Pay for Success: Driving Systems Change

Bloomberg Philanthropies Announces Inaugural Cities to Receive What Works Cities Certification

Tracy Palandjian and Anna Fogel

At Social Finance, we have learned a lot from our experience in launching the Pay for Success field, which is now at almost 100 projects globally. As we grow the model, we are increasingly focused on how the tools of Pay for Success can help governments design, fund, and manage effective social services, all with the goal of achieving better outcomes for people in our communities. As we describe in our recent SSIR article, Pay for Systems Change, we believe the real potential for the Pay for Success movement lies in developing capacity for local governments to leverage these tools and revamp public spending on social programs.

That is why we’re excited about Bloomberg Philanthropies’ announcement of the inaugural cohort of nine cities to achieve What Works Cities Certification, a first-of-its-kind national standard of excellence in city governance. The Certification process focuses on six core elements which are central to our work in Pay for Success: data governance, open data, performance analytics, results-driven contracting, low-cost evaluations and re-purposing for results. And it has established a rigorous process and benchmark for cities in assessing their use of data to inform effective spending decisions. Importantly, beyond the process and selection of these nine cities, it has generated interest in these important considerations from across the country; more than 230 cities expressed interest in the program and more than 180 applied for Certification.

We were thrilled to see cities that are leaders in the Pay for Success field included in the list of inaugural cities, including Boston, San Diego and Los Angeles. And we were excited to learn about cities exploring important data-driven practices that haven’t yet explored Pay for Success. These cities have demonstrated their commitment to and investment in internal capacity building to use data-driven approaches in their spending decisions; in our work with 50+ jurisdictions, we’ve learned that this capacity building is one of the most challenging parts of pursuing Pay for Success or other performance-based financing structures.

Finally, we’re excited to see what’s next for this inaugural cohort of cities and their peers. This Certification could set cities up to more effectively explore other tools in social services spending, leveraging their significant progress in using data to more quickly develop Pay for Success projects or Outcomes Rate Cards. It could also impact their conversations with other potential partners, such as impact investors and philanthropy who are eager to support cities in new ways focused on improving citizens’ outcomes. We will be closely following along and look forward to continuing to partner with many of these cities going forward.