Scaling and Sustaining Pay for Success: Recommendations for Creating a More Sustainable and Scalable Financing Model
The Pay for Success (or Social Impact Bond) model is a public-private financing mechanism designed to bring new investment and cross-sector collaboration to solving endemic social challenges such as lowering recidivism, ending chronic homelessness, unifying homeless parents with their children who are in the foster care system, and improving elementary school preparedness. Though Pay for Success has generated a great deal of attention and interest among policymakers, program evaluators, investors and social service practitioners, a relatively small number of projects in the United States have launched using this financing model.
This paper explains why it remains particularly challenging to finance projects using the Pay for Success model and recommends changes that could improve the model’s long-term scalability and sustainability. Enterprise draws on a long history of working with public-private financing models such as the Low- Income Housing Tax Credit to inform its work on Pay for Success projects.