Pay-for-Success: Big Strides in Doing Well By Doing Good

Laura D. Tyson

In their latest column for Project Syndicate, Laura D. Tyson and Lenny Mendonca outline the accelerating pace of pay-for-success pilot projects in Republican and Democratic states alike.

The projects are testing promising new strategies to tackle problems from chronic homelessness to recidivism to gaps in early childhood education.  They are flourishing in states as red as Utah and Kentucky and as blue as Massachusetts.  Indeed, almost $100 million has been invested in such programs – most of it in the past two years.

“If you get most of your ideas about government from speeches by America’s Republican presidential candidates, it’s easy to believe that the US federal government is incapable of doing anything right,” write Tyson and Mendonca.

“But not even the Republicans actually believe it. The proof is just beneath the surface, where a remarkable bipartisan consensus is emerging around an approach to America’s most serious social problems….that combines the best principles of conservatism and progressivism.”

Tyson and Mendonca see it as an excellent example of “progressive federalism.”   Private investors, nonprofits and philanthropic foundations provide most of the upfront money, and are repaid only if the project achieves its goals – as verified by independent quantitative evaluation.

The federal government plays a role, and the Obama administration has provided strong support for feasibility studies around the country, but most of the work is done at the state and local levels.

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