Giving Compass’ Take:
• Liz Farmer, writing for Governing, explores a new initiative that helps veterans get jobs. It’s the first pay-for-success program tied to veteran programs.
• Some say pay-for-success projects have hidden costs, but are the advantages — the potential for a large investor payoff — worth it?
• Stanford Social Innovation Review explores when pay-for-success models make sense.
Veterans often struggle to find and keep jobs. If they have mental health issues, that only exacerbates the struggle. That’s where a joint state and local pilot project — the first of its kind — hopes to help.
“We’re not just talking about employment but better health outcomes for PTSD sufferers. The hope is to change the trajectory of that veteran’s life,” Melissa Glynn, an assistant secretary for the U.S. Department of Veterans Affairs (VA), said in a conference call with reporters. “We are looking at this as a way to combat suicide.”
The VA is working with the state of Massachusetts and the cities of Boston and New York to connect 480 veterans to civilian jobs that stick. What’s novel about the joint effort is how its being funded: by so-called pay for success or social impact bonds.
Pay for success projects are financed by private investors that only get paid back and then some if certain benchmarks are met within a specified timeframe. The projects are run by public institutions and have certain measurable outcomes and goals that aim to benefit society — in this case, employing veterans. If those goals are not met, the investors don’t receive their money back. This funding structure minimizes the financial risks for governments.
Read the full article about pay-for-success by Liz Farmer at Governing magazine
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