2017 Symposium Industry Report: Pay for Success

Why PFS?

Why is PFS an ideal mechanism for local and state governments to finance affordable housing and support services? What inefficiencies and concerns are addressed through alternative financing? The Problem Social problems are traditionally addressed by governments, with philan- thropic or charitable help. Hundreds of billions of dollars are spent by commu- nities across the United States annually to address the negative consequences of social issues rather than to prevent them through systematic solutions. 82 Service strategies are engrained into annual budgets, with no room for innovation and improvement for more efficient outcomes. In addition, most of this government spending goes unmeasured through evidence-based evaluations, meaning inef- ficient services continue to be funded year after year. 83 This constitutes poor use of taxpayer dollars and paralyzes budgets with improper spending. In addition, philanthropies and charitable organizations largely remain woefully undercap- italized, limiting their social impact. 84 Governmental support for not-for-profit housing providers is neither systematic nor entirely comprehensive, lacking the financial and technical support needed by organizations. Support systems also vary in strength and comprehensiveness across America, leaving some cities and communities underserved. 85 The Solution Pay for Success contracts tackle lack of performance assessments by promoting evidence-based interventions to increase the accountability of service provid- ers and government agencies. This focus on “extent” of provided services over “intent” allows governments to quickly determine what works—and scale up successful programs for further implementation. In addition to fiscal responsi- bility, PFS interventions encourage communities to partner with organizations who bring knowledge and expertise to deliver effective services where they are needed most. Pay for Success also stresses proactive investment in preventive services aimed at tackling social problems at their roots early-on. The innovative financ- ing and implementation model also enhances collaboration between govern- ments and private service providers, and increases the impact of philanthropic and charitable capital through entrepreneurial solutions. Finally, PFS contracts

32 Pay for Success & Affordable Housing | Stefano Rumi

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