Nonprofit Finance Fund (NFF) spoke with Partnership about the organization’s exploration of Pay for Success (PFS) in multiple locations across the country. This blog is part of NFF’s ongoing Pay for Success Pioneers blog series, which interviews PFS leaders to provide insight into PFS projects and amplify lessons learned so those interested in outcomes-based efforts can stand on the trails blazed by these early actors.
Nurse-Family Partnership (NFP), a national nurse-led maternal health and home visitation program for low-income, first-time mothers, is exploring PFS as a means to expand its programs to serve an unmet demand for services in South Carolina, New York and California. NFF has had the opportunity to work with NFP on two separate PFS explorations. In 2014, NFP received funding from the California Pay for Success Initiative, a program overseen by NFF with support from the James Irvine Foundation. In 2015, NFP was also selected as a grantee of NFF's Social Innovation Fund Pay for Success transaction structuring competition. NFF spoke with Roxane White, Chief Executive Officer, and Tamar Bauer, Chief Policy and Government Affairs Officer of NFP to further understand why the organization is considering PFS and what they have learned from these efforts thus far.
NFF: Tell us about the impetus behind NFP’s exploration of PFS. What were the organization’s top motivations for pursuing this work?
Tamar: We first learned about PFS in mid-2012. We brought the concept to our board in May 2013 and decided to move forward with pursuing PFS funding for two reasons. First, PFS is a strategy that is very much aligned with NFP’s core values: a commitment to evidence and transparency about outcomes. Second, and perhaps most important, with a growing number of families falling into poverty in our country, the demand for NFP’s services is far outpacing our ability to grow with existing public and private resources. We see PFS as a viable way to serve more families as soon as possible. We also see an opportunity to use PFS to further demonstrate NFP’s value to a community. We hope that PFS will make it possible to bring our nurses to more moms who need them, demonstrate the promise of improving population health, and break multi-generational cycles of poverty.
NFF: What were some of the concerns that NFP had about pursuing PFS? What aspects of PFS were a tougher sell to the organization’s stakeholders?
Tamar: The hardest sell was the complexity. We knew it would be difficult to estimate the resources [budgetary, intellectual, etc.] required, given so many unknowns. We also worried about risks to our reputation. What would happen if we failed to achieve the outcome metrics? Overall, would the juice be worth the squeeze? NFP’s focus on and previous investments in learning and systems made us feel that PFS was less of a risk and more of an opportunity to continue improving services for mothers and children. We had confidence in our deeply experienced implementation partners, our rigorous evidence base and our data-driven implementation structure. We also were concerned about the possibility that PFS would cannibalize philanthropic capital and be used to crowd out or replace existing public funding for NFP services. This has not happened to date, but remains an issue that we closely track.
Roxane: We have an ongoing concern with philanthropic capital, because as you all know, funders like to see new practices and new thinking, and some are inclined to move from existing program support to back ‘new things’. So we need to ensure that we can continue to do our current, core work every day even as we look to engage in PFS agreements that let us expand. It’s a continuing conversation, and having the courage to discuss these concerns with funders is a really important part of cultivating an honest and open relationship.
NFF: How have you balanced the different, and perhaps even competing, interests of the various partners (i.e. governments, service providers, and funders) to NFP in PFS projects?
Tamar: We have found remarkable agreement among partners around the ultimate goal: serving more families and achieving positive outcomes. I believe that a shared vision is driving the parties in each of the projects that we’re working on. Our primary interest is to provide quality services to more families. Investors want to make sure that we have enough resources to achieve strong implementation. Government leaders in the states where we are working are committed to smart use of taxpayer funds to achieve outcomes. While the process is not without tensions, there are reasonable discussions and there is alignment around this ultimate goal. NFP has had the good fortune to work with incredible partners in all states and counties so far, with a shared sense of excitement about the potential of what we are creating together.
NFF: You’re working on or exploring projects in South Carolina, New York, California and other states. What are you learning from working in so many diverse places?
Roxane: You’ve got to get back to the context of each state and what each state is looking for in terms of maternal and child health outcomes. South Carolina, for instance, did not expand its Medicaid population. Leaders there have different goals than those in New York, where leaders have specific objectives around expansion of the Medicaid population and services. One of the things that we have to be thinking about is: what is it that the state is trying to address, that they see as primary concern for their citizens? With that context, it varies a lot.
Tamar: With support from the California Pay for Success Initiative, we have learned a great deal already. We went through a productive feasibility analysis process with the City and County of San Francisco to explore the viability of a PFS project. The analysis showed relatively good baseline outcomes and the majority of economic benefits accruing to state or federal levels. Baseline outcomes were better than expected partly because data were not available for the higher risk subset of Medicaid families that NFP serves. Thus leaders in San Francisco decided, and we agreed, that PFS is a less optimal way to scale the program for the City and County. However, we continue to work with leaders in San Francisco to reach the common goal of improving maternal and child health outcomes by expanding NFP there, and investigating a PFS model seems to have galvanized County leadership to consider the most effective means to scale our program from both a cost and impact standpoint, even though ultimately they determined that it wasn’t PFS. San Francisco recently added three Nurse Home Visitors to their team, meaning that they can reach at least 75 more moms!
Roxane: One of the things that Tamar and our board spent a lot of time really getting clear throughout the organization was that we couldn’t fall in love with the deal more than the expansion of our services. So there have been a couple of times when we have walked away from potential PFS deals because they didn’t meet our internal growth goals. If the deal doesn’t further the mission, which is first and foremost about how we reach more low-income, first-time moms with an evidence-based program, then we can’t do PFS. I’ve been running nonprofits for 30 years, and it is really hard for governments and for nonprofits to have that kind of discipline when there are dollars on the table.
NFF: What advice would you give to other organizations, governments and service providers that are exploring PFS as a way to achieve greater impact and scale evidence-based programs?
Roxane: Participating in a PFS project is the most complicated, complex, time-consuming work I have ever done in my life. It pales in comparison to anything I did as Chief of Staff, supervising cabinet heads for the State of Colorado. I don’t think people understand that. These projects are really complex. So I would say, be prepared for the investment of time and work required.
Tamar: I'd also caution that I think it’s too early to look back. We are well aware of how little we know, and we’re learning daily. But some of our early reflections are:
- PFS is one piece of the puzzle. For example, we view PFS and Medicaid as symbiotic strategies. PFS investor dollars can pay for the infrastructure costs of expansion, and Medicaid and other existing funding sources can help sustain the program.
- Good partners are critical. For us, Social Finance has been an incredible partner in navigating the complexity of this process.
- Understand what has the most potential to make it worthwhile to the government. We as an organization are going to prioritize our future work in states, not counties, where due to the magnitude of savings potentially realized at that level, we can make the strongest case for the use of PFS to scale our programs (unless the county government really does not care about return on investment at the local level).
- Consider how you can approach PFS as an opportunity for infrastructure building, rather than only as a one-off project. For instance, our early work in New York, South Carolina and California has given us the opportunity to create efficiencies. We are in the process of applying lessons learned. We have developed a national PFS framework that makes us ‘shovel-ready’ for the next project and that we can adapt to meet a particular jurisdiction’s policy priorities. That’s huge. For example, we’ve taken the time with our internal and external research teams to systematically review our evidence and identify a small menu of viable outcome metrics from the fairly lengthy list of outcomes that NFP has been shown to achieve. With that work completed, we can now offer those outcome metrics options for consideration by states and see what’s most interesting and valuable to them.
At this point in the evolution of the field, we are excited about the opportunity to launch the first US maternal and child health PFS project, and we’re eager to continue exploring PFS as a way to break through current funding constraints and reach more families.
NFF: Are there any last thoughts you would like to share?
Tamar: I am both honored and grateful to be an early participant in this PFS work. I want to express great appreciation to NFF for the critical role they are playing in developing this field by facilitating information exchange and creating safe places for early adopters to learn from each other. I’m deeply committed to finding a path forward to help NFP improve population health. In closing, I would like to reference a comment by Woody McCutcheon at the Edna McConnell Clark Foundation (a long-time supporter of NFP) in a recently published piece in the Philanthropy Journal: “NFP is emerging as one of the premier, sought-after candidates for states interested in PFS agreements because they have 37 years of evidence and are one of the most effective solutions to multi-generational poverty. We are intrigued to see how PFS can help NFP realize their potential.” We, too, are intrigued to learn more, and we are driving hard to make it happen.