The vocabulary around pay for success (PFS) is unique. Certain terms, like “end payor” and “feasibility,” are specific to PFS, while others, like “risk” and “contract,” mean different things in PFS than they would in other types of transactions. Furthermore, even organizations highly engaged in PFS can differ among themselves in how they use certain terms.

In the hopes of make the content on our site accessible to both new and returning users, we’ve created a glossary of our most-used PFS-related terms. Some definitions have been modified to best reflect how they are used in our blogs and reports.

Capacity: Expertise, skills, ability, and experience

Causality: The condition where an observed outcome (e.g.  sobriety) is caused by a known activity (e.g. a rehabilitation program).  Only some evaluation methods can actually establish causality.

Comparison group: In an evaluation, a group of people whose outcomes are compared to another group that actually receives services from the program under evaluation. To learn more, see here.

Contract: A legal agreement among all or some PFS project stakeholders to define the terms of the PFS project, as well as the roles and responsibilities of each stakeholder.

Cost Savings: Expenses that are not incurred because the need for those services is prevented by the intervention

Counterfactual: In social science, the outcomes that would have occurred in absence of program services, and are compared to observed outcomes. To learn more, see here.

Effect Size: A quantitative measurement of the magnitude of intervention results. To learn more, see here.

End Payor: The entity, usually a government agency, that repays the investors if a PFS project is successful

Enrollment: The act of being included in the program funded through a PFS project.

Evaluation: An assessment of if and to what degree the intervention in a PFS project has caused or is associated with changes in population outcomes. Evaluations typically determine whether investors will be repaid. For more information on evaluation in pay for success, see here.

Evaluator: The person or firm charged with assessing if and to what degree a project has had the desired impact. To learn more, see here.

Evidence:  A collection of facts or information that attest to the truthfulness and/or validity of a belief or proposition. To learn more about evidence in pay for success, see here.

Feasibility: A formal inquiry regarding the prospective use of PFS that reviews several factors to decide whether and how to proceed with a PFS project. Definition based on the Nonprofit Finance Fund’s PFS Glossary. For more information about pay for success feasibility, see here.

Intermediary: Third parties that assist in project development and implementation by designing and structuring the project, securing investors, selecting the service provider, coordinating stakeholders, negotiating the contract, and/or providing oversight and project management. 

Funder:  An institution or person who provides the up-front capital investment in a PFS project, usually with the expectation of repayment if the project is successful.

Implementation: The stage of a PFS project in which services are delivered and stakeholders engage in active project management.

Intervention: The program or services provided to a target group with the goal of achieving agreed-upon outcomes as part of a PFS project. The program or services that make up the intervention are different than what has been provided in the status quo, either because the program itself is new to the community or because the PFS project scales it to reach a new or larger population.

Knowledge intermediary: Third parties, including PFSI, that help PFS stakeholders understand the research behind their target population and/or chosen intervention and translate that evidence into rigorous evaluations.

Launch: The start of PFS project implementation, marked by the initiation of service delivery to the target population.

Outcome Payment: A sum of money paid by the end payor to investors if the intervention in a PFS project achieves the desired outcomes.

Outcome Target: A unit of measurement or indicator used to track project progress towards the desired outcomes.

Outcome: The longer-term consequences of an intervention, such as number of people employed within six months of receiving a job training service.

Output: The direct and tangible results of an intervention’s activities, such as the number of participants, number of workshops held, and number of therapy sessions.

PFS Stakeholders: The key individuals and organizations involved in a PFS project.

Pay for Success: An innovative financing mechanism in which third-party investors provide the up-front capital to implement a social program. If the program is successful in achieving pre-determined outcomes, as measured by a rigorous evaluation, government will repay investors with a potential positive return. PFS projects are considered forms of pay-for-performance, public-private partnerships, and impact investing. To learn more, see here.

Pilot: A separate program that allows PFS project stakeholders to test out recommendations and assumptions from the feasibility stage to determine if stakeholders want to move forward with a project. If PFS project launch is guaranteed, this phrase is called a “ramp-up” (see below).

Ramp-Up: A trial period before a PFS project formally launches in which PFS stakeholders test and modify project operations, address any unexpected challenges around data collection, and establish clear communication channels among stakeholders

Randomized Controlled Trial: An evaluation design in which eligible people are randomly assigned to either the treatment or comparison group, creating the highest confidence that differences in outcomes observed between the two groups are actually caused by the intervention. To learn more, see here.

Rate Card: A “menu” of outcomes developed and priced by the government; when an outcome is achieved in a PFS project, it triggers success payments by the government at that agreed-upon rate. To learn more, see here.

Referral: Identifying the target population and directing them towards the PFS project. 

Rigor: The degree of validity of an evaluation design and confidence with which one can assert a causal relationship between the intervention and the outcomes. Read more here.

Risk: The potential political, reputational, and financial downsides of a partner’s decision to enter a PFS project. Read more here.

Scale: Expanding and/or replicating programs to reach more constituents, or adapting the program to a different target population.

Service provider: The organization providing the intervention in a PFS project.

Services: A general term for the set of activities and/or treatments included in an intervention meant to boost specific well-being outcomes among a given population.

Sinking fund: A fund formed by a payor to provide for future success payments to investors if the PFS project achieves desired outcomes.

Social impact bond: A term for “pay for success” more commonly used outside the United States.

Structuring: The process of finalizing all PFS project partners, defining project governance and relationships between partners, and executing the PFS contract.

Systems change: A fundamental change in values and norms, corresponding to changes in partnership and power structures, operations, and policies; a key goal of pay for success. For more information, see here.

Target Population: The population primarily affected by the social problem or the focus of a program intended to address the social problem. Read more here.

Wrong Pockets Problem: A situation in which the entity that bears the cost of implementing a practice does not receive a commensurate benefit. To learn more, see here.