Pay for Success

Katherine Stevens writes at US News:

We're leaving too many people behind, and for $2 trillion a year, we deserve better results. Enter Pay for Success. This new approach to social spending, sometimes referred to as Social Impact Bonds, is an innovative funding tool that drives government resources toward effective, results-based social programs to address our nation's toughest social challenges. In a Pay for Success contract, private investors provide upfront cash to fund a social service program that aims to achieve specific outcomes for at-risk and marginalized members of society. If the program successfully achieves those outcomes, based on a transparent, agreed-on metrics, the government pays investors back. If the project is not successful, investors lose their money, and the public pays nothing.

Pay for Success is very new in the U.S.; the first project was launched in 2012 and, to date, just eight projects are in operation around the country. But dozens more are in the pipeline in homelessness, employment, recidivism, infant health, early education and foster care, among other areas. And excitement around the Pay for Success approach is growing quickly