Pay for Success is a creative approach to funding social services, with potential to bring new, significant, and reliable resources to proven preventative programs. In a Pay for Success deal, private investors pay for preventative or interventional social services up front. Should these services deliver their intended results, governments then reimburse the investors with a return on their investment, while saving money on what they otherwise would have spent. It is a model designed to both improve outcomes and reduce costs.
With the arrival of Pay for Success (PFS) in the United States in 2010, we at NFF, along with many others in the sector, recognized its potential to catalyze improved delivery of and investment in better social outcomes. Equally as important was the recognition that PFS also had the potential to motivate a needed discourse among service providers, traditional and new social sector investors, governments and other stakeholders in the sector on how to align their efforts to improve our society's capacity to deliver better outcomes more cost effectively for the beneficiaries of social programs.