2017 Symposium Industry Report: Pay for Success

• M ost state government procurement regulations make it difficult to implement multi-year contracting obligations. In addition, investors may be weary of providing upfront funding consider- ing that future administrations may reverse an earlier funding commitment. • S iloed government agencies at all levels and their respective laws and regulations make it difficult to pay for outcomes outside of their issue area. For example, federal regulation may limit the ability of a state social service agency to pay for medical outcomes. • I n most issue areas, there is a limited evidence base on effective interventions. Therefore, investors may face substantial risk when investing in projects. Moreover, government and political leaders may be unwilling to compensate them sufficiently with a high interest rate. • P FS Projects involve managing the needs and expectations of diverse set of stakeholders. Stakeholders Involved Although Pay for Success (PFS) projects can take many forms, they generally involve these stakeholders:

Stakeholder and Role(s): Outcome Funders

To-date in the United States, these stakeholders have mostly been local and state governments but could be a foundation or other organization that agrees to pay for the outcomes achieved by the intervention • S uch funders often initiate the project development process Service Providers Examples are nonprofit or governmental social service providers • O rganizations that undertake the intervention as agreed to by all parties during the project development process Service Recipients Are generally at-risk or otherwise vulnerable individuals who are likely to mea- surably benefit from the service provider intervention • I ndividuals who are at the receiving end of the intervention pro- vided by the service provider(s) Intermediaries Examples include an impact investing firm, a government agency, a nonprofit with financial management experience, or a commercial bank

50 Pay for Success & Affordable Housing | Stefano Rumi

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