$2.5 Million Effort to Catalyze Innovative Model of Paying for Improved Social Services
SAN FRANCISCO, Jan. 28, 2014 /PRNewswire-USNewswire/ -- Nonprofit Finance Fund (NFF) and The James Irvine Foundation launched a new initiative today designed to make the "Pay for Success" model a reality in California, with an initial $2.5 million in funding.
Pay for Success is an approach to funding social services designed to improve outcomes and ultimately reduce the costs of addressing these issues. In a Pay for Success agreement, private investors provide funding for preventative or interventional services up-front, and government reimburses these investors with a return on their investment, only if results are achieved. In doing so, private investors take on initial risk, governments only pay for outcomes, and cost-saving programs with demonstrated effectiveness have access to new funding from private sources. While Pay for Success projects are underway in a few other states, there are none yet launched in California.
The California Pay for Success Initiative will provide flexible funding and expert support to help nonprofit and government leaders structure Pay for Success agreements in California over the next two years. In addition to helping finalize these agreements, the Initiative will nurture a cohort of leaders that will learn from each other and share knowledge as they take Pay for Success from concept to reality.
Nonprofit Finance Fund will select approximately three to eight leaders throughout California to support through an initial round of funding, with additional funding available to these leaders throughout the year. Participants will form an active learning cohort and will have opportunities to share experiences, challenges and results with the goals of further testing the Pay for Success concept and expediting additional Pay for Success agreements. Applications are now open at: http://nff.org/CaliforniaPFS.
"Pay for Success has generated tremendous interest and excitement as a concept," said Don Howard, Executive Vice President of The James Irvine Foundation. "But, these are complex agreements that are difficult to develop because they require multiple partners to do business in new ways. That's why so few Pay for Success agreements exist nationally, with none yet in place in California. Our goal is to catalyze the creation of these agreements so that the promise of Pay for Success can be realized for the benefit of all Californians."
Pay for Success is at a critical moment in its evolution, where a significant investment in supporting the design and structuring of new projects is poised to deliver tangible benefits to people in need. This initiative comes at a time when governments increasingly struggle to provide critical services, and leaders in all sectors are exploring how to better concentrate resources around proven approaches to creating positive change. Pay for Success is still in an experimental stage, and the California Pay for Success Initiative is designed to provide the resources needed to determine the role it may play in the future of social problem-solving.
NFF brings expertise in innovative as well as traditional approaches to financing social good, providing tailored strategic expertise, financial guidance and loans to social sector organizations. NFF has worked with foundation, government and nonprofit partners across the country on Pay for Success efforts and, through this initiative, will partner with experienced intermediaries and technical assistance providers to provide critical support to usher Pay for Success projects from concept to reality across California.
"Social problem-solving requires creativity as well as perseverance," said Antony Bugg-Levine, CEO of Nonprofit Finance Fund. "Leaders pursuing Pay for Success agreements need both. Ultimately, we're committed to supporting services that serve communities. Beyond the benefits to Californians, we expect that the experiences of participants will be instructive elsewhere as we explore new ways to address pressing issues and fund social good."
About The James Irvine Foundation
The James Irvine Foundation is a private, nonprofit grantmaking foundation dedicated to expanding opportunity for the people of California to participate in a vibrant, successful and inclusive society. The Foundation's grantmaking focuses on three program areas: Arts, California Democracy and Youth. Since 1937 the Foundation has provided over $1.3 billion in grants to more than 3,500 nonprofit organizations throughout California. With about $1.7 billion in assets, the Foundation made grants of $69 million in 2013 for the people of California.
About Nonprofit Finance Fund
Nonprofit Finance Fund (NFF) unlocks the potential of mission-driven organizations through tailored investments, strategic advice and accessible insights. Founded in 1980, NFF helps organizations connect money to mission effectively, and supports innovations such as growth capital campaigns, cross-sector economic recovery initiatives and impact investing. A leading community development financial institution with over $80 million in assets, NFF has provided $280 million in loans and access to additional financing via grants, tax credits and capital in support of over $1.4 billion in projects for thousands of organizations nationwide. NFF is headquartered in New York City and serves clients from five offices across the country, including in Los Angeles and San Francisco.
SOURCE Nonprofit Finance Fund