As the field of Pay for Success financing grows, both in the U.S. and internationally, it is essential that we learn from those who have real-world experience in previous deals. A recent report from the Brooking Institution, which ICS discussed here, provided a quantitative look at the experiences of those involved in deal construction internationally. But what about those who are actually providing the services on the ground?
Early this month, ICS hosted a webinar on Pay for Success from the Service Provider’s Perspective as part of our technical assistance funded by the Social Innovation Fund. The webinar elevated the voice of service providers in four major PFS deals in the United States:
- Sam Schaeffer, CEO, Center for Employment Opportunities, Service provider for New York State PFS project
- Elizabeth Gaynes, President and CEO, the Osborne Association, Service provider for New York City PFS project
- Elizabeth Mascitti-Miller, Ed.D., Chief Officer of Early Childhood Education, Chicago Public Schools, Service provider in Chicago PFS project
- Lili Elkins, Chief Strategy Officer, Roca Inc., Service provider for first Massachusetts PFS project
The goal of the webinar was not to review the details of these deals (summaries of each deal can be found in this document) but rather to have an honest conversation about the pros and cons of PFS financing for service providers and to share advice for other service providers and governments.
Many challenges stem from the need to coordinate multiple organizations which operate in different ways. Whether trying to coordinate multiple referral sources or navigate privacy laws to get data on program outcomes, the existing systems have not be been designed to coordinate the way PFS deals require. The interventions themselves may also need to be fitted to new locations and target populations – as we noted in our analysis of the New York City Rikers Land deal, implementation can be a challenge in a new environment. Having support across organizations helps, though change can be slow given the types of organizations (governments, large nonprofits, and investors) involved.
Despite the challenges, all participants agreed that PFS financing can be a tremendous opportunity for service providers. They praised the government’s, investors’ and intermediaries’ understanding and commitment to making the programs succeed. Liz Gaynes noted that the partners in the New York City Rikers project were able to work through many implementation challenges together. Beth Mascitti-Miller explained that while quality has always been important in Chicago Child Parent Centers, the PFS project provided an opportunity to increase the focus on family engagement while they expanded. Lilli Elkins of Roca, Inc. in Massachusetts notes that the PFS project “is the first time government has really stepped up and said we want to do something to keep these kids from getting locked up.”
Sam Schaeffer of CEO also stressed that PFS financing helps governments shift their attention and their dollars to programs with evidence of effectiveness and strong performance management systems; he and others hope that government will recognize the value of the services they receive and continue paying for the program after deals are concluded.
What are the takeaways for parties interested in using Pay for Success financing? Our providers had advice for all deal participants to consider:
- Do Pay for Success for the right reasons. PFS is complex, and shouldn’t be utilized just because it is trendy or innovative. Use PFS financing to enable a program to reach people who would not otherwise get helped and to scale up in a way that will enable the best outcomes. Coordination can be tough, so all parties must be deeply committed.
- Communication among partners is essential at all stages, as is external communications. If a deal is high-profile, carefully plan your communications and media strategy and get all partners on the same page.
- Timing matters. Government should invest in “pre-takeoff” needs to make sure everyone is prepared for the implementation and allow more lead time before the evaluation begins to get things in place. Service providers should ideally be involved in deal construction from the beginning.
- Build flexibility into the contract. Experience shows that numbers of people eligible for a program and other factors change or do not work out as planned. The contract should leave room for adjustments if they are needed, both in terms of service provision and evaluation. .
A full recording of the webinar can be accessed here.