Nonprofit Finance Fund receives $3.6 million from Social Innovation Fund to Accelerate "Pay for Success" Projects

WASHINGTON, Oct. 1, 2014 /PRNewswire-USNewswire/ -- The U.S. Corporation for National and Community Service (CNCS), through its Social Innovation Fund, has awarded Nonprofit Finance Fund $3.6 million to advance Pay for Success projects across the U.S. "Pay for Success" is an approach to funding critical social services that aims to deliver better results by addressing problems at an early stage and using taxpayer dollars to pay only for demonstrated success. Under the Pay for Success model, governments identify promising programs with the potential to solve high-priority social problems, and private investors cover the cost of those programs up front. An increasing number of cities, counties and states are now exploring Pay for Success financing to support programs that are working to reduce homelessness, lower rates of recidivism, expand access to early childhood education and address other social issues. Nonprofit Finance Fund (NFF) will use the award to support service providers, governments and their partners as they develop Pay for Success agreements.

The award is part of a new $12 million federal investment in Pay for Success initiatives announced today at an event co-hosted by the U.S. National Advisory Board on Impact Investing, the Social Innovation Fund, and the Beeck Center for Social Impact and Innovation at Georgetown University.

"Pay for Success has the potential to dramatically improve the way we fund certain social services, ultimately leading to more just and vibrant communities," said Antony Bugg-Levine, CEO of Nonprofit Finance Fund. "Beyond the small number of organizations that will directly participate in a Pay for Success contract, many others stand to benefit as the Pay for Success movement brings together nonprofits, governments and business partners in the pursuit of shared goals to improve life for people in need."   

The Social Innovation Fund (SIF) is about finding solutions that work and making them work for more people. It combines public and private resources to grow the impact of innovative, community-based solutions that have compelling evidence of improving the lives of people in low-income communities throughout the United States. In 2014, Congress increased SIF's budget by 40 percent from 2013, making it the largest grant pool in the history of the program. This budget increase has allowed SIF to launch its first Pay for Success program, designed to accelerate and diversify Pay for Success activity across social issue areas, geographies and implementing organizations.

The funding from the Social Innovation Fund, along with an additional $720,000 in support from the Laura and John Arnold Foundation and pro-bono legal services provided by Orrick, Herrington & Sutcliffe LLP, will allow NFF to help organizations that are working to meet the demand for social services in their communities.  That is currently a challenge for many nonprofits.

"By using Pay for Success financing, governments are able to expand promising programs at no risk to the taxpayers," Laura and John Arnold Foundation Vice President of Public Accountability Josh McGee explained. "We are pleased to join the Social Innovation Fund in supporting NFF and its efforts to promote this innovative financing structure."

In a Pay for Success agreement, private investors provide funding for services up front, and government reimburses these investors based on the results achieved. Organizations that can demonstrate how their programs deliver value to participants and communities will benefit from new sources of capital, which will increase their ability to deliver services.

NFF will provide sub-grants through an open, competitive application process launching in early 2015, and is the only grant recipient focused on late-stage support to bring Pay for Success agreements to fruition. NFF will work with governments and organizations that have near-term opportunities to implement Pay for Success projects that have already been deemed viable through feasibility assessments. NFF's efforts will create tools that will assist those who are moving projects toward implementation.

"The thriving community of the future will be one where business, government, and nonprofits work together to discover innovative, effective solutions and tap new sources of capital to help these solutions grow," said Lisa Garcia Quiroz, CNCS Board Chair and Senior Vice President, Corporate Responsibility and Chief Diversity Officer at Time Warner Inc. "I am proud that CNCS and the Social Innovation Fund are helping to usher in this new era by providing the resources, expertise, and evaluation needed to catalyze action and results."

"We could not be more enthusiastic about our inaugural class of Pay for Success grantees," said Michael D. Smith, Director of the Social Innovation Fund. "They represent a diverse group of highly effective organizations and social enterprises at the cutting edge of social financing and innovation. Their work will lead to one of the largest scale, and most comprehensive, demonstration projects of when, why and how Pay for Success can be a powerful catalyst to sustain effective solutions to challenges facing communities in greatest need."

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 $320 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's Pay for Success team has worked with organizations across the country to help them evaluate opportunities, explore partnerships, and advance agreements. NFF also curates a Pay for Success Learning Hub, www.payforsuccess.org. NFF is headquartered in New York City and serves clients from five offices across the country.

The Corporation for National and Community Service is a federal agency that engages more than five million Americans in service and champions community solutions through its AmeriCorps, Senior Corps, Social Innovation Fund, and Volunteer Generation Fund programs, and leads the President's national call to service initiative, United We Serve. For more information, visit NationalService.gov.

The Social Innovation Fund (SIF), a key White House initiative and program of the Corporation for National and Community Service (CNCS), combines public and private resources to grow the impact of innovative, community-based solutions that have compelling evidence of improving the lives of people in low-income communities throughout the United States. The SIF invests in three priority areas: economic opportunity, healthy futures, and youth development.

In just a few years the Social Innovation Fund (SIF) and its private-sector partners have invested more than $700 million in compelling community solutions— $243 million in federal grants plus $540 million in non-federal match commitments in 35 intermediary grantees and 217 nonprofits in 37 states and the District of Columbia.

SOURCE Nonprofit Finance Fund