

Mason, P., Lloyd, R., Andrews, M. & Henry, N. (2014). Learning from the development and commissioning of the London 

Homelessness SIB. Retrieved from 

http://data.gov.uk/sib_knowledge_box/sites/default/files/140818%20ICF%20Learning%20from%20the%20%20London%20

Homelessness%20SIB%20Summary%20Report%20FINAL%20July%2014.pdf

McKay, K. (2013). Evaluating Social Impact Bonds as a new reentry financing mechanism: A case study on reentry programming in 

Maryland. Annapolis, MD: Department of Legislative Services. Retrieved from 

http://mgaleg.maryland.gov/Pubs/BudgetFiscal/2013-Evaluating-Social-Impact-Bonds.pdf

Merrill Lynch & Social Finance. (2014). Pay-for-Success (PFS) financing. Retrieved from 

http://socialfinanceus.org/sites/socialfinanceus.org/files/BAML%20SF_PFS%20Playbook.pdf

Ministry of Justice. (2014). Peterborough social Impact Bond - HMP Doncaster: Payment by results pilots final re-conviction results 

for cohorts 1. Retrieved from https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/341682/pbrpilots-cohort-1-results.pdf

New Profit, Inc. (2014). America forward: Workforce development, pay for success and social enterprises. Retrieved from

http://redf.org/wordpress/wp-content/uploads/2014/12/12-8-14-SE4Jobs-Webinar-Slides-America-Forward-FINAL.pdf 

nationalservice.gov/SIF 37
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

New York State Government, Center for Employment Opportunities (CEO), & Social Finance. (2014). Investing in what 

works: "Pay for success" in New York state - increasing employment and public safety. Retrieved from 

https://www.budget.ny.gov/contract/ICPFS/PFSProjectSummary_0314.pdf

New York City Office of the Mayor, Goldman Sachs, Bloomberg Philanthropies & MDRC. (2012). Fact sheet: The NYC 

ABLE project for incarcerated youth. Retrieved from http://www.nyc.gov/html/om/pdf/2012/sib_fact_sheet.pdf 

Nonprofit Finance Fund & White House Office of Social Innovation and Civic Participation. (2012). Pay for success: 

Investing in what works. Retrieved from http://payforsuccess.org/sites/default/files/pay_for_success_report_2012.pdf

Palandijan, T. & Hughes, J. (2014). A strong field framework for SIBs. Stanford Social Innovation Review Blog (July 2). 

Retrieved from http://www.ssireview.org/blog/entry/a_strong_field_framework_for_sibs

Patton, A. (2013). The social investment market: The role of public policy in innovation and execution. Retrieved from 

http://apsocialfinance.com/wp-content/uploads/2013/05/social-investment-symposium-report-2013.pdf 

Pratt, J. (2013). Flaws in the social impact bond/pay for success craze. Nonprofit Quarterly. Retrieved from 

https://nonprofitquarterly.org/policysocial-context/22149-flaws-in-the-social-impact-bond-craze.html 

Preston, C. (2012). Getting back more than a warm feeling. New York Times. Retrieved from 

http://www.nytimes.com/2012/11/09/giving/investors-profit-by-giving-through-social-impactbonds.html?pagewanted=all&_r=0 

Reynolds, A. J., Temple, J. A., White, B. A., Ou, S. R., & Robertson, D. L. (2011). Age 26 cost–benefit analysis of the Child‐Parent 

Center Early Education Program. Child Development,82(1), 379-404. 

Roman, J.K., Walsh, K.A., Bieler, S. & Taxy, S. (2014). Five steps to pay for success: Implementing pay for success projects in the 

juvenile and criminal justice systems. Retrieved from http://www.urban.org/UploadedPDF/413148-Five-Steps-to-Pay-forSuccess.pdf

Rudd, T., Nicoletti, E., Misner, K. & Bonsu, J. (2013). Financing promising evidence-based programs: Early lessons learned from 

the New York City social impact bond. Retrieved from 

http://www.mdrc.org/sites/default/files/Financing_Promising_Evidence-Based_Programs_ES.pdf

Sanchez, M. (2014). For the record: Paying for preschool with social impact bonds. Catalyst Chicago. Retrieved from 

http://www.catalyst-chicago.org/news/2014/11/03/66189/record-paying-preschool-social-impact-bonds

Schaeffer, S. (2014). Assessing nonprofit risk in PFS deals: A framework to guide nonprofits in effectively assessing risk 

and opportunity in pay for success contracts. Stanford Social innovation Review Blog (July 31). Retrieved from 

http://www.ssireview.org/blog/entry/assessing_nonprofit_risk_in_pfs_deals

Shah, S., & Costa, K. (2013). Social finance: A primer. Retrieved from 

https://www.americanprogress.org/issues/economy/report/2013/11/05/78792/social-finance-a-primer/ 

Shah, S. & Costa, K. (2013b). Social Impact Bonds: White House Budget Drives Pay for Success and Social Impact Bonds 

Forward. (April 23). Retrieved from https://www.americanprogress.org/issues/economy/news/2013/04/23/61163/whitehouse-budget-drives-pay-for-success-and-social-impact-bonds-forward/

Social Finance. (2013). The California Endowment awards grant to Social Finance and Collective Health. Retrieved from 

http://www.socialfinanceus.org/sites/socialfinanceus.org/files/imce/user/u104/Fresno%20Asthma%20Demonstration%20P

roject%20Press%20Release.pdf

Social Finance. (2014). State and local activity Snapshot. Retrieved from http://www.socialfinanceus.org/social-impactfinancing/social-impact-bonds/history-sib-market/united-states

nationalservice.gov/SIF 38
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Social Impact Investment Taskforce. (2014). Impact investment: The invisible heart of markets. Retrieved from 

http://www.socialimpactinvestment.org/reports/Impact%20Investment%20Report%20FINAL%5b3%5d.pdf 

Third Sector Capital Partners. (2014a). Cuyahoga County partnering for family success program. Retrieved from 

http://www.thirdsectorcap.org/our-work/cuyahoga-county-pfs/

Third Sector Capital Partners. (2014b). Frequently asked questions: The Cuyahoga partnering for family success program.

Retrieved from http://www.thirdsectorcap.org/wp-content/uploads/2014/12/141204_Cuyahoga_PFS_FAQ.pdf

Third Sector Capital Partners. (2014c). Fact sheet: The Cuyahoga partnering for family success program. Retrieved from 

http://www.thirdsectorcap.org/wp-content/uploads/2014/12/141204_Cuyahoga_PFS_Fact-Sheet.pdf

Third Sector Capital Partners. (2014d). Project brief: The Massachusetts Juvenile Justice Initiative. Retrieved from 

http://www.thirdsectorcap.org/wp-content/uploads/2014/06/TSCP_MAJJ-PFS-Project-Brief.pdf 

Third Sector Capital Partners & Rockefeller Foundation. (2013). Social innovation financing: Case study - Preparing for a pay 

for success opportunity. Retrieved from http://www.thirdsectorcap.org/wp-content/uploads/2013/04/ThirdSector_Roca_Preparing-for-Pay-for-Success-in-MA1.pdf

Tobias, J.T. (2013). Cuyahoga County to test new way to raise money for social services. Cleveland.com. Retrieved from 

http://www.cleveland.com/cuyahoga-county/index.ssf/2013/12/cuyahoga_county_to_test_new_way.html

Tobias, J.T. (2014). Cuyahoga County executive Ed Fitzgerald introduces plan to use new fundraising model to pay for 

social services. Cleveland.com. Retrieved from http://www.cleveland.com/cuyahogacounty/index.ssf/2014/06/cuyahoga_county_executive_ed_fitzgerald_introduces_plan_to_use_new_fundraising_model_to

_pay_for_soci.html

United Way of Salt Lake. (2013). United Way of Salt Lake announces results-based financing for low-income preschool students.

Retrieved from http://www.uw.org/our-work/cradle-to-kindergarten/uw_resultsbasesfinancingnr.pdf 

U.S. National Advisory Board on Impact Investing. (2014). Private capital public good: How smart federal policy can galvanize 

impact investing - and why it's urgent. Retrieved from 

http://static.squarespace.com/static/539e71d9e4b0ccf778116f69/t/53aa1681e4b04a6c515fac31/1403655809489/Private_Capita

l_Public_Good.pdf

Von Glahn, D. & Whistler, D. (2011). Pay for success programs: An introduction. Policy & Practice, June 2011. Retrieved 

from http://www.thirdsectorcap.org/wp-content/uploads/2012/07/Pay-for-Success-Programs-June-2011-PP.pdf

Wallace, N. (2014). With a few Pay-for-Success plans under way, the idea is gaining currency and criticism. Chronicle of 

Philosophy (July 13). Retrieved from http://payforsuccess.org/sites/default/files/philanthropy.comwith_a_few_payforsuccess_plans_under_way_the_idea_is_gaining_currency_and_criticism__news__the_chroni.pdf 

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 

nationalservice.gov/SIF 39
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

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 our 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, within 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

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 pay for success 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 

nationalservice.gov/SIF 40
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

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 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

Pay for success (PFS) Pay for success is an innovative funding strategy that leverages funds from philanthropic 

and private investors to pay for services provided to a target population by a service 

provider with demonstrated success. An independent evaluator determines if the service 

intervention achieves agreed-upon outcomes or benchmarks, which generally include 

metrics associated with savings to government programs. If and only if the pre-specified 

outcomes or benchmarks are achieved, the payor (usually a government entity) makes a 

payment to the investors.

Other Terms Used: N/A

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 federal, state or local government agency.

Other Terms Used: Lead organization, Outcome 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, a RCT measures the effect of an intervention on two 

seemingly identical groups—a “treatment” group that receives the intervention and a 

“control” group that does not receive the intervention. If done 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 assignment evaluation, Experimental study

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. 

nationalservice.gov/SIF 41
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Terms Definition

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

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. 

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

nationalservice.gov/SIF 42
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Specific to CNCS SIF Pay-for-Success Grants9

Key Terms Definition

CNCS SIF Pay for Success 

Grant Program

A grant program funded by CNCS to advance and evaluate emerging models that align 

payment for social services with verified social outcomes. The PFS competition 

encourages the implementation of PFS projects in order to enhance the reach and impact 

of innovative community-based solutions in low-income communities, related to SIF’s 

three primary focus areas of youth development, economic opportunity, and healthy 

futures.

Grantee The term Grantee refers to a CNCS SIF PFS Competition grant recipient. There are two 

types of SIF PFS grantees—technical assistance (TA) providers and transaction 

structuring providers. 

SIF operating model The model upon which the SIF PFS competition is based, distinguished by the following 

six key characteristics:

• Innovation and evidence: Requires that all proposed interventions be innovative, 

in addition to advancing the pay for success model which in itself is innovative, 

based on best practices.

• Scale: Funds grantees to help implement and assess programs that get results, 

while simultaneously growing the impact and reach of effective solutions and 

service providers leading to deeper or broader impact in communities.

• Intermediary grantees: Relies on intermediary grantees with strong skills and 

track records of success to do the critical work of competitively selecting, 

validating, and growing high-performing subrecipients.

• Match: Requires that each federal dollar granted by SIF be matched 1:1 by nonfederal dollars or services.

• Knowledge sharing: Requires each grantee to commit to knowledge sharing and 

other initiatives that advance understanding and more effective models more 

generally in the social sector.

Subgrantee For Transaction Structuring applicants, the term Subgrantee refers to the Transaction 

Coordinators, funded by Grantees, who directly support deal structuring.

Subrecipient The term Subrecipient refers to any entity receiving services or resources from a Grantee 

or Subgrantee, such as technical assistance or deal structuring assistance, or grants of 

goods. Subrecipients will typically be state and local governments and nonprofit 

organizations.

Technical assistance grant 

applicants

Grant applicants proposing an approach to increase, strengthen and diversify the range 

of governments and nonprofit organizations that are prepared to engage in PFS 

transactions by identifying evidence-based preventive interventions; conducting 

feasibility studies and preparing for PFS implementation; and analyzing alternate social 

finance strategies. 

9 Corporation for National and Community Service. (2014). Announcement of federal funding availability: FY 2014 Social Innovation Fund 

Pay for Success Grants Competition. Retrieved from http://www.nationalservice.gov/documents/main-menu/2014/social-innovationfund-pay-success-grants-competition-nofa 

nationalservice.gov/SIF 43

 
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Terms Definition

Transaction structuring 

grant applicants

Grant applicants proposing an approach to assist governments and nonprofit entities that 

have identified viable PFS projects to structure and close PFS transactions. In this 

approach, the grant would ultimately culminate in fully structured PFS transaction 

agreements and/or analyses of alternative financing structures if a PFS agreement is 

impossible or determined to be inappropriate. Grantees will provide subgrants to 

Transaction Coordinators who directly support deal structuring, and provide services to 

certify high-quality PFS transaction candidates and support knowledge sharing initiatives 

to benefit the sector and enable future PFS deals.

nationalservice.gov/SIF 44
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Appendix B: Annotated Bibliography of Key Pay for Success Documents

Key Source Overview

Azemati, H., Belinsky, M., Gillette, R., 

Liebman, J., Sellman, A. & Wyse, A. (2013). 

Social impact bonds: lessons learned so far. 

Community Development Investment Review, 

9(1). Retrieved from 

http://www.frbsf.org/communitydevelopment/files/social-impact-bondslessons-learned.pdf 

Azemati et al. review lessons learned by the Harvard Kennedy 

School’s Social Impact Bond Technical Assistance Lab following two 

years of assistance to several state and local governments developing 

PFS initiatives. The article poses key questions about the future of PFS 

programs related to model success and sustainability, risk mediation, 

and government coordination.

Key Take-Away(s):

 Select lessons learned include: (1) several different PFS model 

variations have emerged; (2) potential for large impact is the 

most important criterion for deciding whether to establish a 

SIB; (3) most socially beneficial interventions are unable to 

yield budgetary savings that fully cover program costs; (4) 

building government capacity requires dedicated staff and 

expertise; and (5) new structures are necessary to enable 

government to commit future payments. 

Butler, D., Bloom, D. & Rudd, T. (2013)

Using social impact bonds to spur innovation, 

knowledge building and accountability. 

Community Development Investment Review, 

9(1). Retrieved from

http://www.frbsf.org/communitydevelopment/files/social-impact-bonds-spurinnovation-knowledge-buildingaccountability.pdf 

This article—prepared by three employees of MDRC, the intermediary 

for the New York City Rikers Island Jail PFS project—highlights the 

benefits and limitations of existing PFS models and recommends a more 

expansive vision of PFS that promotes innovation. Recommendations for 

expanding the scope of PFS projects include: (1) establish a tiered system 

of PFS models where a top level contains the least risky programs with 

strong evidence of effectiveness and scalability, a middle level contains 

programs that have limited evidence and may warrant a mix of investors, 

and a lowest level contains the riskiest programs that most resemble 

traditional demonstration projects; (2) ensure that high-quality impact 

evaluation is a priority; and (3) structure PFS models to achieve socially 

desirable goals other than government budgetary savings (e.g., 

increasing high school graduation rates, better mental health outcomes 

for teens, etc.)

Key Take-Away(s):

 There are too few proven interventions, and too many 

difficulties in scaling and replicating them, to minimize the role 

of innovation and knowledge-building in PFS models.

nationalservice.gov/SIF 45
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Callanan, L. & Law, J. (2012). Will social 

impact bonds work in the United States? 

McKinsey on Society. Retrieved from 

http://payforsuccess.org/sites/default/files/will

_social-impact-bonds_work_in_the_us.pdf 

Callanan and Law provide an overview of social impact bonds (SIB), 

why they could be important in the U.S., and what parties need to be 

involved for them to work. The article presents an infographic illustrating 

the “SIB ecosystem” to scale preventive solutions.

Key Take-Away(s):

 The SIB is a new tool for scaling solutions to social problems, 

driven by multistakeholder collaboration, alignment of 

incentives, and focus on measurable results.

 With only one example of a SIB to date, questions remain as 

to whether SIBs will work, where they could be useful, and

how they should be structured.

Callanan, L., Law, J. & Mendonca, L. (2012). 

From potential to action: Bringing social impact 

bonds to the US. Retrieved from 

http://mckinseyonsociety.com/downloads/rep

orts/SocialInnovation/McKinsey_Social_Impact_

Bonds_Report.pdf 

This report explores the benefits and limitations of social impact bonds 

(SIB) and their potential in the United States. Callanan et al. begin with 

an overview of the structure of SIBs, then assess their potential in two 

social policy areas (homelessness and criminal justice), describe the 

stakeholders involved, and present the results of a pro forma analysis 

of a hypothetical SIB arrangement. They find that the right conditions 

are in place to implement SIBs in the United States, provided key 

barriers are overcome.

Key Take-Away(s):

 In order for SIBs to succeed, stakeholders must: implement a 

well-coordinated communications effort to inform others 

about the application of SIBs; recognize SIBs as a tool for 

scaling up social benefits (not the easiest way for direct 

service providers to fund expansion); and effectively manage 

SIB programs through cooperation and flexibility.

 Crucial to the development of the SIB field are: the creation of 

standards related to best practices in cost-benefit analysis; 

scoping new program areas/geographies, diagnostic tools to 

determine eligibility and capability of various players; and 

maintaining successful partnerships.

Centre for Social Impact Bonds. (2013). Case 

studies- existing SIBs. Retrieved November 11, 

2014, from 

http://data.gov.uk/sib_knowledge_box/casestudies-existing-sibs

This web page links to case studies of 13 social impact bonds (SIB) 

operating in the U.S., U.K., Canada, and Australia. The targetted 

social outcomes of the these projects are reported to be reducing 

recidivism in the Peterborough and New York City projects, reducing 

homelessness in the London project, and improving educational 

attainment in the Utah project. 

nationalservice.gov/SIF 46
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Cohen, R. (2014). Social impact bonds: 

Phantom of the nonprofit sector. Nonprofit 

Quarterly. Retrieved from 

https://nonprofitquarterly.org/policysocialcontext/24560-social-impact-bonds-phantomof-the-nonprofit-sector.html 

In this article, Cohen notes the inconsistency between widespread 

congressional, nonprofit, and academic support for social impact bonds 

(SIB), and a lack of “proof” of effectiveness of the SIB model due to the 

prematurity of existing pilot programs. As evidence of widespread 

support for SIBs, Cohen discusses the recent passing of the Workforce 

Innovation and Opportunity Act (WIOA) in July 2014, with $300 million 

committed to pay for success programming. The article additionally 

provides an overview of SIB programs and legislation by state.

Key Take-Away(s):

 Several states have introduced SIB legislation, but have not 

yet been able to get it passed (e.g., CO, CT, RI).

 Few researchers have issued critical commentary of SIB and 

PFS models.

Corporation for National and Community 

Service. (2014). Pay for success: A primer of social 

innovation. Retrieved from 

http://www.nationalservice.gov/sites/default/fi

les/documents/SIF%20-

%20A%20Primer%20on%20Pay%20for%20Suc

cess_0.pdf 

This CNCS primer provides an overview of pay for success (PFS) and 

where it is happening, discusses PFS grants through the Social 

Innovation Fund (SIF), and then highlights a series of current key 

resources on PFS strategies and implementation. These resources include 

articles by PFS thought leaders and practitioners, as well as news articles.

Key Take-Away(s):

 The CNCS PFS Grant Program funded eight grantees in 2014 

to advance PFS projects and transactions, and to ultimately 

enhance community-based solutions to pressing social 

problems in low-income communities. 

Dermine, T. (2014). Establishing social impact 

bonds in continental Europe. Retrieved from 

http://www.hks.harvard.edu/content/downloa

d/70653/1255422/version/1/file/dermine_final.p

df 

This article chronicles the year-long process of designing and preparing 

to launch social impact bond (SIB) pilots in Belgium related to juvenile 

recidivism and workforce empowerment. The process includes 

identifying and selecting: salient social issues to address, research-proven 

interventions, target populations, intervention design and evaluation 

metrics, the SIB instrument structure, the procurement process, and types 

of contractual agreements. Key findings and recommendations for public 

authorities, social entrepreneurs and social investors conclude the report.

Key Take-Away(s):

 Dermine recommends use of an “Investor-Provider Partnership” 

SIB structure in Belgium, where service providers enter directly 

into a contractual agreement with the government, 

demonstrating prior commitment of a private investor.

 Practical tips for presenting the concept of SIBs to government, 

nonprofit, and private actors, respectively, include: (1) describe 

SIBs as “insurance on the success of social programs” to avoid 

ideological reactions from public stakeholders; (2) position SIBs 

as “seed capital for social innovation” to influence a broad shift 

in public funding; and (3) private funding of SIBs is not the same 

barrier in European welfare states as it is in the U.S. due to a 

broader range of potential investors.

nationalservice.gov/SIF 47
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Disley, E., Rubin, J., Scraggs, E., Burrowes, N. 

& Culley, D.M. (2011). Lessons learned from the 

planning and early implementation of the social 

impact bond at HMP Peterborough. Retrieved 

from 

http://www.rand.org/content/dam/rand/pubs/t

echnical_reports/2011/RAND_TR1166.pdf 

This detailed report identifies early lessons learned from the 

development and implementation of the social impact bond (SIB) at 

Peterborough Prison in England. The authors conducted interviews 

with 22 key informants who were involved with the SIB program, 

related to: barriers and facilitators to contractual relationships, 

investments, risk tranfser, delivery agencies or intermediaries, 

commissioning, outcome measures, and payment models. The report 

concludes with a series of recommendations, lessons, and conclusions, 

and offers potential lessons learned for future SIBs.

Key Take-Away(s):

 Potential lessons learned for the wider roll-out of SIBs include 

the need for: (1) intermediaries with technical skill in

negotiating contracts, financial expertise, knowledge of 

relevant policy areas, and relationship-building skills; (2) 

standard contract terminology and definitions for SIBs; (3) 

prior analysis of investment markets to identify likely funders 

and their motivations/ interests; (4) mechanisms to facilitate 

cross-agency commitment to outcome payments; (5) building 

relationships with local organizations to secure buy-in for 

SIBs; and (6) fostering investor confidence through 

commissioned evaluations of program work.

Giantris, K. & Pinakiewicz, B. (2013). Pay for 

success - Understanding risk trade-offs. 

Community Development Investment Review, 

9(1). Retrieved from

http://www.frbsf.org/communitydevelopment/files/pay-for-successunderstanding-risk-trade-offs.pdf 

This article discusses various risks faced by three key parties that 

must collaborate in a successful pay for success (PFS) relationship—

government, investors, and service providers. Four probable PFS 

financing structures are described, each with varying levels of risk by 

involved party; these include social impact bonds (SIB), SIBs with full 

or partial private guarantee, human capital performance (HUCAP) 

bonds, and a hybrid structure of HUCAP bonds and SIBs with private 

guarantee.

Key Take-Away(s):

 SIBs with a full private enterprise guarantee represent the PFS 

financing structure with the lowest combined risk trade-off 

position for government, providers, and investors for a proofof-concept pilot.

Gilbert, K. (2012). The latest in socially conscious 

investing: Human capital performance bonds.

Retrieved from 

http://www.institutionalinvestor.com/Article/2

958534/The-Latest-in-Socially-ConsciousInvesting-Human-Capital-PerformanceBonds.html 

Gilbert focuses on the application of a Human Capital Performance 

Bond (HuCap) to a proven-effective program in Minnesota, called 

Twin Cities RISE! The article additionally discusses the wider pay for 

success program landscape, including social impact bonds (SIB) in the 

U.K. and U.S.

Key Take-Away(s):

 Institutional investors should track the increasing 

development and success of social investment products, 

including HuCaps and SIBs. 

nationalservice.gov/SIF 48
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

INET Human Capital and Economic 

Opportunity Working Group & ReadyNation. 

(2013). Applying “pay for success” social impact 

finance to early childhood education in Salt Lake City

[PowerPoint slides]. Retrieved from 

http://www.readynation.org/uploads//2014030

6_HCEORNUtahPFSOverview131205.pptx

This presentation discusses the Utah Preschool Project—the first U.S. 

“results-based financing” initiative for early childhood education.

This pay for success model expands high quality pre-K schooling to 

reduce special-education assignment rates and associated costs.

Key Take-Away(s):

 Initial research shows that quality pre-K education in Granite 

City Public School may reduce potential special-education 

assignment rates of at-risk children from around 30% to less 

than 3%.

Kohli, J., Besharov, D.J. & Costa, K. (2012a). Fact 

sheet: Social impact bonds – A brief introduction to a 

new financing tool for social programs. Retrieved 

from http://cdn.americanprogress.org/wpcontent/uploads/issues/2012/04/pdf/sib_fact_she

et.pdf 

This two page fact sheet defines social impact bonds (SIB) and the 

advantages they offer, outlines where they will be useful, and 

provides a brief overview of the Petersborough Prison SIB model.

Key Take-Away(s):

 Kohli et al. anticipate that SIB opportunities that appear likely 

to save money, produce measurable outcomes in a short time 

span, and are proven-effective social interventions will be 

most likely to succeed.

Kohli, J., Besharov, D.J. & Costa, K. (2012b). 

Social impact bonds 101- Defining an innovative new 

financing tool for social programs. Retrieved from 

http://cdn.americanprogress.org/wpcontent/uploads/issues/2012/03/pdf/sib101.pdf 

This brief article defines social impact bonds (SIB) and discusses 

where they will be useful, their advantages, and challenging aspects 

for government actors.

Key Take-Away(s):

 Government faces a variety of challenges related to SIBs, 

including: difficulty defining a measurable outcome and its 

worth in potential savings; ceding control to an external 

organization (intermediary); up front planning for an orderly 

termination of the SIB agreement if necessary; and an ideal 

SIB funding structure across multiple agencies and levels of 

government.

nationalservice.gov/SIF 49
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Liebman, J. B. (2011). Social impact bonds: A 

promising new financing model to accelerate social 

innovation and improve government performance. 

Retrieved from 

http://cdn.americanprogress.org/wpcontent/uploads/issues/2011/02/pdf/social_impac

t_bonds.pdf 

Liebman discusses the social impact bond (SIB) model, and various 

barriers and facilitators to its success in promoting government financing 

of social service programs in the UK. The article identifies next steps to 

expand and test the SIB model in the U.S. 

Key Take-Away(s):

 The SIB model facilitates improved performance and lower 

costs, accelerated adoption of new solutions, and rapid analysis 

of what works.

 The SIB model will only work for interventions that have: 

sufficiently high net benefits, measurable outcomes, well-defined 

treatment populations, credible impact assessment approaches, 

and contingency plans if the model fails.

 To spread SIB model to the U.S., it is necessary to: identify and 

establish local level pilots, identify prime areas where bonds will 

spur innovation, assess the investor market, develop 

government/evaluative/private-sector capacity, and seek 

congressional authority to expand use of long-term performance 

contracts.

Liebman, J. B. (2013). Building on recent 

advances in evidence-based policymaking.

Retrieved from 

http://www.brookings.edu/~/media/research/fi

les/papers/2013/04/17%20liebman%20evidence

%20based%20policy/thp_liebmanf2_413.pdf 

In this report, Liebman identifies the need for innovative approaches 

to better use taxpayer money in addressing critical social problems, 

and offers strategies for evidence-based policymaking to mitigate this 

need. These strategies include: (1) subsidizing experimentation to 

develop new solutions; (2) increasing evidence of what works; (3) 

making greater use of evidence in budget and management decisions; 

(4) purposefully targetting improved outcomes for specific 

populations; and (5) spurring innovation through cross-sector 

collaboration. Liebman then recommends legislative and 

administrative actions to help disseminate these practices, and 

identifies two specific approaches that would apply these five 

strategies—a federal “ten year challenge” to solve ten problems in ten 

places in ten years, and pay for success projects in early childhood 

and other strategic areas.

Key Take-Away(s):

 Liebman urges the federal government to establish a pay for 

success process that subsidizes learning at the state level to 

overcome underinvestment in childhood learning when 

individual jurisdictions cannot capture the full value of their 

discoveries.

nationalservice.gov/SIF 50
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Liebman, J. & Sellman, A. (2013). Social impact 

bonds: A guide for state and local governments. 

Retrieved from 

http://payforsuccess.org/sites/default/files/soci

al-impact-bonds-a-guide-for-state-and-localgovernments1.pdf 

This report provides an overview of the social impact bond (SIB) model 

and structure, identifies existing SIBs in the U.K. and U.S., and offers a 

“Step-by-Step SIB Development Process.” Steps in the development 

process include: (1) determining whether SIBs are a good fit for your 

organization; (2) selecting a suitable policy; (3) navigating the 

development process; (4) putting all the pieces together; (5) 

implementing and monitoring; and (6) wrapping up. 

Key Take-Away(s):

 In determining whether to pursue a SIB, organizations should 

determine whether their proposed program falls within a 

priority policy area for the government, whether there is strong 

agency leadership, if there is potential for high net benefits, and 

whether the intervention is technically feasible (e.g., measurable 

outcomes, well-defined treatment population, etc.). 

Mason, P., Lloyd, R., Andrews, M. & Henry, 

N. (2014). Learning from the development and 

commissioning of the London Homelessness SIB. 

Retrieved from 

http://data.gov.uk/sib_knowledge_box/sites/d

efault/files/140818%20ICF%20Learning%20fro

m%20the%20%20London%20Homelessness%2

0SIB%20Summary%20Report%20FINAL%20Ju

ly%2014.pdf 

This report focuses on lessons learned from the development, design, 

and commissioning of the London Homelessness Social Impact Bond 

(SIB). Mason et al. first overview the potential benefits and critiques of 

SIBs, then outline the identification, bidding, and selection processes of 

two funded program models. The report concludes with a series of key 

findings and lessons learned about commisioning SIBs and the SIB 

investment landscape.

Key Take-Away(s):

 A single procurement process for the London Homelessness SIB 

resulted in two different SIB administration models—one 

administered by an intermediary organization, and the other 

through three providers (no intermediary).

 Lessons learned include: (1) the importance of detailed data 

analysis and wide-ranging stakeholder engagement to 

developing a “payment by results” (pay for success) contract; (2) 

a competitive request for proposal process helps build a credible 

pool of providers and helps build commissioner confidence in 

the viability of the PFS model; (3) in order to address investor 

concerns, commissioning structures could allow for the 

awarding of contracts “in principle” to preferred bidders 

followed by a defined period for negotiation among PFS entities; 

(4) investors prefer to see sharing of risk across key parties 

(including providers and commissioners); and (5) a longer or 

more flexible timescale would allow more time for due diligence 

and provider engagement. 

nationalservice.gov/SIF 51
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Merrill Lynch & Social Finance. (2014). Pay-forSuccess (PFS) financing. Retrieved from 

http://socialfinanceus.org/sites/socialfinanceus.

org/files/BAML%20SF_PFS%20Playbook.pdf 

This resource provides an overview of the pay for success (PFS) 

financing model, requirements for a successful PFS project, key 

parties involved, and critical tasks to successful project execution. 

Main tasks, tips for success, and resources are identified for the key 

parties involved in a PFS project—intermediaries, grant makers, 

technical assistance providers, placement agents, 

government/payor(s), service providers, and evaluators, legal counsel, 

investors, and validators.

Key Take-Away(s):

 PFS projects typically involve a number of critical players 

who perform important and overlapping roles.

New York State Government, Center for 

Employment Opportunities (CEO), & Social 

Finance. (2014). Investing in what works: "Pay 

for success" in New York state - increasing 

employment and public safety. Retrieved from 

https://www.budget.ny.gov/contract/ICPFS/PF

SProjectSummary_0314.pdf 

This article provides an overview of the first state-led pay for success

(PFS) social impact bond (SIB) in the U.S.—the Work for Success 

initiative—to reduce recidivism in New York State (NYS). The authors 

discuss the NYS PFS model and intervention, program budget, 

process for randomizing and enrolling program individuals, 

outcomes metrics and measurements, evaluation design, and 

performance-based payments process. A variety of appendices 

additionally show roles and responsibilities, a project timeline, 

participant eligibility criteria, technical evaluation design, outcome 

pricing methodology, and hypothetical performance-based payments.

Key Take-Away(s):

 NYS SIB program performance-based payments are based on 

three outcomes: recidivism (bed days in prison), employment, 

and engagement in transitional jobs.

Nonprofit Finance Fund & White House Office 

of Social Innovation and Civic Participation. 

(2012). Pay for Success: Investing in what 

works. Retrieved from 

http://payforsuccess.org/sites/default/files/pay_f

or_success_report_2012.pdf 

This report presents a summary of conclusions from a 2011 convening 

of cross-sector stakeholders to assess the potential of pay for success 

(PFS) and opportunities to pursue U.S.-based projects. The report 

begins with background detail on PFS financing, then discusses 

lessons learned about support for PFS projects, opportunities for 

future progress, and helpful resources.

Key Take-Away(s):

 Key themes from the 2011 convening included: the Obama 

Administration’s commitment to PFS pilot funding; strong 

interest in PFS pilots in criminal justice, homelessness, and 

education; and desire for a PFS “Community of Practice” to 

support state/local governments.

nationalservice.gov/SIF 52
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Kodali, S., Grossman, G., & Overholser, G. 

(2014a). The Massachusetts juvenile justice PFS 

initiative: Project brief. Retrieved from 

http://www.thirdsectorcap.org/wpcontent/uploads/2014/06/TSCP_MAJJ-PFSProject-Brief.pdf

 

This project brief details the mechanics and structure of the 

Massachusetts Juvenile Justice Pay for Success program in its first 

year of implementation. Highlighted within the brief are key program 

innovations and insights related to finance and repayment structure, 

evaluation design, and governance structure that can be replicated for 

future PFS projects.

Key Take-Away(s):

 Key financing and repayment innovations include: 100% atrisk principals for all lenders; diverse funding base; recyclable 

grants; financial stake in project by service provider; 

threshold for initiation of government payouts; and a smooth 

payout schedule for each day incarceration is avoided.

 A successful PFS project rests on government participation 

and commitment (e.g., long term financial commitment, 

referrals of intervention participants from juvenile justice 

system, data sharing, etc.). 

Kodali, S., Grossman, G., & Overholser, G. 

(2014b). The Massachusetts juvenile justice PFS 

initiative: Lessons learned. 

http://www.thirdsectorcap.org/wpcontent/uploads/2014/06/TSCP_MAJJ-PFSLessons-Learned.pdf

This report delineates five major lessons drawn from the Massachusetts 

Juvenile Justice Pay for Success program in its first year of 

implementation. Major lessons include: (1) the intermediary must play an 

active project manager role as part of a collaborative, multiparty contract 

rather than the sole negotiator of a “privatized” contract with the state; 

(2) mechanisms should be put in place to accelerate the pace of 

negotiations (e.g., staff person authorized to make decisions, forced 

deadlines); (3) all parties must be committed to the pay for success 

model; (4) need for funding tool to remediate funding gap prior to 

program launch (e.g., upfront partial funding); and (5) early PFS projects 

should consciously set examples for future programs.

Key Take-Away(s):

 The authors identify the following project parameters and 

structures as replicable: (a) use of philanthropic grants as firstloss capital, rather than to guarantee repayment of principal 

loans; (b) financial innovations including a success payment 

schedule, recyclable grants, and a default remedy agreement; (c) 

“open source” project contracting to guide future PFS programs; 

and (d) use of a randomized control trial evaluation approach.

nationalservice.gov/SIF 53
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Palandijan, T. & Hughes, J. (2014). A strong field 

framework for SIBs. Stanford Social Innovation 

Review Blog (July 2). Retrieved from 

http://www.ssireview.org/blog/entry/a_strong_fi

eld_framework_for_sibs 

This article assesses the strengths and weaknesses of the social impact 

bond (SIB) landscape and its stakeholders using a “stong field 

framework” involving five components—shared identity, standards 

of practice, knowledge base, leadership and grassroots support, and 

funding and supporting policy. Based upon these analyses, Palandijan 

and Hughes offer a series of recommendations to strengthen the SIB 

sector.

Key Take-Away(s):

 The U.S. SIB sector still lacks vital components of a “strong 

field.”

 Key factors to strengthening the SIB field include: supportive 

public policy (e.g., enabling legislation), shared identity and 

standards of practice, and sustainable leadership and support.

Roman, J.K., Walsh, K.A., Bieler, S. & Taxy, S. 

(2014). Five steps to pay for success: Implementing 

pay for success projects in the juvenile and criminal 

justice systems. Retrieved from 

http://www.urban.org/UploadedPDF/413148-

Five-Steps-to-Pay-for-Success.pdf 

This article begins with an overview of pay for success (PFS), early 

model development (e.g., SIBs), the federal and state legislative 

context, and PFS prevalence and early adopters. The article then 

explores a step-by-step process for implementing PFS strategies, 

including: (1) strategic planning; (2) valuing the PFS product, 

assessing risk, and setting performance targets; (3) identifying key 

players and developing a PFS transaction; (4) developing a logic 

model; (5) delivering services; and (6) evaluating the program. The 

article concludes with a summary of advantages and risks of PFS 

models, and next steps.

Key Take-Away(s):

 PFS advantages include: risk transference to private investors, 

accountability for results, community-based infrastructure 

building, and flexibility of financial structure. 

 PFS risks include: private investor preference to focus on lowrisk, low-reward populations, to obtain the most cashable 

benefits; reallocation of existing Community Reinvestment 

Act funds to PFS, rather than increasing net investment in 

social services; and incentive for service providers to stop 

developing new programs and concentrate on existing 

programs with a strong evidence base.

 Next steps include: developing instruments that standardize 

the PFS pricing process; and solidifying the role of research in 

selecting PFS projects.

nationalservice.gov/SIF 54
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Rudd, T., Nicoletti, E., Misner, K. & Bonsu, J. 

(2013). Financing promising evidence-based 

programs: Early lessons learned from the New York 

City social impact bond. Retrieved from 

http://www.mdrc.org/sites/default/files/Financ

ing_Promising_EvidenceBased_Programs_ES.pdf

Rudd et al. provide an overview of the first operational social impact 

bond (SIB) in the U.S. and the project financed by it to reduce 

recidivism among adolescents ages 16 to 18 incarcerated in Rikers 

Island Jail. The report provides background on the SIB model and its 

application in New York City and outlines preliminary lessons for the 

negotiation, implementation, and structuring of future SIB deals.

Key Take-Away(s):

 The SIB implementation process benefits from: strong 

partnerships, evidence-based and scalable interventions, and 

intervention pilot-testing at full scale.

 SIB arrangements will be more attractive to private investors if: 

the potential for sharp drop-offs in repayment is eliminated; 

early performance indicators are made available; transaction 

costs are decreased (e.g., financing of set-up, evaluation, 

intermediary costs); and interventions are backed by rigorous 

evidence.

Schaeffer, S. (2014). Assessing nonprofit risk in 

PFS deals: A framework to guide nonprofits in 

effectively assessing risk and opportunity in pay 

for success contracts. Stanford Social innovation 

Review Blog (July 31). Retrieved from 

http://www.ssireview.org/blog/entry/assessing_

nonprofit_risk_in_pfs_deals 

In this article, Schaeffer—an employee of the Center for Employment 

Opportunities (CEO), the service provider in the New York State Pay for 

Success (PFS) program—proposes a matrix consisting of 12 “deal 

components” to help nonprofits assess the risks of closing PFS deals and 

operationalizing projects. Schaeffer demonstrates the application of the 

matrix to the NYS PFS model in determining the levels of risk feasible for 

CEO to take on relative to different PFS “deal components,” including 

capital source, investment stake, and number of government payors.

Key Take-Away(s):

 Schaeffer’s proposed matrix can be built upon to develop a 

standardized tool for nonprofits to assess the risks and rewards 

of PFS ventures.

Social Finance. (2014). State and local activity 

Snapshot. Retrieved from 

http://www.socialfinanceus.org/social-impactfinancing/social-impact-bonds/history-sibmarket/united-states

This Social Finance Web-article highlights federal, state, and local 

social impact bond initiatives across the U.S.

Key Take-Away(s):

 Social impact bond pilot programs are currently in 

preliminary phases of development (requests for proposals 

released) or underway in CA, CO, CT, IL, MA, MI, NJ, NY, 

OH, SC, UT, and Washington, DC.

nationalservice.gov/SIF 55
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

Social Impact Investment Task Force (2014). 

Impact investment: The invisible heart of markets. 

Retrieved from 

http://www.socialimpactinvestment.org/report

s/Impact%20Investment%20Report%20FINAL[

3].pdf 

This report presents a summary of key findings and 

recommendations by the Social Impact Investment Task Force related 

to the main barriers to the global spread of impact investment. The 

report offers a broad overview of the global social impact investment 

“ecosystem”, as well as in-depth reviews of opportunities for 

entrepreneurialism, barriers to the flow of capital into impact 

investments, impact measurement trends, and impact investment in 

developing countries. The Task Force offers eight high-level 

recommendations, in addition to a series of subrecommendations to 

overcome identified barriers.

Key Take-Away(s):

 High level recommendations encourage: (1) measurable 

impact goals and achievement tracking; (2) investor 

consideration of risk, return, and impact; (3) fiduciary 

responsibilities of trustees; (4) streamlined pay for success

arrangements by government actors; (5) impact investment 

wholesalers; (6) social sector organization capacity building; 

(7) legal forms/provisions to secure social mission status; and 

(8) impact investment in international development. 

Third Sector Capital Partners Inc. & 

Rockefeller Foundation. (2013). Social 

innovation financing: Case study - Preparing for a 

pay for success opportunity. Retrieved from 

http://www.thirdsectorcap.org/wpcontent/uploads/

2013/04/Third-Sector_Roca_Preparing-for-Payfor-Success-in-MA1.pdf

This case study details the successful candidacy of a Massachusettsbased service provider (Roca, a nonprofit that helps high-risk 

individuals break the cycle of perpetual incarceration) and 

intermediary (Third Sector, a nonprofit financial advisory firm) for a 

state-funded pay for success and social impact bond (PFS/SIB) 

opportunity. Roca/Third Sector highlight eight criteria essential to 

their successful application and proposed program, including: 

commitment of government leadership; well-defined and measurable 

target populations; proven outcomes from administrative data; an 

intervention that is likely to work; proven service provider prepared 

to scale with quality; and cost effective programming that results in 

fiscal savings for government.

Key Take-Away(s):

 Critical success factors included Roca’s: existing dedication to 

performance-based management and outcomes, 

demonstrated experience in replicating their intervention 

model, commitment to understanding the PFS opportunity, 

use of PFS methodology to change the organization’s revenue 

model, and commitment to the target population.

 The PFS program aims to prevent recidivism among 900 highrisk youth recently released from the juvenile justice system, 

over a 6-year period. For each program participant that 

avoids recidivism for 48 continuous months (foregone 

incarceration), the state of Massachusetts will provide $50,000 

in PFS payments.

nationalservice.gov/SIF 56
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Key Source Overview

U.S. National Advisory Board on Impact 

Investing. (2014). Private capital public good: 

How smart federal policy can galvanize impact 

investing - and why it's urgent. Retrieved from 

http://static.squarespace.com/static/539e71d9e

4b0ccf778116f69/t/53aa1681e4b04a6c515fac31/1

403655809489/Private_Capital_Public_Good.p

df

This report lays out the social impact investing landscape and offers a 

framework for federal policy to unlock its growth. Key strategies 

include: (1) removing regulatory barriers to unlock more private 

impact investment; (2) increasing the effectiveness of government 

programs; and (3) providing incentives for new private impact 

investment. The report additionally advocates for further support of 

innovative impact-oriented organizations and opportunities, and 

standardized metrics and improved data access.

Key Take-Away(s):

 The federal government should revise rules that currently 

inhibit the flow of new capital toward social impact 

investments, and promote impact-oriented entrepreneurs and 

an efficient marketplace of data-driven investors.

Von Glahn, D. & Whistler, D. (2011). Pay for 

success programs: An introduction. Policy & 

Practice, June 2011. Retrieved from 

http://www.thirdsectorcap.org/wpcontent/uploads/2012/07/Pay-for-SuccessPrograms-June-2011-PP.pdf 

This brief article reviews the concept of PFS, then discusses their 

functionality, key players, their value to state and local government, 

and key success factors to functional PFS arrangements.

Key Take-Away(s):

 Implementing PFS models require: (1) government 

engagement and planning; (2) a focus on program initiatives 

that meet specific parameters; (3) use of performance-based, 

multi-year contingency contracting; (4) robust evaluation 

process and procedures; and (5) making a “concrete” case for 

the program; and (6) commitment and perseverance.

Wallace, Nicole. (2014). With a few Pay-forSuccess plans under way, the idea is gaining 

currency and criticism. Chronicle of Philosophy 

(July 13). Retrieved from 

http://payforsuccess.org/sites/default/files/phil

anthropy.comwith_a_few_payforsuccess_plans_under_

way_the_idea_is_gaining_currency_and_critic

ism__news__the_chroni.pdf 

This brief article discusses the enthusiasm and controversy over pay 

for success in the U.S. Following an overview of the PFS landscape, 

Wallace reports mixed feelings over the New York City PFS project 

program, then presents various barriers to and potential dangers of 

the proliferation of PFS and state efforts to overcome them.

Key Take-Away(s):

 Potential hurdles to widespread dissemination of PFS 

include: lack of legislation facilitating multiyear, conditional 

contracts; time-consuming nature of the PFS negotiation 

process; and high costs of development and implementation.

 A feasibility study by the Maryland Department of 

Legislative Services concluded that costs for independent 

evaluation and return to investors for a successful PFS would 

exceed cost savings to the state, even if the program was 

highly successful.

nationalservice.gov/SIF 57
Social Innovation Fund: Corporation for National and Community Service

State of the Pay for Success Field Office of Research and Evaluation

Appendix C: Summary of Legislative Actions at the State Level

• In California, Assembly Bill 1837 was approved by Social Innovation Financing Program in September 2014.

• The Colorado legislature considered a bill to establish PFS contracts for early childhood education, but the bill 

was delayed in the Senate.

• Connecticut reintroduced a 2013 bill that includes language to establish a limited social impact bond focused on 

adult recidivism; as of April 2014, the bill has been tabled by the Senate but was given a favorable report overall. 

• Hawaii may be on the precipice of PFS legislation after the state’s Department of Budget and Finance presented a 

report about the feasibility of a social impact bond (SIB) related to early childhood education that recommended 

watching existing programs for feasibility.

• Maryland proposed House Bill 517 in January 2013 to require the State Board of Education to issue requests for 

proposals for SIBS; the bill was assigned to Ways and Means where it received an unfavorable report and was 

withdrawn.

• Massachusetts gave the Secretary of Administration and Finance the authority to enter into up to $50 million in 

PFS contracts backed by full faith and credit of the Commonwealth. This bill established a sinking fund and 

requires the Secretary to request appropriations in each year equal to the maximum performance payments that 

may ultimately be needed based on the services delivered in that year in order to ensure funds are available 

when performance payments are due.

• New Jersey introduced Assembly Bill 3289 in 2012 to establish a PFS pilot program, but the bill was not acted on 

by the Governor as of January 2014 and thus died. 

• In New York, the Governor’s 2014-2015 budget raised allocation for PFS.

• In Pennsylvania, PFS legislation was introduced in 2013 but has not yet been passed.

• Rhode Island introduced a bill to authorize a SIB that was stalled in the Senate over concern that state services 

would become privatized by large Wall Street firms.

• In 2014, Utah established H.B. 96—the Utah School Readiness Initiative—which commits to PFS programs 

targeting early childhood education, and gives the School Readiness Board in the Governor’s Office of 

Management and Budget the authority to negotiate PFS contracts and ongoing appropriation of $3 million. The 

bill was signed on April 1, 2014.

• Members of the Washington State House of Representatives introduced H.B. 2337 on January 27, 2014, which 

proposed to establish a steering committee to pilot a PFS project in the state, with the intention that the project 

would be implemented by January 1, 2016. The bill passed through the first House Committee on Early Learning 

and Human Services, but was sent to Appropriations on February 3, 2014, where it remains. 

nationalservice.gov/SIF 58