The voices of Urban Institute's researchers and staff
February 16, 2016

One day, two new pay for success projects

February 16, 2016

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While some might spend today enjoying National Almond Day, many in the Pay for Success field are celebrating #nationalPFSday.

As of this morning, two new projects in Connecticut and South Carolina have boosted the number of active pay for success (PFS) projects in the United States to 11. After only one project was announced in all of 2015, three deals (including one in Denver) have now launched in just the first 50 days of 2016.

In an era of increasing partisanship, these projects are a welcome sign that good ideas can cut through political disagreements. Connecticut and South Carolina stand at opposite ends of the political spectrum, but each are using this financial mechanism to harness evidence of what works to provide better services to vulnerable populations—at minimal risk to taxpayers.

While the simultaneous launch of these projects suggests a sudden shift, each project has actually been in the works for years.

In South Carolina: Promoting better health for moms and babies

The South Carolina project, which mobilizes $30 million from funders, represents the largest PFS project ever. The deal will also be the first that taps into Medicaid to help cover funding for expanded services.

The South Carolina project will operate at impressive scale, bringing the services of the Nurse-Family Partnership (NFP) program into the lives of over 3,200 first-time mothers. The program provides support to these mothers through home visits by trained nurse practitioners from early in pregnancy through the child’s second year of life.

Widely recognized as one of the gold standard evidence-based programs, NFP has undergone multiple randomized control trials (RCTs) in the last 30 years. These trials have demonstrated significant impact on reducing preterm births, decreasing child hospitalization and emergency department visits due to injury, and other important outcomes.

In sum, South Carolina will scale up a proven program to support thousands of young families in a time of need while tapping outside investors to provide the upfront funding. Even better, the project also includes an RCT which means that the evidence on NFP will continue to grow.

In Connecticut: Keeping families together and helping parents fight addiction

Moving from a southern state with Republican leadership to a northeastern state with Democratic leadership: Connecticut will invest $12 million over four years into providing home-based supports to parents struggling with substance abuse. The goals of the project are to stabilize families, keep children out of foster care, and help parents fight addiction.

The Connecticut Family Stability Pay for Success project will provide funding to expand the intervention to 500 additional families. And just like the South Carolina project, this deal will also be evaluated through an RCT evaluation.

What we’ll learn

With minimal risk to the state governments backing these deals, thousands of people will be enrolled in programs that promote healthy child development, reduce child maltreatment, and decrease substance abuse. The rigorous evaluations of each project will add to the evidence base on their respective issue areas, which can be used in the future to build and adapt more interventions to better serve vulnerable populations.

This increase in the number of deals will also help the broader PFS field in the United States find its footing. In the coming months, the Urban Institute and other intermediaries will share lessons from these deals with stakeholders developing their own projects, adding to our understanding of best practices and hopefully shortening the time from feasibility study to launch.

Stakeholders have long heralded PFS as a financing mechanism with enormous potential. Today’s launches underscore that potential, and indicate that more and more deals will be launched throughout 2016. Hopefully there will be more “Pay for Success Days” in the near future.

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