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Pay for Success Solicitation

The Pay for Success (PFS) model is a new way of financing social services to help governments target limited dollars to achieve a positive, measurable outcome. Under the Pay for Success model, a government agency commits funds to pay for a specific outcome that is achieved within a given timeframe. The financial capital to cover the operating costs of achieving the outcome is provided by independent investors. In return for accepting the risks of funding the project, the investors may expect a return on their investment if the project is successful; however, payment of the committed funds by the government agency is contingent on the validated achievement of results. In this way, the PFS model shifts the burden of investment risk from the government to private investors, effectively creating a social investment market where the government only pays for results.

ETA awarded almost $24 million in two grants to pilot the Pay for Success model funded by the Appropriations Act, 2012 (P.L. 112-74, Div. F, Tit. I) and the Consolidated Further Continuing Appropriations Act, 2013 (P.L. 113-6).