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Pay for Success:
New Capital for Evidence-Based Programming
December 2, 2014
John K. Roman, Ph.D.
Senior Fellow, Jus:ce Policy Center, Urban Ins:tute
Jennifer Stoff, MPP
Senior Program Officer, Social Innova:on Fund Corpora:on for Na:onal and Community Service
Deirdre O’Connor, LCSW
Senior Program Specialist, Na:onal Council on Crime and Delinquency
Stephanie Mercier, M.S.W, M.B.A.
Senior Program Manager, Corpora:on for Suppor:ve Housing
Angela Tolosa, J.D.
Deputy Program Director, Na:onal Reentry Reentry Resource Center, Council of State Governments Jus:ce Center
Today’s PresentaDon Overview
1. Introduc:on to CSG Jus:ce Center
2. Speaker Introduc:ons
3. Overview of Social Impact Bonds/Pay for Success 4. Overview of Social Innova:on Fund (SIF) program
5. Na:onal Council on Crime and Delinquency’s SIF project 6. Corpora:on for Suppor:ve Housing SIF’s project
7. Ques:ons & Answers
Council of State Governments Jus:ce Center
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Council of State Governments JusDce Center
• Na:onalnon-profit,non-par:sanmembershipassocia:onofstate government officials
• Engagesmembersofallthreebranchesofstategovernment
• Jus:ceCenterprovidesprac:cal,nonpar:sanadviceinformedby the best available evidence
Council of State Governments Justice Center

The NaDonal Reentry Resource Center
• The NRRC is a project of the CSG Jus:ce Center and is supported by the Bureau of Jus:ce Assistance.
• NRRC staff have worked with nearly 600 SCA grantees, including 40 state correc:ons agencies.
• The NRRC provides individualized, intensive, and targeted technical assistance training and distance learning to support SCA grantees.
hep://csgjus:cecenter.org/nrrc/
ü Please register for the monthly NRRC newsleeer at: hep://csgjus:cecenter.org/subscribe/
ü Please share this link with others in your networks that are interested in reentry!
Council of State Governments Jus:ce Center 4
Council of State Governments Justice Center
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Pay for Success:
New Capital for Evidence-Based Programming
Presenters:
John K. Roman, Ph.D.
Senior Fellow, Jus:ce Policy Center Urban Ins:tute
Jennifer Stoff, MPP
Senior Program Officer, Social Innova:on Fund, Corpora:on for Na:onal and Community Service
Deirdre O’Connor, LCSW Senior Program Specialist Na:onal Council on Crime and Delinquency
Council of State Governments Jus:ce Center
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Pay for Success:
New Capital for Evidence-Based Programming
Presenters:
Stephanie Mercier, M.S.W, M.B.A.
Senior Program Manager, Corpora:on for Suppor:ve Housing
Moderator:
Angela Tolosa, J.D.
Deputy Program Director,
Na:onal Reentry Resource Center, Council of State Governments Jus:ce Center
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Next: Social Impact Bonds/Pay for Success Overview John K. Roman, Jus<ce Policy Center, Urban Ins<tute
1. Introduc:on to CSG Jus:ce Center
2. Speaker Introduc:ons
3. Social Impact Bonds/Pay for Success Overview 4. Social Innova:on Fund (SIF) Program Overview
5. Na:onal Council on Crime and Delinquency’s SIF project 6. Corpora:on for Suppor:ve Housing’s SIF project
7. Ques:ons & Answers
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What is Pay for Success?
• New financial instrument to support discre:onary social programming – Brings evidence-based programs to the necessary scale
• Can support programs that:
– Involve significant start-up costs but long-term savings – Serve large popula:ons
– Involve poli:cal or programma:c risks
• PFS addresses these programs with private capital
– Offers an investment return if the program meets performance goals – Government only pays for successful outcomes
• Some:mes called “social impact bonds” – PFS does not operate like a bond
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How Does Pay for Success Work?
• An intermediary selects an evidence-based program
• The program is supported with private capital solicited by
the intermediary
• The intermediary:
– Oversees program implementa:on – Ensures model fidelity
• Anindependentevaluatordeterminesiftheprogramhas met performance targets
• Governmentpaystheintermediaryforsuccessfuloutcome
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The Structure of Pay for Success
Intermediary
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Pay for Success: OpportuniDes in JusDce
• Pre-Trial Processing
– Pre-trial risk assessments can save money by
diver:ng low risk offenders from jail
– Upfront investment is needed to train officials on assessment tools
• Reentry
– The therapeu:c community programs can have
beneficial effects on recidivism and substance abuse
ü Start-up requires developing counseling, employment, and job training services
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Pay for Success: OpportuniDes in the Adult JusDce System
• Proba:on
– Electronic monitoring can save money and reduce
vic:miza:ons
ü Implementa:on infrastructure (equipment, IT support, etc.) is costly
• Adult Diversion programs
– Drug courts and community supervision can preserve
public safety while reducing costly secure confinement
ü The training, addi:onal technical assistance, and staff required to effec:vely implement diversion programs has significant upfront costs
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Pay for Success: OpportuniDes in Juvenile JusDce
• Juvenile Jus:ce
– Family-based interven:on and preven:on programs can
prevent delinquent conduct and reduce recidivism
ü Implemen:ng these programs requires start-up investment to train local staff
• Adolescent Diversion
– Adolescent diversion from secure confinement has been
found to have a very large cost-benefit ra:o
ü Training and project implementa:on impose significant upfront costs
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Pay for Success: Advantages and Drawbacks
Advantages Drawbacks
• Government transfers risk
• Local service networks are
developed or scaled
• Addresses the “wrong pockets” problem
• Allows agencies to pool resources and knowledge
• Significant flexibility to deploy programs across jurisdic:ons or regions
• Requires significant exper:se from mul:ple fields
• Complex to execute
• Could limit non-profit innova:on by focusing on programs with a proven track record
• May simply reallocate exis:ng impact and philanthropic capital rather than drawing new capital
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Pay for Success: Strategic Planning
• PFS relies on good strategic planning to maximize cost effec:veness
• Before star:ng a program jurisdic:ons should: – Iden:fy popula:on and cost drivers
– Iden:fy the problems that generate these drivers
– Find evidence-based solu:ons to the problem
– Determine if the evidence-based solu:on is PFS-compa:ble
• Government should iden:fy a research partner to assist with this process
• Jus:ce program databases can inform implementa:on: – OJP’s Crime Solu:ons
– WISIPP
– Vanderbilt University Peabody Research Ins:tute
– Blueprints for Violence Preven:on
– The Urban Ins:tute’s Meta CBA analyses for DCPI
– Na:onal Reentry Resource Center’s What Works in Reentry Clearinghouse
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Building PFS in 5 Steps
• PFS projects should target jus:ce system “inefficiencies”
– Example:prisonpopula:ondrivers
• Once drivers are iden:fied, PFS is developed in 5
steps:
Strategic Planning
Price the Develop Evaluate the Product Infrastructure Program
12345
Make the Deal
Deliver Service and TTA
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Step 1: Price the Product
• Use cost-benefit analysis (CBA) to determine: – Serviceinfrastructureandcapitalneeds
– Performancetargets
– Probabilityofprogramsuccess
ü Return rates
– Governmentsavings(recoverableandnon-
recoverable)
• Meta-CBA provides the best es:mates
– Uncertainty deters investors, risk does not
– Meta-CBAModels:
ü Urban’s DCPI model
ü The Washington State Ins:tute of Public Policy (WSIPP) model
ü Pew’s Results First
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Step 2: Make the Deal
• Iden:fy investors, providers, and government partner
• Determine if sufficient infrastructure exists to deliver the interven:on
– Non-profits are open key jus:ce system service providers
• Determine project management and incen:ve structure – Get all partners to sign onto contract
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Step 3: Develop Infrastructure
• Coordinate direct service
– Develop service infrastructure
(staff knowledge, IT, etc.)
– May require building new infrastructure or enhancing exis:ng infrastructure
• Determine technical assistance needs
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Step 4: Deliver Service and TTA
• Deliver TTA and service to the target popula:on
• TTA helps providers sustain services past the life of the
project
• The intermediary ensures program model fidelity
• The PFS contracts provide safeguards so that PFS does not interrupt service delivery
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Step 5: Evaluate the Program
• Evaluate the program and determine success
– Determine if local organiza:ons can perform
the evalua:on
– Find ways to promote evalua:on transparency
• For ini:al evalua:ons RCT is the best design
– RCTs build knowledge about what works in criminal jus:ce
– Evalua:on costs are primarily a func:on of data availability, not evalua:on design
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Future of Pay for Success
• PFS efficacy depends on maintaining a research emphasis • Broad adop:on of PFS will be a
learning process
– Governments, for-profits, and non-profits learn how to collaborate
– PFS offers a new instrument for sharing resources and benefits
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Social Impact Bond Resource Center
• Urban Ins:tute created a roadmap of tools for helping governments implement pay for success projects. Visit hep://www.urban.org/socialimpactbonds/
– Find execu:ve summary at hep://www.urban.org/publica:ons/ 413149.html
– Find overview presenta:on at hep://www.urban.org/publica:ons/413151.html
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Next: Social InnovaBon Fund Program Overview
Jennifer Stoff, Social Innova:on Fund, Corpora:on for Na:onal and Community Service
1. Introduc:on to CSG Jus:ce Center
2. Speaker Introduc:ons
3. Social Impact Bonds /Pay for Success Overview 4. Social Innova:on Fund (SIF) Program Overview
5. Na:onal Council on Crime and Delinquency’s SIF project 6. Corpora:on for Suppor:ve Housing’s SIF project
7. Ques:ons & Answers
Council of State Governments Jus:ce Center
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Social Innova<on Fund Program Overview
Jennifer Stoff, Social Innova:on Fund, Corpora:on for Na:onal and Community Service
As part of the President’s vision for building a smarter, more effec:ve government, Pay for Success (PFS) has emerged as an approach for government to partner with the private sector to fund proven and promising prac:ces.
PFS is an innova:ve contrac:ng and financing model that leverages philanthropic and private dollars to fund services up front, with the government paying aper they generate results.
This strategy has gained strong bi-par:san support in Congress as a strategy for increasing return on taxpayer dollars while improving the quality of services provided in our communi:es.
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The Social InnovaDon Fund Pay for Success Program aims to:
• Strengthen and diversify the pipeline of governments and nonprofit organiza:ons that are prepared to engage in PFS projects
• Assess the poten:al of PFS to address a variety of social issues rela:ng to diverse popula:ons in diverse geographic contexts
• Aeract capital to high-performing ins:tu:ons seeking to strengthen, grow, and sustain effec:ve solu:ons for challenges facing low-income communi:es
Through two approaches:
1) Provide Technical Assistance to Assess Feasibility and Develop PFS
Capacity
2) Structure PFS Transac:ons. These ac:vi:es will contribute to the
infrastructure necessary to implement future PFS projects.
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2014 Social InnovaDon Fund Pay for Success grantees
• CSH (Corpora:on for Suppor:ve Housing)
• Green & Healthy Homes Ini:a:ve
• Harvard Kennedy School Social Impact Bond Lab
• Ins:tute For Child Success, Inc.
• Na:onal Council on Crime and Delinquency
• Nonprofit Finance Fund
• Third Sector Capital Partners, Inc.
• University of Utah David Eccles School of Business PFS Lab
Grantees will be releasing compe<<ons between November 2014 – March 2015
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Next: NaBonal Council on Crime and Delinquency’s SIF Pay For
Success Project
Deirdre O’Connor, Na:onal Council on Crime and Delinquency
1. Introduc:on to CSG Jus:ce Center
2. Speaker Introduc:ons
3. Social Impact Bonds/Pay for Success Overview 4. Social Innova:on Fund (SIF) Program Overview
5. Na:onal Council on Crime and Delinquency’s SIF project 6. Corpora:on for Suppor:ve Housing’s SIF project
7. Ques:ons & Answers
Council of State Governments Jus:ce Center
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NaBonal Council on Crime and Delinquency
NCCD promotes just and equitable social systems for individuals, families and communi:es through research, public policy and prac:ce.
Oakland, CA
Madison, WI
Washington D.C.
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Racial Disparity in Child Welfare and Juvenile JusDce
• Na:onwide, African Americans are more than twice as likely to enter foster care as white children
• Data demonstrates disparity for youth of color at every decision point in the juvenile jus:ce system
• Youth who experience foster care or juvenile jus:ce systems also experience higher raters of nega:ve life outcomes
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NCCD’s Pay for Success Opportunity
• One of eight Social Innova:on Fund PFS grantees
• Three jurisdic:ons will be selected
• PFS feasibility assessment technical assistance
• Posi:ve youth development interven:on
• Goal of reducing racial disparity
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Timeline for NCCD’s RFP
PFS Feasibility Assessment TA
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Eligible state, local and tribal governments and non-profits
CA, CT, DC, IL, MA, MN NE NJ, NY, PA, RI WI
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Thank you!
For more informa:on Deirdre O’Connor doconnor@nccdglobal.org
www.nccdglobal.org

Next: CorporaBon of SupporBve Housing SIF project
Stephanie Mercier, Corpora:on for Suppor:ve Housing
1. Introduc:on to CSG Jus:ce Center
2. Speaker Introduc:ons
3. Social Impact Bonds/Pay for Success Overview 4. Social Innova:on Fund (SIF) Program Overview
5. Na:onal Council on Crime and Delinquency’s SIF project 6. Corpora:on for Suppor:ve Housing’s SIF project
7. Ques:ons & Answers
Council of State Governments Jus:ce Center
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CorporaDon for SupporDve Housing (CSH)
CSH advances solu:ons that use housing as a platorm for services to improve the lives of the most vulnerable people, maximize public
resources and build healthy communi:es. Council of State Governments Jus:ce Center

SupporDve Housing: An IntervenDon that Works
• Targets households with barriers to housing and/or employment
• Is affordable
• Provides tenants with leases
• Engages tenants in flexible and voluntary services
• Coordinates among key partners
• Supports tenants in connec:ng with the community
Council of State Governments Jus:ce Center

Evidence for SupporDve Housing
• 79% to 83% stay housed one year or more
• 41% to 67% decrease in Medicaid costs
• 40% reduc:on in jail days
• Reentry suppor:ve housing pilot with Ohio Department of Rehabilita:on and Correc:on (ODRC):
– 60% less likely to be reincarcerated
– 40% less likely to be rearrested for any crime.
• Study in Denver among chronically
homeless individuals:
– 76% reduc:on in the number of days spent in jail.
Council of State Governments Jus:ce Center

CSH and the SIF Pay for Success Program
Awarded $750,000 from CNCS over three years Selecting up to 12 grantees
Focused on jurisdictions interested in exploring feasibility of a PFS initiative focused on supportive housing and vulnerable populations
Will select 4-6 Sub-Recipients in First Round
Government and/or non-profit organizations are eligible to apply
Anticipated application release : December 2014 Anticipated application due date: February 2015
Council of State Governments Jus:ce Center

Feasibility Technical Assistance
Convene multiple cross-department stakeholders Collect and analyze data to understand status quo costs Outline the structure for quality supportive housing Select housing and service providers
Develop a financial model and framework Define project success with all stakeholders Create, publicize and issue RFPs
Council of State Governments Jus:ce Center

Questions & Answers
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Thank you!
The webinar recording and PowerPoint presenta:on will be available on www.csgjus:cecenter.org within a week.
This material was developed by the presenters for this webinar.
Presenta<ons are not externally reviewed for form or content and as such, the statements within reflect the views of the authors and should not be considered the official posi<on of
the Bureau of Jus<ce Assistance, Jus<ce Center, the members of the Council of State Governments, or funding agencies suppor<ng the work.
To receive newsleTers and other announcements, please visit our website:
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