Urban Institute
Policy Assitant

Delaware becomes tenth state to enact PFS legislation

October 17, 2018 - 12:18pm

In response to growing interest in pay for success (PFS) in the United States in recent years, states have enacted legislation to authorize or appropriate funds to be used in PFS projects. At least 20 states plus the District of Columbia have introduced PFS-related legislation, and of those, nine states have adopted such legislation. In August this year, Delaware became the tenth state to pass PFS legislation when Governor John Carney signed Senate Bill 242.

Federal and state PFS legislation, like Delaware just passed, is significant because it signals both interest in the future of PFS and a willingness on a state-wide or federal level to serve as a project end payor. An end payor in a PFS project is the entity that agrees to pay for successful outcomes. Of the 21 current PFS projects, about half involve only city or county governments as end payors, another ten involve state governments, and three—the New York Increasing Employment and Improving Public Safety project, the Massachusetts Juvenile Justice PFS Initiative and the Los Angeles County Just-In-Reach project—involve federal agencies.

The Delaware bill allows state agencies to serve as an end payor in PFS projects by repaying organizations or investors that provide up-front capital. By passing legislation that allows for the possibility of PFS, Delaware is broadening the scope of possibility for PFS and other innovative financing mechanisms in the state.

The governor signed the bill at the Blood Bank of Delmarva, which is the service provider in an existing PFS project that aims to increase blood donations among people ages 17 to 24. The Delaware Community Foundation’s Social Impact Fund has awarded a grant to the blood bank for a third mobile blood drive bus. For this project, the Longwood Foundation will serve as the end payor and will repay the fund if the blood bank increases donors among the target population.

Delaware’s passage of SB 242 followed the federal government’s passage of the Social Impact Partnerships and Pay for Results Act (SIPPRA), which appropriates $100 million to a US Department of Treasury-controlled fund. At least 90 percent of this has been set aside to allow the federal government to repay investors in PFS projects.


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