Community Development Innovation Review
April 2013
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Government’s Role in Pay for Success
Pay for Success (PFS) financing mechanisms, including social impact bonds (SIBs), provide opportunities for multiple stakeholders with different expertise—government, private investors, foundations, and service providers—to work towards common goals. For government agencies at all levels, PFS mechanisms create opportunities for the public sector to reward “what works” or expand access to evidence-based preventive social interventions without requiring taxpayers to shoulder all of the financial risk upfront. But in order for these new mechanisms to work, government must retain a central and important position. Ultimately, it is the government’s responsibility to ensure that these mechanisms are fair and efficient. PFS financing, done well, has the potential to help society better identify and address some of the most endemic, intractable problems in our society in partnership with the private sector and civil society; yet each PFS deal, no matter how exciting, is just one step in a series.
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Other articles in this issue
Community Reinvestment Act (CRA) Banks as Pioneer Investors in Pay for Success Financing
The Real Revolution of Pay for Success: Ending 40 Years of Stagnant Results for Communities
Pay for Success is Not a Panacea
The Promise of Pay for Success
Social Impact Bonds: Lessons Learned So Far
Pay for Success: Understanding the Risk Trade-offs
Learning from the Low Income Housing Tax Credit: Building a New Social Investment Model
Using Social Impact Bonds to Spur Innovation, Knowledge Building, and Accountability
Social Impact Bonds: Using Impact Investment to Expand Effective Social Programs
Innovation Needs Foundation Support: The Case of Social Impact Bonds
Pay for Success: Opportunities and Risks for Nonprofits
Success Begins with a Feasibility Study
Rikers Island: The First Social Impact Bond in the United States
Human Capital Performance Bonds
Pay for Success: Building On 25 Years of Experience with the Low Income Housing Tax Credit
Can Pay for Success Reduce Asthma Emergencies and Reset a Broken Health Care System?
Supporting At-Risk Youth: A Provider’s Perspective on Pay for Success
Bringing Success to Scale: Pay for Success and Housing Homeless Individuals in Massachusetts
Making Performance-Based Contracting Work for Kids and Families