Why evidence matters in pay for success projects
When it comes to pay for success (PFS) projects, evidence is both the baseline and the endgame. Existing evidence informs the scope of the project, the intervention selected, and the target metrics; the evidence generated by the project’s evaluation informs future projects and policymaking.
Governments often don’t direct funding toward programs that have previously been demonstrated to work. And when a new idea is put forward, governments often don’t determine if the program achieved its objectives.
As our new paper describes, PFS forces governments to put evidence first when they make decisions at project launch and when they assess results at project conclusion. This paper is the first of three that the Pay for Success Initiative will release over the next few months to address why and how evidence matters.
Evidence as the baseline
In PFS, evidence helps drive project development by guiding project scoping, informing program selection, and influencing the terms of the deal.
Governments should begin the strategic planning process by looking at existing data about the populations they serve and understanding which groups are the most vulnerable and what their needs are.
Governments should search for alignment between the community’s needs and programs that have been shown to effectively meet those needs. Once decisionmakers have selected a program, understanding what outcomes they should expect can help them craft pragmatic and fair evaluation metrics.
With some baseline from previous evaluations of the same intervention, governments, social service providers, and funders can have realistic expectations about how effectively the project might achieve the desired outcome. By basing every decision on existing data and evaluations, evidence informs project design from start to finish.
What if evidence is limited?
Programs with a proven track record are certainly preferable, but not every potential program has a strong evidence base. In those cases, policymakers can still take practical steps to assess and manage risks.
For example, stakeholders could consider the social context and the program’s characteristics. Does the program have a clear and compelling explanation for how and why it will yield the results it intends?
In the absence of an evidence base, other components of the project’s design take on even greater relative importance and have implications for the assessment of the project’s risk. For instance, assessing a proposed service provider’s capacity is essential for any project design, but particularly for programs with limited evidence.
And a potential program might currently have a limited evidence base, but that won’t always be the case. Stakeholders can build that evidence base by choosing a strong evaluation design to assess the outcomes. Whether a project meets its target indicators or falls short, the evaluation will inform future policymaking by giving governments more resources in which to ground future decisions.
For a PFS project to effectively contribute to the evidence base for an intervention, each step of project design should incorporate existing data and evaluation history. Implementing rigorous evaluations will ensure PFS investments contribute to the body of evidence and help governments provide the best services to citizens in the future.