Evaluation is perhaps the most critical element in a pay for success (PFS) project's design. Evaluation measures the impact of a program on the people it serves. This is important, not just to determine whether the project met the outcome targets that form the basis for repayment, but also to help estimate whether the program itself caused those outcomes, building the underlying evidence base of the intervention. Regardless of whether the intervention achieves its outcome targets, the evaluation gives us the knowledge we need to further understand what works and what does not.

This report describes evaluation design in PFS projects, with a focus on early childhood education (ECE). It is part of a larger toolkit for states, localities, and investors considering early childhood PFS projects and is based in part on stakeholders’ experiences with ongoing PFS projects.

In the first part of this report, we outline the role of evaluation in a PFS project and the importance of considering evaluation design early. The second part of the paper provides a high-level overview of three categories of evaluation design, including randomized controlled trials (RCTs), which are generally considered the most rigorous evaluation design. In the final section, we review considerations for planning an evaluation in the context of ECE programs.