Publication Excerpt:

It seems that wherever you turn people are talking about Pay for Success (PFS) financing as a new way to increase funding, through private sector investment partners, for services that address important social challenges. Under Pay for Success financing, government funding is transformed from payment for services to payment for outcomes. Thus, preparing for PFS financing can help organizations build capacity for outcomes-based, data-driven management. In this policy brief, we explore whether PFS financing could be used to supplement (not replace) core government funding for child care for infants and toddlers, in order to increase access to and the quality of this vital service.

Many interventions targeted at young children appear to be well suited to PFS financing because of the g rowing research base showing that effective early childhood programs produce long-term benefits for children and communities. One of the first four PFS transactions in the US finances a pre-K prog ram in Utah and two more early childhood PFS deals are in the negotiation stage. A spring 2014 conference ICS organized for the business group ReadyNation2 revealed significant interest among state and local governments, foundations, and private investors in using PFS financing to expand and improve services for young children.