The Payoff of Pay-for-Success

Pay for SuccessIn their SSIR article “The Payoff of Pay-for-Success,” Kash Rangan and Lisa Chase argue that Pay-for-Success models are a powerful new tool but relevant only for a select group of nonprofits that can a) “effectively deliver and measure their social impact” and b) “translate that impact into financial benefits or cost savings that are traceable to [government] budgets.” They cite Roca as a great example of an organization that meets both criteria, and we agree. Roca signed its Pay-for-Success contract with the Commonwealth of Massachusetts in 2014. If Roca is successful in reducing recidivism rates below a set of agreed-upon targets, everyone wins. Massachusetts will save money, investors will make a solid profit, Roca will receive robust revenues it can use to expand, more young men will stay out of prison, communities will be safer, and the nonprofit sector will gain invaluable information on how to make this new funding stream work for nonprofits that meet Rangan and Chase’s criteria.

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