Pay for Success, Social Impact Bonds and Funding Innovative Schooling

Pay for Success Models, including Social Impact Bonds, have a relatively limited and recent history in the United States. These innovative, public-private partnership financing structures have been utilized over the past decade to address important social challenges such as housing insecurity, recidivism rates for juvenile offenders and advancing early childhood education opportunities. But despite numerous advantages these programs can offer for supporting innovative education models, like microschools, and specific provisions in federal legislation laying out how they can work, such initiatives have not yet materialized.

Pay for Success is designed so that the government only pays for a program if its outcomes are achieved, thus shifting the risk of failure to investors. Programs combine the ability to encourage innovation, reduce financial risks to taxpayers, improve outcomes by offering increased flexibilities, and emphasize proactive interventions rather than remediating existing problems.

This report discusses prominent Pay for Success and Social Impact bond programs of the past decade, including program results and details, different partners and the roles they have played. It explains how these models work and discusses advantages, and some concerns, about the particular program details and structures utilized. Finally, it explains how different microschools can be particularly well positioned to succeed supporting nontraditional learning models for primary and secondary aged students, and what social benefits could be realized by positive results.

You can download Pay for Success, Social Impact Bonds, and Funding Innovative Schooling Here.