Pay For Success Sounds Straightforward, But Getting It Right May Take A While

Oct 6, 2016


People wait to meet recruiters at a Philadelphia job fair in June 2014. Job preparedness and employment was one of the five areas Governor Wolf’s administration identified that could benefit from Pay for Success performance contracts.
Credit Matt Rourke / AP Photo

In 2015, the Harvard Kennedy School decided to support Pennsylvania in creating Pay for Success programs. If Pay for Success sounds like bribing a middle schooler to bring home good grades ($5 for an A, anyone?) it’s because both transactions aim to incentivize results.  The former is just more involved than the latter.

Pay for Success contracts are a fairly new idea. The first U.S. program launched in New York in 2012. They're also known as social impact bonds.  Whatever you call them, a Pay for Success contract is essentially a loan from the private sector to government in service of the public good. Pennsylvania identified five areas of focus: early childhood care and education; education, workforce preparedness, and employment; public safety; health and human services; and long-term living and home- and community-based services. 


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