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Thanks to the persistence of social innovators across the country, every day we see strategies that are working and delivering results in a rapidly changing world. This ongoing blog series will highlight the voices of our Coalition of more than 70 social innovators and their solutions to our country’s most pressing social problems, as well as examples of how this powerful work can be transformed into national change. Today we will hear from Nicole Truhe, America Forward’s Director of Government Affairs, about the Pay for Success movement we’ve seen at the federal and state levels, and why the next President should embrace this movement.

America Forward Coalition members Corporation for Supportive Housing (CSH), Third Sector Capital Partners (Third Sector), Institute for Child Success (ICS), and Local Initiatives Support Corporation (LISC) have all provided their expert insights into the impact of Pay for Success and the relevance of the topic for consideration by the Presidential nominees. What is clear from all four pieces is that Pay for Success is not a phrase with one meaning, but it instead encompasses a movement towards an evidence-based environment that the Presidential nominees should embrace.

Before we dig into the role Pay for Success should play in the Presidential election, and government as a whole, let’s start by defining what we mean when we say, “Pay for Success.” At America Forward Pay for Success does not mean social impact bonds or simply an approach to contracting for services where government doesn’t pay until outcomes are achieved and private funders provide upfront capital to address payment delays. This misnomer has come to be the way many use and view this phrase. However, at America Forward, we define Pay for Success to broadly mean a movement towards making government policies and funding decisions more effective and efficient in order to measurably improve the lives of people in need. Through this wider lens, Pay for Success, as noted by CSH, Third Sector, ICS, and LISC, means: performance rises above promises; procurement reform is possible; government shifts towards an outcomes mindset; and continuous improvement and accountability become the core elements of government policy and funding decisions.

The notion of effective government performance is not new, and in fact, it’s been a common theme across Republican and Democratic administrations since at least the early 1990s. The last eight years have seen significant support and scaling of the idea at the federal and state level, through Administrative and legislative action supported by leaders on both ends of the political spectrum. With this momentum underway, we challenge the next President to increase the efficiency and effectiveness of our taxpayer dollars by doubling down on current efforts to pay for success and by incentivizing new ways to push this movement forward.

Below are five ways the next President can continue this movement towards a government that works and achieves better results for all Americans.

1. Bring Innovation to Every Federal Agency
   Too often, federal agencies search for solutions by looking internally to legacy grantees or institutional knowledge and archaic processes that can stifle innovative thinking. In order to bring greater innovative thinking to the Federal government, “Innovation Funds” should be required at each federal agency through a five percent set-aside. Additionally, a Cross-Agency Innovation Lab, modeled after the Defense Advanced Research Projects Agency (DARPA), should be created. This Lab would engage with the private sector to seed early-stage innovation, identify promising solutions, and rapidly test social service approaches to problems that traditional government programs have failed to address effectively.
2. Support Greater Focus on Outcomes over Outputs
   Upwards of $1.6 trillion is allocated by the Federal government annually for social services, but there is a lack of sufficient accountability for the impact of that funding on those being served. As a result, greater amounts of federal funding should be allocated based on evidence and outcomes with the biggest grants going to programs with the highest levels of evidence and the smallest to those that are promising but unproven. With this increased pivot towards outcomes, accountability structures should align with that focus and incorporate a review of evidence of impact and achievement of outcomes as part of required government audits.
3. Tie Payments to Providers for Results Achieved
   In order for government to continue to adopt and promote an outcomes-focused social policy environment, contracting strategies should award taxpayer dollars to programs based on effectiveness, achievement of better results for communities, and allowance of flexibility in how providers choose to address the needs of their communities. Pay for Success authority should be included and/or expanded within federal programs and training and technical assistance should be supported for federal, state, and local governments, as well as potential providers as they move towards a contracting and procurement system based on outcomes over outputs.
4. Measure What Matters
   The ability to innovate and invest in what works depends on the availability of metrics and data that accurately and comprehensively assesses impact. Unfortunately, adequately judging the success of social programs and providing programs with useful feedback can be constrained either by inaccessibility of data or lack of meaningful data. The next Administration should support and encourage the development of new data sources, allow for low-or-no cost access to current public sources of data, and study the emerging science to identify a next-generation set of metrics to more completely evaluate the success of programs.
5. Scale What Works
   Making government more effective and efficient will take the engagement of all sectors to achieve this critical outcome. The role of the private sector can be particularly important in identifying promising solutions to community problems and funding their expansion. Modeled after the New Market Tax Credit and Low Income Housing Tax Credit, a Community Solutions Tax Credit should be created to recognize the asset of private sector funders across the country and to increase investment in evidence-based high-impact initiatives.

Read more about how social innovators in the America Forward Coalition are solving America’s biggest problems in communities across the country every day in our briefing book, Moving America Forward: Innovators Lead the Way to Unlocking America’s Potential, and join the conversation. Follow @America_Forward, and tell us how Pay for Success and data driven programs and policies have created better results for you and your community using #AFPresidential16.