Pay for Success Legislation Nears Enactment

Update (11/30/16): The pay-for-success provisions have been unexpectedly dropped from the bill. SIRC’s original story follows below.

Federal legislation that would authorize $100 million for pay-for-success projects (dubbed “Social Impact Partnerships”) has been attached to a larger end-of-year bill that is expected to pass in the House this week and the Senate in the next two weeks.

The latest action on similar legislation had come in late May, when the House passed a nearly identical bill (H.R.5170) sponsored by Reps. Todd Young (R-IN) and John Delaney (D-MD).  Separate legislation was introduced by Sens. Orrin Hatch (R-UT) and Michael Bennet (D-CO) in 2015, but it was never acted on.

If it is enacted as expected, the bill would be a nice going away present for Young, who won a race for the Senate in November and will be joining the bill’s Senate co-sponsors in January.

Major Provisions

The legislation tasks the Treasury Department with overseeing the Social Impact Partnership program, although the department may delegate oversight authority for individual projects to other federal agencies. The bill creates a federal interagency council to advise and coordinate with the Treasury Department and a separate appointed commission of experts to assist the interagency council.

Under the bill, the first request for proposals would be issued within a year of  enactment — likely late next year if the bill is enacted by the end of December.  Applications would be restricted to states and local governments, but they would apply on behalf of partnerships that would typically include nonprofit social service providers, intermediaries, evaluators, and philanthropic organizations.

Funding may be provided for projects lasting up to 10 years. However, federal payments will only be made to the state or local governments if the designated independent evaluator has determined that the project has met the requirements specified in the agreement.

Evaluations would need to rely on randomized controlled trials or, where they are not feasible, other methodologies that have been approved by the interagency council that allow for the “strongest possible causal inferences.”

Funds could also be used for feasibility studies. The Social Innovation Fund has been providing funding for that purpose to a number of grantees since 2014.

The full text can be found in Title XXV (p. 943) of the larger bill.

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