Recently, the San Diego County Board of Supervisors unanimously voted to support a “Pay for Success” (PFS) approach to fund public health and safety programs. Under the PFS model, private investors provide upfront financing for high impact prevention programs and governments pay returns on investment only if specific outcomes are achieved.
The Board’s announcement follows a year of intense work by a partnership – including Harder+Company, Social Finance, REDF, and the Center for Employment Opportunities (CEO) – that assessed the feasibility of a CEO PFS project around the issue of recidivism, the cycle of re-incarceration after being released for a previous crime.
Harder+Company’s role in the partnership was to determine what questions needed to be asked—and what data would be needed—to demonstrate if CEO San Diego’s program was reaching its goals. This project is one of several funded by Nonprofit Finance Fund and The James Irvine Foundation as part of the California Pay for Success Initiative. It will inform future PFS projects throughout San Diego County and the rest of the state. And as one of the first evaluation firms to support the PFS model in California, we’ve learned some critical lessons along the way:
- Designing a PFS evaluation requires clear thinking about the link between outcomes and cost. The goal of the PFS model is to improve outcomes for participants and help governments save money on services in the future. So when it comes to assessing the feasibility of a PFS project, the evaluation partner has to be able to articulate and measure outcomes that are associated with public spending. This means thinking from the very beginning about data collection and analysis in a way that allows the project to link program results to future cost-savings or cost-avoidance.
- Finding a champion within government will open doors. PFS is still a relatively new concept that is being approached by governments with caution. Having the buy-in, connections, and time commitment of one or more champions within government is invaluable to moving a project forward.
- Accessing multiple administrative data sources requires creative solutions. Administrative (or publicly available) data can be complex, and data owners can feel protective. Depending on what data is available, a PFS feasibility study must be able to make mid-course corrections, adjust an analysis plan, and manage expectations.
PFS has the potential to transform the way public programs are developed and implemented—but it is new terrain for almost everyone involved. As evaluators, it’s our job to remain objective, listen to what the data tell us, and help others answer the question at the heart of Pay For Success: Is the program successful? We are excited to be contributing to the future of this innovative model.