Across the United States, governments and nonprofit organizations are working to address a range of pressing problems such as hunger, homelessness, unemployment, high rates of disease, failing schools, and teen pregnancy. There are a number of programs designed to target these issues. However, many of these well-intentioned efforts have failed to produce adequate improvements. If we are to solve these problems, we must dramatically accelerate the pace at which we learn what works and insist on services that deliver measurable results. Governments and nonprofits should continually analyze and evaluate the impact of their programs and try new approaches. Programs that are found to be successful should be replicated and scaled, while those that are not effective should be modified or eliminated.
One innovative funding model that governments and nonprofit organizations are using to implement evidence-based decision making is Pay for Success (PFS). PFS allows policymakers to test whether promising programs work, while ensuring that taxpayer dollars are allocated in a smart, efficient way. Under the PFS model, the government begins by identifying a problem. It then outlines the specific outcomes it would like to achieve. Next, it works with independent experts to choose an intervention and a high-performing service provider that has the greatest potential to produce the target results. Private investors and philanthropic organizations cover the up-front costs of the selected program, and the government agrees to “pay for success.” In other words, investors are repaid, and may receive a modest return, only if a third-party evaluator determines that the program has reached its goals. Investors are not repaid if the program falls short.
LJAF has invested in two PFS initiatives and will recycle any returns into future projects. We support the New York State Workforce Reentry Program and the Massachusetts Juvenile Justice Initiative, both of which are designed to improve public safety and reduce recidivism. We also funded a pilot in Cuyahoga County, Ohio, aimed at reducing the amount of time children spend in foster care. In addition, we support entities that are providing technical assistance to help governments implement and evaluate PFS projects. As part of our effort to advance the model, we also partnered with the White House Office of Social Innovation and Civic Participation and the Nonprofit Finance Fund to co-host a series of regional PFS summits.
Beyond our work in PFS, LJAF supports evidence-based decision making by funding a number of policy labs that are using data to take a fresh look at the best ways to provide social services. For example, the Government Performance Lab at the John F. Kennedy School of Government at Harvard University works with governments to identify creative ideas that will help improve public sector operations. New programs are implemented and rigorously evaluated. The results are then communicated so that stakeholders know if, and to what degree, government has improved.