INTRODUCTION TO PAY FOR SUCCESSnadcpconference.org/wp-content/uploads/2017/06/SB-5.pdfFamilies receive Case Management services to cope with occupational challenges, transportation,

10 Milk Street, Suite 1010, Boston, MA 02108

National Association of Drug Court Professionals

2017 Annual Training Conference

INTRODUCTION TO PAY FOR SUCCESS

JULY 2017

2

Social Finance, Inc. © 2017 Confidential

AGENDA

I. What is Pay for Success?

II. State of the PFS Field

III. Case Study #1: Connecticut Family Stability Project

IV. Case Study #2: Oklahoma Women in Recovery Project

V. The Evolution of Pay for Success

3


WHAT IS PAY FOR SUCCESS?

4


Pay for success is about

measurably improving the lives

of people most in need

by driving government resources

toward more effective programs

5


PAY FOR SUCCESS SITS AT THE INTERSECTION OF THREE POWERFUL

MOVEMENTS

“What works”

Impact

Investing

Government

Accountability

Pay

for

Success

6


WHAT IS PAY FOR SUCCESS?

Nonprofit intervention

provider

Private funders /

impact investors

Payor

(often government)

Expansion

capital ($)Outcomes

Repayment ($)

7


WHY DO WE CARE ABOUT PAY FOR SUCCESS?

Focus on evidence and outcomes

Promotes measurement

Attracts new resources

Helps scale up high-quality services

Influences government funding decisions

8


DRIVING TOWARD SUSTAINABLE CONTRACTING

Grants to test solutions

Scaled

government

contracts

Funding

mechanism

Capacity Scale-upLifecycle of

intervention R&D EvidenceSustainable

Steady State

Continuum of capital

PAY FOR SUCCESS MAY BE ABLE TO HELP QUALITY

INTERVENTIONS MAKE THE JUMP TO SCALE*

PFS may helps build the bridge to scale

•Based on

performance

•Actively managed

for quality

• Experiments with innovative

interventions

• Builds evidence, capacity, and

track record for public sector

POLICY

GAP

Traditional role of philanthropy Systems change

9


WHEN IS PAY FOR SUCCESS USEFUL?

Underserved, large-scale population, with adequate

demand for intervention

Defined Target

Population

Evidence base studied versus rigorous comparison groupRigorously

Evaluated

Well-codified program model with fidelity monitoringCodified Program

Model

High-quality provider with capacity to scaleScalable Service

Provider

Outcomes attract civic and/or commercial supportPayor and

Investor Interest

Clear link to public-sector benefits (economic and

community benefits) within reasonable timeframePositive ROI

Solutions have:

Important challenges faced by communities

10


STATE OF THE PFS FIELD

11


GLOBAL MOMENTUM IN SOCIAL IMPACT BONDS

1 project in 2010

76 projects across

18 countries as of

March 2017

28 Employment

13 Homelessness

9 Child Welfare

8 Education

8 Health

9 Criminal Justice

1 Environment

12


THE PAY FOR SUCCESS LANDSCAPE IS EVOLVING QUICKLY

Taken steps to explore PFS (legislation, procurement, developing project)

Active PFS project or demonstration project launched

2011 2017

Do Not Distribute

April 2017

13


17 PFS PROJECTS HAVE REACHED THE MARKET TO DATE

Photographs courtesy of Center for Employment Opportunities, Chicago Public Schools, FrontLine Services, and NFP.

• Chicago

• Salt Lake Co.6

7

April 2017

Governments have nuanced objectives and motivations for using PFS

• Michigan

• South Carolina15

16

Maternal & Child

Health

Homelessness &

Family Stability

Early Childhood

Education

Criminal Justice /

Recidivism

Environment /

Sustainability

• Washington, DC171

2

3

• New York City

• Massachusetts

• New York State

• Salt Lake Co.4

• Santa Clara

11

Why Are Governments Using Pay for Success?

Improve outcomes for

constituents

Drive government

accountability by paying

for what works

Build pathways to

sustainable funding

streams

Scale service providers

and test efficacy

Leverage private

funding to build

“infrastructure” to scale

Build evidence-based

practices & develop perf.

management systems

• Oklahoma State5

9• Massachusetts

8• Cuyahoga Co.

Denver

10

• Salt Lake Co.13

• Connecticut12

• Santa Clara Co.14

14


OVERVIEW: CRIMINAL JUSTICE PFS PROJECTS

To date, 9 CJ projects have had executed contracts across 4 countries, with at

least 2 more in the pipeline

Source: http://www.socialfinance.org.uk/database/

New York City:

Juvenile Recidivism

(January ‘13)

4,458 juvenile ex-offenders

2

New York State:

Adult Recidivism &

Employment (December ‘13)

2,000 adult ex-offenders

3

Massachusetts:

Juvenile Recidivism

(January ‘14)

929 juvenile ex-offenders

4

Peterborough, UK:

Recidivism (September ‘10)

2,000 short-sentenced adult

ex-offenders

1

Netherlands:

Adult Recidivism &

Employment (June ‘16)

150 short-sentenced adult

offenders

5

Salt Lake County, UT:

Recidivism (December ‘16)

225 high-risk, high-need adult

offenders

8

New South Wales, Australia:

Parolee Re-Offending (July ‘16)

3,900 medium-high risk adult

parolees

6

Project Location:

Focus (Contract Execution)

Target Population

Service

Provider

Inter-

mediaryPayor

Ventura County, CA:

Recidivism (October ‘16)

400 medium-high risk

probationers

7

Oklahoma:

Prison Diversion (April ‘17)

Up to 625 women at risk of

incarceration

9

http://www.socialfinance.org.uk/database/

15


CASE STUDY: CONNECTICUT FAMILY STABILITY PROJECT

16


WHY PAY FOR SUCCESS?

1

6

Substance use is an immediate social and

economic problem

Impacts service array / availability of substance use

services

Increases reliance on costly out-of-home Placements

Increases length of out-of-home placements and

likelihood of re-referrals

…with compounding long term consequences

Continued Involvement with DCF (both for Families, and

for Youth “Aging Out”)

High Cost of Child Maltreatment

High Cost to State and Taxpayers

17


FAMILY-BASED RECOVERY (FBR)

17

Model

Components

Substance Use Treatment: Reinforcement-Based Treatment (RBT), an evidence-based

substance use program originating from Johns Hopkins University

Parent-child Attachment Component: Coordinated Intervention for Women and Infants

(CIWI) theory, attachment-based parent-child treatment developed at the Yale School of

Medicine

Motivational Interviewing techniques enhance in-home treatment

Families receive Case Management services to cope with occupational challenges,

transportation, and linkages to community-based services

FBR Social Club provides group therapy and is available for all current and previous

FBR clients

FBR promotes stable families, and safe and permanent homes for children

Intervention

Overview

Overview: FBR is an intensive, in-home parent-child attachment program for

families with young children at risk for: abuse and or neglect, poor development

outcomes, and/or removal, due to parental substance use

History: Family Based Recovery was developed in 2006 at the Yale Child Study Center

− In 2010, DCF allocated funding to offer FBR services statewide; currently ten FBR

teams are operating in CT, serving ~240 families each year

Evidence Base: The University of Connecticut Health Center conducted a Quasi-

experimental evaluation of FBR from 2007 to 2011; results indicated a 10.0 percentage

point decrease in the rate of removals at 12 months and a 12.1 percent point

decrease in the rate of referrals to DCF

18


CT FAMILY STABILITY PROJECT

Intervention

Impact Investors

The CT Family Stability project will provide $11.2M to expand Family Based Recovery

throughout the state of Connecticut

Intermediary

Evaluator

Outcome Payor

Target Population

500 DCF-involved families with a referred child under

six years old

Yale Child Study Center

Family Based Recovery

Service Providers

Community Mental

Health Affiliates

Community Health

Resources

Yale Child Study

Center

United Community

& Family Services

19


CASE STUDY: OKLAHOMA WOMEN IN RECOVERY PROJECT

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FEMALE INCARCERATION IN OK

1) “Prisoners in 2015”. US Department of Justice. https://www.bjs.gov/content/pub/pdf/p15.pdf

2) “Fact Sheet: Oklahoma Pay for Success: Family and Children’s Services – Women in Recovery”

3) “Report to the Governor, President Pro Tempore of the Senate, and Speaker of the House of Representatives”. Special Task Force for

Women Incarcerated in Oklahoma. http://digitalprairie.ok.gov/cdm/ref/collection/stgovpub/id/24545

4) Two main reasons for this: (1) women are more likely to need medical care in prison, and (2) female inmates are more likely to be custodial

parents, and society pays more to care for their children.

5) “Parents in Prison and Their Minor Children”. US Department of Justice. https://www.bjs.gov/content/pub/pdf/pptmc.pdf

6) “A Wealth of Inequalities: Mass Incarceration, Employment, and Racial Disparities in U.S. Household Wealth, 1996 to 2011.” The Russell

Sage Foundation Journal of the Social Sciences. http://www.rsfjournal.org/doi/full/10.7758/RSF.2016.2.6.07

• Highest female incarceration rate in the nation (151

per 100,000) by a wide margin; almost double the US

avg.1

• Average cost to incarcerate women in OK is $30,133 per

prison term, not including indirect costs such as foster

care and social benefit programs2

• Cost to incarcerate women in OK is 31% higher than

for men3,4

• 62% of women in state prison in the US have children

under the age of 185

• Incarceration can have devastating effect on the family;

Russell Sage Foundation found incarceration in the US

is linked with a 64% decline in household assets6

https://www.bjs.gov/content/pub/pdf/p15.pdf

http://digitalprairie.ok.gov/cdm/ref/collection/stgovpub/id/24545

https://www.bjs.gov/content/pub/pdf/pptmc.pdf

http://www.rsfjournal.org/doi/full/10.7758/RSF.2016.2.6.07

21


• Founded in 1925, Family & Children’s Services (FCS) mission is to “promote, support, and strengthen the well-being and behavioral health of adults, children, and families” in the greater Tulsa area1

• Today, FCS serves more than 110,000 individuals a year (1 in 6 Tulsans)2

• In 2009, FCS partnered with the George Kaiser Family Foundation (GKKF) to establish Women in Recovery (WIR), an evidence-based, best-practice program to address female incarceration

WIR works with women facing long-term prison sentences for nonviolent, primarily drug-related offensesProgram designed to serve women who are ineligible for any other diversion programs; WIR is the last resort for these women before incarceration

• Since 2009, WIR has served more than 570 women and impacted lives of more than 1,200 children with the following services:

Substance use and mental health treatmentComprehensive case management Court-related services (e.g. GPS monitoring)Transitional housing support Workforce readiness trainingEducation and vocational programsParent education and family therapy focused on family reunification

FAMILY & CHILDREN’S SERVICES (F&CS)

Behavioral health care services provider based in Tulsa

1) “Our Mission and Vision”. Family & Children’s Services. http://www.fcsok.org/about/our-mission-and-vision/

2) “About Us”. Family & Children’s Services. http://www.fcsok.org/about/

http://www.fcsok.org/about/our-mission-and-vision/

http://www.fcsok.org/about/

22


PROVIDE

INTERVENTION

Philanthropic re-investment PFS model puts WIR on a pathway to sustainability by

recycling outcomes payments into the program

OKLAHOMA WOMEN IN RECOVERY PFS PROJECT

PROJECT ADVISOR

POPULATIONS IN NEED

OUTCOMES PAYOR

INTERVENTION

UPFRONT FUNDING

Up to $10M ($2M per

year) for WIR service

delivery

1

SOCIAL SERVICE PROVIDER

Other

funders

FUNDERS

Women in Recovery (WIR)

Up to 625 women (125 per year) facing long-term prison sentences for

nonviolent, primarily drug-related offensesDELIVER SERVICES3

ACHIEVE

OUTCOMES4

PAY FOR SUCCESS

Total possible outcomes

payments of $14.1M.

Can be used for WIR

service delivery

5

2

23


THE EVOLUTION OF PAY FOR SUCCESS

24


PFS ISN’T ONE IDEA—IT’S A CONSTELLATION OF IDEAS

BUILDING EBP

FOUNDATIONS

PAY FOR

SUCCESS

CONTRACTING

FOR

PERFORMANCE

ACTIVE

PERFORMANCE

MANAGEMENT

DESIGNING

CROSS-SECTOR

PARTNERSHIPS

ASSESSING

PROVIDER

CAPACITY

FINANCING PFS

25


GOVERNMENT SUITE OF SERVICES CAN DRIVE IMPACT AT SCALE

DESIGN

• Define policy-

relevant outcomes

and metrics

• Develop

implementation

plans based on

key operational

inputs (program,

scale, geography)

• Develop data

systems to

measure impact

FUND

• Perform due

diligence and

select service

providers

• Develop contracts

linking payment

with measurable

outcomes

• Raise capital via

funders and impact

investors where

necessary

MEASURE

• Co-develop

measurement plan

with service

providers,

evaluators, and

government

• Work with

evaluators to

execute

measurement plan

ADAPT

• Distill insights from

ongoing project

data

• Facilitate

discussions re:

learnings with

project partners

• Take action with

project partners to

improve results

• Repeat!

ASSESS

• Identify challenges

that drive poor

social outcomes

and cost

governments,

individuals, and

communities

• Conduct target

population data

analysis

• Estimate cost-

benefit analyses for

potential evidence-

based solutions

• Engage and convene service providers, philanthropy,

civic leaders, government and community members

to address the challenge

• Facilitate ongoing stakeholder engagement

throughout project

ENGAGE

26


APPENDIX

27


OUR FIRM

• Founded in January 2011 by

David Blood, Sir Ronald Cohen,

and Tracy Palandjian

• One of the first dedicated PFS

intermediaries in the country

• Social Finance UK, was founded in

2007 and launched the world’s first

Social Impact Bond in 2010

• We partner with Social Finance UK

and Israel in the world’s only Global

PFS Network – we have launched

30% of all PFS projects worldwide

Our

Work

Social Finance, Inc. is a 501(c)(3) non-profit organization dedicated to

mobilizing capital to drive social progress

Social Finance is committed to using Pay for Success to tackle complex social challenges, facilitate

greater access to services for vulnerable populations, and direct capital to evidence-based social

programs — all with the goal of measurably improving the lives of people most in need.

Our History Our Global Network

• Team of 40 includes experienced

professionals from the public,

private, and nonprofit sectors

• Three offices in Boston, MA,

Austin, TX, and the Bay Area, CA

Our Team

• Social Finance has deep experience in the design and implementation of Pay for

Success projects, from early stage feasibility assessment, to project development and

capital formation, to post-launch performance management support

• We have conducted 30+ feasibility studies and are actively developing or managing

15+ PFS projects across a diverse array of issue areas around the country

28


WHAT WE DO

Our Services

Advisory

ServicesSocial Investment

Active Performance

Management

Explore Potential Develop Projects Mobilize Capital Manage for Results

We partner with

governments and

foundations to

assess promising

programs that could

benefit from PFS

financing.

We develop PFS

projects that

improve social

outcomes and

generate financial

returns.

We mobilize capital

to support PFS

projects and put

capital to work in

service of society.

We ensure our projects

stay on track and drive

positive results for

communities in need.

Field Building and Market Education

Through research, advocacy, and publications, we support the

development of the Pay for Success market and the broader impact

investment movement.

INTRODUCTION TO PAY FOR SUCCESSnadcpconference.org/wp-content/uploads/2017/06/SB-5.pdfFamilies receive Case Management services to cope with occupational challenges, transportation,

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