A surfeit of articles to consider, led by the excellent offices of Tracy Palandjian, have a great weekend:
Response To “The Payoff Of Pay-For-Success”
Tracy Palandjian & Jeff Shumway – SSIR
As V. Kasturi Rangan and Lisa Chase point out in their article “The Payoff of Pay-for-Success,” pay-for-success is an innovative financial tool “generating more than a moderate amount of attention.” In part, this is because pay-for-success (PFS) sits at the intersection of three powerful movements that are reshaping the social sector: “moneyball for government” (driving public resources to evidence-based programs), “transformative scale” (achieving impact at scale to solve social challenges), and “impact investing” (using capital productively to create both social and financial returns).
Enthusiasm, as is often the case in new markets, belies the pace of progress. Today, there are only seven PFS deals that have reached the market in the United States. Rangan and Chase, in their article, review these and offer predictions for the sector’s future.
Their research into these seven transactions is thoughtful and detailed. Their predictions for the future, however—from our perspective as practitioners—are based on three flawed assertions: first, that governments care about PFS solely to drive monetary savings; second, that linking nonprofit funding to measured outcomes will negatively affect the social sector; and third, that private investors in PFS are seeking either profit or impact—but not both. These assumptions lead Rangan and Chase to conclusions with which we disagree.
After Pay For Success: Doubling Down On What Works
Sam Schaeffer, Jeff Shumway, & Caitlin Reimers Brumme – SSIR
It’s time to start talking about what governments will do when pay for success (PFS) projects that are funding social services end. While only a handful of projects are currently in progress across the United States, a robust pipeline could result in several more launching over the next year. Many will feel like pilots, as government, providers, intermediaries and investors are still gaining familiarity with this new contracting mechanism. Immediate challenges will likely center around setting up referral pipelines, designing evaluation methodologies, and making necessary mid-course project corrections. While for these early projects, the first evaluation results may be years away, we should not put off the conversation about what happens after the last participant in a project receives services. We need to keep discussion about program sustainability front and center.
Social Impact Investing: Anthea Gardner – Managing Partner, Cartesian Capital
Siki Mgabadeli – Moneyweb
Social impact investing refers to investments made into companies, into organisations and funds in order to generate a measurable beneficial social impact alongside financial returns. So it’s a form of socially responsible investing. It serves as a guide for various investment strategies.
Interview with Anthea Gardner, who is managing partner at Cartesian Capital.