We at Nonprofit Finance Fund (NFF) took great care in redesigning the Pay for Success Learning Hub for, and based on, input from a variety of stakeholders. This endeavor allowed us to identify and address gaps in knowledge and information needs in the field. One notable gap was that we—still—heard a clamoring for a stronger shared language. To address this gap we created the glossary, a living resource of terms. This piece highlights how the pursuit of the glossary structured the Hub to flexibly capture different types of projects and proposes a definition of “launch.”
While Pay for Success has made impressive strides in cross-sector collaboration, common language remains a hurdle. What constitutes a ramp-up versus a pilot? Does an intermediary differ from a transaction coordinator? Given the pace of innovation in the Pay for Success (PFS) field, and its position at the intersection of the private, public, and social sectors, there is a continuous need to rapidly refine and clarify language. Even the definition of one of the most important terms, a “launched” project, lacks consensus in the field, with each stakeholder having their own slightly different take on what constitutes one. The debate that surrounds this term, however, is part of a larger discussion around the project life cycle of each PFS deal.
On the PFS Learning Hub, projects are represented as moving through three states: In Development, In Progress, and Finished. In Development is a catch-all term that includes exploration, feasibility, and transaction structuring. An example of exploration includes early administrative data initiatives that may one day lead to PFS projects. Next, In Progress reflects a project that has started to deliver services. To this end, it includes both projects that are “launched” as well as those in ramp-up or pilot phases. For example, the Illinois Dually-Involved Youth Project is considered In Progress as it is completing a year and a half ramp-up, serving 71 youth, prior to officially launching. The final stage of the project life cycle is Finished. A project will be classified as such at the completion of its contract, with Finished either meaning a project that has completed service delivery and its evaluation period and may have payments disbursed, or, alternatively, a project where a termination event was triggered. Currently the only Finished project on the Hub is the NYC Able Project for Incarcerated Youth (also known as the Rikers Island Project).
While projects that move methodically from In Development to In Progress to Finished are straightforward, what about the rest? There’s a tongue in cheek phrase in the field that a PFS project will die many deaths before it gets off the ground; however, not every project rises in the same way and launches. For this reason, the Hub also contains an “Other” designation for projects that take a different path. For example, the initiative in the City and County of San Francisco completed feasibility but its partners found they were not yet ready for PFS. Instead, they chose to invest in data and infrastructure programs. Other projects may have been ready for PFS, but a different path is chosen, like in the City of Tempe Human Services Administration, where the results of a feasibility study led the government to fund the program pilot without using PFS financing. Of course there are also those that hit just one too many challenges, like the beleaguered Hillside project that progressed far into transaction structuring work before petering out. For each one of these projects that did not end up as a PFS deal, its project page includes an italicized note on the new direction taken. Publicly documenting, sharing and learning from stakeholders , even if projects don’t work out as planned, is critical to continuing to move the field forward.
While we developed the Pay for Success Hub to be more flexible and inclusive of project progress, we aren’t shying away from proposing criteria for a launched project. We hope this serves as the starting point for robust discussions and gives the field a more cohesive sense of exactly how many projects are active in the United States:
1. All contracts have been signed: this includes the PFS contract as well as the lending contract(s).
2. Services are being delivered.
3. The project is drawing on lending capital, or there is capital at risk.
4. The project is no longer in a pilot phase. A pilot phase indicates an assessment of whether the program is effective for the target population; it is independently evaluated and is linked with a possible termination event should the project prove to not be effective for the target population. This is different from a ramp up phase, which may be excluded from the evaluation, but is ultimately used to refine processes to operationalize the start of the transaction.
5. The overall project evaluation has started.
How do you think we, as the Pay for Success field, should define a “launched project?”