California Pay for Success Initiative

About Pay for Success gd.image.widen_alt_text In 2014, the Irvine Foundation launched a three-year exploration called the California Pay for Success Initiative. The Foundation’s goals were to find creative approaches to funding high-quality social services for society’s most vulnerable individuals, and to bring new, significant, and reliable resources to proven programs. Pay for Success models are designed to both improve outcomes and reduce costs. The agreements support public-private partnerships to improve and expand social services through a variety of means: better use of government data, tying government contracts to outcomes that improve Californians’ lives, and attracting private investment to bridge funding gaps. For example, Pay for Success bonds bring in outside investors — including foundations and the private sector — to pay, upfront, for particular social services, like preventing homelessness or providing prenatal care. If 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. If the projects succeed, governments are much more likely to fully implement the program — a common goal of philanthropy. pfsgraphic Photo to the left by Abode Service / Esteban Allard-Valdivieso. Our Partnership with the Nonprofit Finance Fund gd.image.widen_alt_text Since starting this effort in 2014 with our partner, the Nonprofit Finance Fund, the first two Pay for Success projects have launched in California, with several more in the pipeline — the start of what we hope will be many such endeavors in the future. As our participation concludes in 2017, we are very proud of the initiative’s achievements and hope that this effort will be an effective tool for funders, social services providers, and governments across the country to address some of society’s most challenging problems.