Community Development Innovation Review
April 2013
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Pay for Success: Opportunities and Risks for Nonprofits
Across the United States, a variety of social sector stakeholders are looking to “pay for success” (also known as pay for results or pay for outcomes) approaches to enhance the reach and impact of social programs. As a contribution to this national conversation, McKinsey & Company recently published a comprehensive study on the potential for social impact bonds (SIBs) in the U.S. In discussions of the study’s findings, stakeholders repeatedly stressed that nonprofits are likely to continue providing the majority of social services in the U.S. for some time, even if for-profit or hybrid social enterprises are growing in number and importance. In particular, nonprofits will continue to be the primary providers of programs for poor and vulnerable people, including homeless people, troubled youth and youth aging out of foster care, and low-income seniors. This is why it is critical to understand how Pay for Success (PFS) can strengthen nonprofits’ work and what risks it might create for them.
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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
Success Begins with a Feasibility Study
Government’s Role in Pay for Success
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