One of the most valuable roles a foundation can play is to invest in promising solutions being tested out by talented leaders at a moment in time when, if they succeed, a breakthrough just might be possible.
I’m excited to announce a new initiative that strives to do just that. Today, The James Irvine Foundation, in close partnership with the Nonprofit Finance Fund, launches the California Pay for Success Initiative, initially funded with $2.5 million, designed to make the “Pay for Success” model a reality in California.
Pay for Success is a creative approach to funding social services, with potential to bring new, significant, and reliable resources to proven preventative programs. In a Pay for Success deal, private investors pay for preventative or interventional social services up front. Should 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. It is a model designed to both improve outcomes and reduce costs.
There is a clear need to scale proven prevention programs, and there has been tremendous interest by impact investors, yet despite this, few Pay for Success deals exist. And, though our state has a long history of innovation, no such deal has tested this concept in California.
The California Pay for Success Initiative is designed to help with this. The Initiative will provide up to eight selected leaders throughout California with flexible funding and expert support to help them structure Pay for Success agreements in 2014 and 2015. In addition to helping finalize these agreements, the Initiative will nurture a cohort of leaders to learn from each other and share lessons about working on Pay for Success agreements—lessons that can also be shared with the entire sector, as the concept is further tested. For questions about this initiative, please contact: Jessica LaBarbera, Director, Nonprofit Finance Fund.
Here at Irvine, this is also a bit of an experiment for us. Outside of our three main program areas, we want to stay flexible in our grantmaking, and seize moments in time where we can spur solutions and expand opportunity. The Pay for Success Initiative is an example of just that. We look forward to seeing what our partners and California leaders can learn through this Initiative, and we look forward to sharing it with the field. As always, we welcome your thoughts and suggestions as we continue to expand opportunity for the people of California.