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Topic: human services

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January 23, 2014 at 6:25 AM

Pay for performance coming to Washington social services?

Across the globe, an unlikely pairing is cropping up. Private investment capital is being tapped by cash-strapped public human services agencies to boost prevention programs. If the prevention programs produce cost-savings, investors get a cut.

Money goes in to a prevention program. If it works, investors are rewarded. / IMAGE COURTESY OF SOCIAL FINANCE

Money goes in to a prevention program. If it works, investors are rewarded. (Image courtesy of Social Finance)

This “pay for performance” model, also called social impact bonds, is cutting-edge stuff, still theoretical. It was pioneered in the U.K. in 2010 to cut criminal recidivism at the Peterborough Prison. Although that data isn’t in yet, it has, as a Los Angeles Times editorial last week described, “become the talk of the financial and nonprofit worlds, and now governments, nonprofits and financiers are clamoring for a piece of the social impact bond action.”

New York is trying it to reduce recidivism for Rikers Island inmates. Massachusetts is trying to save money on emergency care by providing housing for the chronically homeless. Utah and Santa Clara, Calif., also have projects.

It now may be on the way to Washington state.


Comments | Topics: human services, Washington State Legislature