Social Innovation Fund Pay for Success Support

The following is authored by Nicole Truhe, Government Affairs Director at America Forward and originally appeared on the America Forward blog. Third Sector Capital Partners is a proud member of the America Forward coalition.

Since its authorization as a federal program, the Social Innovation Fund (SIF) has been aimed at finding and growing the most promising solutions to our nation’s most pressing challenges. The original model of the SIF, known as SIF Classic, is focused on directing federal resources (matched 1:1 by non-federal and private dollars) to support community-based organizations and solutions that have evidence that they work to help grow and scale them nationwide.

Beginning in fiscal year 2014, the Corporation for National and Community Service (CNCS) was authorized to allocate up to 20 percent of the funding for the SIF to test an approach known as Pay for Success (PFS). Aligned with the established mission of the SIF, this second model known as SIF Pay for Success (SIF PFS), allocates federal funding, again with a required 1:1 match, to support feasibility studies and transaction structuring efforts. This additional focus of SIF funding on PFS supports efforts to identify and scale evidence-based solutions, as SIF Classic does, but also tests the idea of allocating government funding based on the achievement of results or outcomes.

When CNCS launched its first competition under the new PFS authority, Third Sector Capital Partners (Third Sector) was one of eight organizations to receive funding to launch a competition to identify jurisdictions and providers interested in receiving PFS support and technical assistance. Many of these initial eight grantees, including Third Sector, initially defined the success of this work as developing PFS contracts and launching projects. However, it became clear for Third Sector that the work it was doing with the nine communities and organizations it chose as part of its first SIF PFS cohort would be deemed successful for reasons beyond contract launch. (For a review of this first cohort of communities and organizations, please refer to this previous post.)

This theme of ‘impact beyond launch’ is one that is held not just by Third Sector, but by most, if not all, of the SIF PFS grantees. In total, over a dozen different organizations have or are working with over 100 communities and providers on feasibility studies and transaction structuring support related to using Pay for Success in issue areas that include homelessness, workforce development, early education, and health care. To date, an overall small percentage of this support has resulted in executed Pay for Success contracts.

In particular, none of the nine sub-recipients in Third Sector’s first cohort reached contract development or launch by the end of their engagement. The significance of the support Third Sector provided, however, has manifested itself in other ways that have long-term implications for these communities and organizations. They are all now better informed about what is needed to engage in Pay for Success and better prepared to develop and execute Pay for Success contracts in the future.

1.Data Access, Linking, and Sharing for Greater Efficiency and Impact

Data was a significant focus for every sub-recipient in Third Sector’s first SIF PFS cohort and each jurisdiction or organization noted benefitting from Third Sector’s support in this area. Data sharing agreements were established, shared visions for data linking and the utilization of data were identified, and data was integrated, in some cases, between governments and providers to more easily validate intervention impact. All sub-recipients ended their engagement with identified areas for improvement in relation to data access, linking, and sharing.

EXAMPLE

For Friends of the Children (FOTC), a Portland, Oregon-based nonprofit organization, their feasibility study work with Third Sector yielded access to an integrated government dataset that provides longitudinal information about the population they serve. With this access, FOTC can now validate the impact of their intervention model and work to improve service delivery, broaden their evidence base, and engage in performance-based contracts based on benchmarks and pricing backed verifiable data.

2. Contract/Procurement Reform to Focus on Outcomes

As noted, though none of the sub-recipients ended their work with Third Sector through the SIF PFS grant with a developed or executed PFS contract, there were concrete actions taken by some entities to achieve that goal in the near term. Performance-based contract teams were set up in one state/locality and another began to redesign their procurement process to support a focus on outcomes/Pay for Success. In one location, a philanthropic partner on the SIF PFS grant, United Way for Greater Austin, rewrote their funding guidelines so that grants would be awarded based on outcomes and the state Health and Human Services agency began an agency-wide performance measurement initiative.

3. Alignment on Goals, Outcome Metrics, and Accountability Requirements

All of the communities and organizations noted that creating a shared language and common set of goals and metrics were critical outputs of their engagement with Third Sector. It was particularly significant that goals and outcomes identified were valued both by government and collectively as a community. By iterating on and aligning around goals and outcomes, sub-recipients identified being able to more easily establish data needs in an effort to evaluate and cost out outcomes in the context of future Pay for Success contracts.

4. Greater Understanding of Population Needs, Intervention Options, and Available Resources

The feasibility study work Third Sector conducted with its first SIF PFS cohort included an analysis of populations of need, providers available, and service interventions offered. This analysis revealed new information for jurisdictions and helped to provide a better understanding of the risks and challenges of the target population, to identify where interventions were existing and where they were needed, and to help align resources with both highest need populations and most effective interventions.

EXAMPLE

The Bridges Maternal Child Health Network in Orange County, CA, through the Orange County Board of Commissioners, was able to secure one-time Medicaid funding to support the Network’s work for several years. Securing this funding was based on the feasibility study work that demonstrated and validated the Network’s screening process, demonstrated the efficacy of its healthcare outcomes, and established the value proposition for investing in the Bridges’s model.