Urban Institute
Research Analyst

Funding opportunities in the pay for success field

October 6, 2016 - 1:04pm

These last few months of the Obama Administration have seen no less than six pay for success (PFS) federal funding opportunities, which span four different government agencies, and range from two to upwards of eight million dollars in total funding for activities such as data readiness, transaction structuring, and feasibility studies—all critical to launching PFS projects grounded in the best available evidence.

These funding opportunities reflect three key realities of the PFS field in the US. First, they speak to the accelerating pace of PFS project development in the United States. In January 2013, the first PFS project was announced in the United States—a program at Rikers Island Jail in New York City that aimed to reduce recidivism among adolescent offenders. Three-and-a-half years later, 12 PFS projects have launched—two in the past week alone—and more than a hundred are in various stages of development nationwide.

Second, the range of activities that available funding supports emphasizes the fact that PFS projects can be complex, time-consuming, and sometimes costly to set up. While the societal payoffs can be significant, organizations participating in PFS projects may need to engage in capacity-building beforehand to become “PFS ready.”

Third, these funding opportunities indicate the current administration’s commitment to evidence-based policymaking. However, given ongoing PFS exploration in places as different as Philadelphia, Pennsylvania and the Yakima Valley, Washington, and often with bipartisan support, increased interest and funding for PFS may simply reflect a growing appetite for pursuing what works at both the state and federal levels. In addition to these six funding opportunities, more than 20 states have introduced legislation facilitating the use of PFS to address specified topic areas and establishing trust funds for PFS contracts, among other activities.

Federal efforts include, but are not limited to, the Every Student Succeeds Act, which authorizes PFS financing for school services; the Social Impact Partnership Act, which both enables the redirection of funding away from ineffective programs and promotes public-private partnerships as a way to scale existing social interventions; and the Workforce Innovation and Opportunity Act, which emphasizes workforce development programs that are innovative and transparent, both good governance practices that PFS hopes to promote. These bills bolster state-based efforts, and carve out spaces for PFS and other forms of evidence-based policymaking.

The six funding opportunities, largely driven by the Social Innovation Fund (SIF), a subset of the Corporation for National and Community Service (CNCS) at the White House, are detailed below.

Pay for Success Permanent Supportive Housing Demonstration
The Department of Housing and Urban Development will select six cooperative agreements to support feasibility, transaction structuring, and implementation for PFS projects which seek to reduce chronic homeless through permanent supportive housing (PSH). A total of $8,679,000 is available. Applications were due February 12th.

FY 2016 Social Innovation Fund Pay for Success Administrative Data Pilot
The SIF will select up to three entities to provide data access and storage services to PFS projects—preferably in the realms of youth development, economic inclusion, and health futures—in development. A total of $1.5 million is available. Applications were due August 16th.

OCTAE: Providing High-Quality Career and Technical Education Programs for Underserved, High-Need Youth Through a Pay for Success Model
The Department of Education will select an intermediary to conduct feasibility studies and support transaction structuring to PFS projects in development focusing on career and technical education for underserved youth. A total of $2 million is available. Applications were due August 25th.

Veterans Employment Pay for Success Grant Program (VEPFS Program)
The Department of Veterans Affairs (VA) and the SIF will select an organization to develop and fund PFS pilots successful in improving employment outcomes for veterans with post-traumatic stress disorder (PTSD) in areas that are either low-income or have high employment need. A total of $3 million is available. Applications were due September 14th.

Round 2: FY 2016 Social Innovation Fund Pay for Success Cooperative Agreement
The SIF will select multiple recipients to enhance data readiness and provide development support to tribal, local, and state governments interested in PFS. Awards will range from $350,000 to $1.8 million per recipient. Applications were due September 20th.

Department of Education Preschool Pay for Success Feasibility Pilot
The Department of Education will select between seven and 14 tribal, local, and state governments to develop PFS feasibility studies incorporating high-quality preschool programs to close pre-kindergarten achievement gaps. A total of $2.4 million is available. Applications are due October 6th.


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