Pay for Success Efforts Roll Forward in Congress, Administration

Posted on May 10, 2016 by Patrick Lester

The still small, but growing, field of pay for success made significant strides this week, with Congress readying pay for success legislation and the Obama administration announcing a second round of grants through the Social Innovation Fund.


House Readies New Pay-for-Success Bill

On May 6, Reps. Todd Young (R-IN) and John Delaney (D-MD) introduced a new version of their Social Impact Partnership Act (H.R.5170). It will be one of several bills considered at a Ways and Means Committee hearing on May 11.

After the Republican Study Committee lent the bill its support in late April, it seems poised for swift passage. However, one unknown is whether the bill will move forward on its own or as part of an anti-poverty package that House Speaker Paul Ryan has been pushing.

The legislation’s prospects are also unknown in the Senate, but the new House bill appears to have incorporated some of the provisions in a similar bill introduced by Sens. Orrin Hatch (D-UT) and Michael Bennet (D-CO) last year.

The new House bill (bill text) reduces the price tag from $300 million to $100 million, switches the lead federal agency to the Treasury Department, and includes a federal interagency council and separate appointed commission of experts to assist the interagency council.

Update: On May 11, the House Ways and Means Committee approved the Young/Delaney bill by voice vote. Before approving the bill it rejected two amendments from Democrats. These included an amendment from Rep. Lloyd Doggett (D-TX) to require 50% of funds to be spent on children. Another Doggett amendment would have extended authorization for the TANF program, but it was rejected on a point of order that it was not germane to the broader legislation. The bill was passed by the full House on June 21. For additional background on the legislation, see this CRS issue brief.


New Social Innovation Fund Intermediary Grants

The Social Innovation Fund (SIF) today announced $6.1 million in new grants to intermediaries under its pay-for-success program, which provides funding for technical assistance and feasibility studies. Intermediaries match this funding and provide subgrants through separate competitions, which are likely to be announced later this year.

SIF’s funding is divided among three intermediaries, two of which also received funding in the first round in late 2014. Eight intermediaries were selected in that first round and, according to SIF, they have provided subgrants to a total of 67 state and local governments and nonprofits involved in PFS projects.

According to SIF, the new grants announced today are:

  • Harvard University Government Performance Lab: With a $2.1 million grant, the Harvard Government Performance Lab will take projects from the feasibility phase to the implementation phase for up to five Pay for Success projects. Since its inception, Harvard GPL has been actively involved in the feasibility and transaction structuring of 26 PFS projects.  The GPL’s mission is to accelerate the pace of progress on tough social challenges by improving the way that governments procure and deliver social services.
  • Local Initiatives Support Corporation (LISC): With a $1.3 million grant, LISC will take projects from the feasibility phase to the implementation phase for three to four service recipients. LISC will identify high-performing service providers that have demonstrated the ability to develop and operate strong evidence-based programs for PFS investment; help standardize content-specific program design and systematize contracting for the social service program; and create a body of high-quality and routinely-collected data across content areas for PFS projects.  In addition to overall project coordination, LISC will raise investment capital for selected projects, undertake financial modeling for Service Recipients, coordinate negotiation of all transaction documents, develop ongoing monitoring and data collection requirements, and support ramp-up activities.
  • Sorenson Impact Center at the University of Utah’s David Eccles School, in partnership with Social Finance, Inc: With a grant of $2.6 million, the Sorenson Impact Center, in partnership with Social Finance, Inc., will provide advanced transaction structuring technical assistance for between four-five service recipients, bringing Pay for Success projects into development in the Western U.S. The partnership will take a proactive and comprehensive approach to help jurisdictions structure projects. This includes assisting organizations with the development of a communications and engagement strategy to support providers, funders and policymakers.

SIF has also been tracking the knowledge gained from its earlier grantees. Last month it released four new reports:

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