The Community Outcomes Fund provides outcomes financing (also known as pay-for-success) that matches private capital with local priorities, realigning government programs with evidence-based solutions to social challenges.
Outcomes financing is a next-generation public-private partnership that offers a promising way to combine market discipline with performance management. The approach enables federal, state and local governments to partner with high performing service providers and use private capital to expand social programs. Government identifies a priority and target population, sizes the targeted impact and then identifies a service provider with the capacity to deliver meaningful outcomes successfully. Investors provide the upfront working capital to scale services, shifting the risk of impact from the government to the private sector and are repaid based on demonstrated outcomes.
Expanding Access to Pre-K in Memphis and Shelby County
One thousand pre-K seats were set to disappear in Shelby County, TN, due to an expiring federal grant in the summer of 2019. Yet, research shows that a quality early education is critical for long-term educational outcomes, especially for children from low-income or high-risk settings. In Shelby County, where 45% of children live in poverty, the City and County leadership recognized they could not afford to lose those seats. The City and County leadership committed not only to fund those 1,000 seats, but to dedicate dollars over the subsequent years to reach universal, needs-based pre-K.
Using an outcomes financing structure, the City and County were able to align their dollars with student outcomes. Together with First 8 Memphis, the Urban Child Institute, the City of Memphis, Shelby County, and Maycomb Capital's Community Outcomes Fund 1,000 seats of high-quality, full-day pre-K was financed for four-year olds in the community.
Massachusetts Pathways to Economic Advancement
Two hundred and thirty thousand individuals in the greater Boston area face barriers to employment and high-quality jobs because of limited English language proficiency. As a result, these individuals experience significantly lower annual income that is on average $24,000 below their English-fluent peers. Those with limited English have a 40% unemployment rate and if they are employed, they often hold low-wage positions with limited room for career advancement.
This outcomes financing project supported contextualized English language and workforce development services as well as job placement and coaching for 1,810 New Americans. The service provider, Jewish Vocational Services (JVS) is one of the largest community-based providers of adult education and workforce development services in Greater Boston. The Commonwealth of Massachusetts paid for outcomes, including the success of participants in making transitions to employment and earning higher wages.
WHAT IS OUTCOMES FINANCING?
In communities across the country, social challenges persist while resources remain stagnant or even decline. Today, more than ever, governments must find ways to smartly spend scarce dollars. Outcomes financing has emerged as a promising way for local governments to fund what works and improve outcomes for disadvantaged communities.
Government and community leaders define outcomes they want to achieve; develop procurements and contracts that pay based on results achieved, rather than services performed; and mission-driven investors provide financing to the service providers.
WHO IS THE COMMUNITY OUTCOMES FUND?
The Community Outcomes Fund is a dedicated pool of mission-driven private capital for outcomes financing. The Fund has significant capital to invest in these next-generation public-private partnerships that scale high-quality human service programs for low-income communities. For policymakers, this means increasing accountability and transparency in the contracting for and delivery of human services. For communities, outcomes financing can help drive better outcomes for individuals and families.
HOW DOES IT WORK?
With outcomes financing, government and community leaders and other partners come together to leverage private dollars to fund the upfront delivery of high-quality services, where investors are repaid based on the program achieving meaningful outcomes.
identifies priorities and pays for meaningful outcomes only
PROJECT MANAGER/SERVICE PROVIDER
receives resources to expand programs aligned with community priorities
deploys working capital
upfront to fund services
receive services that
improve local outcomes
WHAT DO WE LOOK FOR?
LEADERSHIP & SUPPORT
Strong political leadership and community support for addressing a community need using an outcomes-based approach
STRONG PROVIDERS WITH THE CAPACITY TO SCALE
Service providers with a track record of delivering high-quality programs and demonstrated operational and strategic capability to grow their operations and serve more community members
ACCESS TO DATA
Data that can demonstrate the outcomes achieved by individuals and families as a result of participation in particular human service programs and is accessible to project partners
AVAILABLE FUNDING FOR OUTCOMES PAYMENTS
Funds identified that can be used to pay for outcomes, which could include local or federal sources, existing or new funds