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When necessity is the mother of innovation

Six keys for Pay for Success Human Services Solutions.

Overview

Managing the gap between resources and demand is a way of life in human services. Yet to deliver social outcomes, something has to give. That’s why forward-thinking agencies are exploring pay for success human services solutions for new capital funding for social interventions.

Pay for success financing models tie performance of a desired social outcome to compensation. Using outcomes data, pay for success monetizes social outcomes by capturing the value between the cost of prevention today and the price of remediation tomorrow. The government pays investors their principal and rate of return only if interventions achieve predefined results. The success of these arrangements is proving that investment for financial return and donation for social return do not have to be either-or propositions.

 

Download PDFDownload the full article for six guidelines for agencies interested in exploring pay for success.

Background

Pay for success financing models include loan repayments, social impact bonds and value-based purchasing among others.

The interest in pay for success initiatives is far reaching. States are a driving force, while counties and cities are showing interest. Major investment banks such as Goldman Sachs and Bank of America have entered the marketplace.

And outside the United States, countries including Australia, Canada, Colombia, India, Ireland, Israel and Scotland are exploring opportunities.

 

Download PDFDownload the report to view an information graphic that shows the pay for success process.

Analysis

Based on Accenture’s experience, there are six guidelines that agencies should consider in moving forward with pay for success human services solutions:

  1. Choose the right program.
    Not every program is suited for pay for success, and determining the right fit is a critical first step.

  2. Be deliberate about data.
    Data is essential to any pay for success initiative. Agencies must know where the right data is, who has access to it—and most importantly—they must know what to do with it.

  3. Agree on target outcomes.
    Pay for success initiatives cannot work unless backed by an ability to measure outcomes. In fact, the whole social investment structure is based on the realization of specific, predefined results.

  1. Account for every dollar.
    To evaluate the financial returns of a pay for success program, agencies need a holistic view of costs spent, saved and avoided.

  2. Get everyone involved.
    While a human services organization may be the program’s primary “owner,” other entities are involved. Such interdisciplinary stakeholders have specific roles that must be understood from the start.

  3. Use every funding source.
    Pay for success funding does not have to come from a single funding source. The philanthropic community, commercial financial institutions and the federal government can all be involved.

 

Download PDFDownload the full report to explore these recommendations—and read real-world examples.

Recommendations

The simple act of getting started thinking about pay for success opportunities can spark momentum toward a whole new way of financing and delivering social outcomes.

Start the discussion with these key questions:

  • Do our programs and services use evidence- based principles?

  • Do our programs track performance over time?

  • Can we clearly measure the impact of our programs?

  • Can cost savings be reinvested or repaid elsewhere?

  • Are there service providers and nonprofit organizations that are trusted partners, understanding the vision and outcomes that we want to achieve?

The ideas in this point of view reflect perspectives from the 2012 Human Services Summit: Outcomes and Impact, a gathering of human services leaders, industry experts and academics at Harvard University in October 2012. Visit www.accenture.com/ integratedservicedelivery to learn more.

 

Download PDFDownload the full article for more detail on making pay for success work for your agency.