Blog

By America Forward Policy Director Roger Low

Today, the Stanford Social Innovation Review published “The Evolving Promise of Pay for Success,” a piece co-written by Sindhu Lakshmanan, a senior investment associate at Living Cities, a Pay for Success (PFS) investor; Caroline Whistler, co-founder and CEO of Third Sector, a PFS advisor; and me detailing the current state of the PFS field in the United States and our vision for the future of Pay for Success. We argue that “despite growing pains,” the PFS model “is primed to evolve into an ever-more-powerful tool for social change.” Please click here to read the full article.

In this article, we draw a clear distinction between PFS, a set of linked approaches governments, nonprofits and funders can use to build evidence, manage performance and improve measurable outcomes, and PFS financing, a specific model that deploys investor capital.

We also identify some of the challenges the first PFS projects faced and argue emphatically that we need to double down on improving the right measurable outcomes for individuals, families, and communities, and put that goal at the center of our approach to public policy, social enterprise, and philanthropy.

Additionally, we identify several projects across the country that are disrupting an unacceptable status quo, and using PFS tools and approaches to improve lives. Some of these projects harness PFS financing. Some involve no investors but tie payments to outcomes. Both approaches are important to the evolution of this field as we move forward. Many organizations across the America Forward Coalition are leading the way on this work.

As we look forward, we also assert the PFS field should evolve by harnessing the power of technology and data to build evidence and achieve outcomes-based systems change, by democratizing the PFS approach, and by putting equity at the center of the conversation.  And we advocate for several policy and funding reforms to achieve these goals.

We conclude that PFS “is much more than a financing model; it’s a set of linked approaches that uses data to drive decisions, establishes governance structures that transcend traditional power dynamics, disrupts the inertia of procurement with active performance management, builds evidence and ties some payments to measurable outcomes. If we can make this approach dynamic enough to keep up with politics, adaptive enough to empower communities rather than dictate to them, and equitable enough to challenge deep and systemic inequities, PFS can become both widespread and potent enough to move the dial on even the most entrenched social challenges.”

The goals and policies for which we advocate in this piece reflect the feedback we’ve heard from across the America Forward Coalition, including over the course of numerous roundtable discussions earlier this year. Ultimately, these themes, these policies, and this vision for the future of Pay for Success will all feature prominently in our nonpartisan 2020 Presidential and election engagement, “United to Move America Forward,” including in our briefing book which includes our policy solutions on this and other areas of policy we will release in the coming months.

We look forward to continuing the conversation with our full Coalition and with our partners in this work.

If you are interested in learning more about our Pay for Success work or the America Forward Coalition, please contact us at America_Forward@newprofit.org.