Pay for success investing in what works pre-convening session-final
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Transcript of Pay for success investing in what works pre-convening session-final
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Pay for Success 101
Jitinder KohliCenter for American Progress – Doing What Works
White House ConveningOctober 21st 2011
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Traditional financing
Drug treatmentprogram
Helping ex‐
offenders into work
Housing support
Restorative justice
$20m $8m $14m $5m
Government agency 1
Government agency 2
Government agency 3
Government agency 4
Provider Provider Provider Provider Provider Provider Provider Provider
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Some issues
• Funding inputs• Hard to know what is working• Even harder to shift money between programs
• Bureaucratic reporting and controls• Effective approaches rarely scale
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Pay for Success BondsGovernment
agency
Investor 1
DealmakerInvestor 2
Investor 3
Provider 1 Provider 3Provider 2
Beneficiary populationBeneficiary population
Govt makes payment if outcome achieved
Dealmaker promises to
achieve outcome
Dealmaker manages and funds providers
Providers work with beneficiary population and report progress to dealmaker
Investors fund dealmakerDealmaker promises return to investors if successful
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Challenges• Complex
• Cannot work for everything– Measurability– Non essential services– Outcomes need to flow in sensible timeframe
• Requires political courage– Flexibility for dealmaker/providers on the ‘how’– Possibility of private sector return– Potentially getting beyond silos
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Advantages
• Allows successful social innovations to scale• Removes input controls from providers
• Public money only allocated to approaches that work
• Helpful in a fiscally tight world
• Leverages private and philanthropic capital
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Very early days
• But what’s the potential?
• Could it be relevant to your world?
• What variations might be needed in your context?