Pay for Success Explained (and Illustrated)

By Chris Ellis and Sara Blumenstein

At Fourth Economy, we are interested in—and experts in—a new generation of funding mechanisms that are enabling the expansion of interventions with proven results. (See these posts from last year introducing Social Impact Bonds and Three Questions to ask to demonstrate impact.)

The key stakeholders involved in a Pay for Success transaction

 


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4 Names to Know

overmoyer-main-blog_image2At Fourth Economy, our team has consistently looked ahead to see what will impact our clients in the coming years and made sure that we have the right set of capabilities and partners to help mind our clients’ needs. While many of our clients have expressed a great deal of uncertainty, we believe that we are well equipped to handle whatever is sent our way. Continue reading “4 Names to Know”

Innovative Financing: Paying for What Works

ellis-main-blog_imageA new generation of innovative funding tools is enabling change agents to expand programs that are meeting their community’s needs. Pay for Success (PFS) transactions, or Social Impact Bonds, represent an emerging financing mechanism that is driven by cross-sector partnerships, robust data, and a commitment to outcomes.

PFS utilizes upfront private investment to expand social programs that have proven results. In order to encourage this type of investment in their programs, service providers must be able to use data to show that their proposed intervention measurably improves outcomes for their clients and leads to an avoidance of cost. Additionally, these transactions depend on the collaborative efforts of a diverse set of stakeholders. PFS engages partners from the public, private, and nonprofit sectors in five critical roles: an investor who funds the expansion of the program; a service provider who administers the program; an independent evaluator who measures the effectiveness of the program; a public entity, or other outcome payer, who repays the investment based on the success of the program; and an intermediary who facilitates the partnerships and ensures that the project operates effectively and efficiently. Continue reading “Innovative Financing: Paying for What Works”