2017 Symposium Industry Report: Pay for Success

Executive Summary

Millions of Americans today face a crisis of affordable housing as costs soar while wages stagnate. Across the nation, thousands of neighborhoods and communi- ties are rallying together to guarantee all of its members access to housing that is safe and affordable, full of opportunities, and a central part of a healthy and positive lifestyle. The purpose of this report, released by the University of Virginia’s Pay for Success Lab at the Frank Batten School of Leadership and Public Policy, in col- laboration with The NHP Foundation (NHPF), is to explore the background of affordable housing in the United States, and the future of the affordable housing industry. In addition, this report aims to make the case for affordable housing as a fundamental right and pressing social issue by outlining its impact on health, education, and opportunity, among other aspects of every individual’s daily life. Finally, this report proposes Pay for Success (PFS) financing as a potential tool to capitalize on affordable housing preservation, rehabilitation, and support services. PFS contracts are a new form of private-public partnerships aimed at promoting innovative and preventive social services while simultaneously mit- igating financial risks for governments and allowing philanthropic donors and impact investors to contribute to efficient projects. By using private funding upfront to capitalize social service providers, PFS contracts help not-for-profit and for-profit organizations get off the ground and begin implementing social service interventions immediately. In addition, because the government does not reimburse service providers until successful completion of the contract, taxpay- ers are insulated from inefficient spending and governments are able to balance the budget. Because successful projects are reimbursed, philanthropies and mis- sion-based organizations can re-invest their initial contribution into more PFS projects, catalyzing more innovation. This report is intended to be a resource for local and national policy- makers, financial and philanthropic institutions, and advocates for affordable housing who are interested in new funding mechanisms. By incorporating case studies of real housing deals the NHPF has financed and a helpful PFS worksheet to determine the feasibility of a PFS project, it aims to serve as a model for future affordable housing financing across the nation. Five PFS contracts are currently used to provide Permanent Supportive Housing (PSH), a HUD program providing permanent housing and support- ive services to individuals and families experiencing homelessness to ensure

Pay for Success & Affordable Housing | Stefano Rumi 5

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