Homeless families face many challenges, including the inability to provide safe and stable living environments for their children. The result is that children who are placed in out-of-home foster care as a result of homelessness remain in the child welfare system for significantly longer periods of time than children whose families have housing; extended stays in foster care can negatively impact children’s educational attainment and future employment status. To address this cycle of poor outcomes, Cuyahoga County launched the first county-level Pay for Success project targeting both homelessness and child welfare. Through FrontLine’s Critical Time Intervention, Child Parent Psychotherapy, and Trauma Adapted Family Connections, the project aims to reduce the length of stay in foster care and achieve housing permanency and/or family reunification. The intensive treatment will take place over five years and serve 135 families. If successful, vulnerable families will be able to reconnect to the community, settle into safe housing, and rebuild a healthy relationship with their children.
- Year Launched2014
- Service Delivery Term (Years)4
- Motivation for ProjectChildren of families who struggle with homelessness experience longer stays in foster care.
- Project Objective(s)Reduce the length of stay in foster care and achieve permanency and/or family reunification
- Individuals Served135 caregivers and their families
- GeographyCuyahoga County, OH
- Issue AreaChild Welfare
- Initial Investment ($ millions) [Note 2]4
-  This category captures the initial private investment raised to support the project that has the potential to be repaid if the project achieves its pre-determined outcomes. Many projects, particularly those in the supportive housing and health arenas, leverage existing public resources, such as subsidized housing and health insurance, to achieve program impact; the value of these resources is not included in these dollar values but are discussed in more detail in Sections 7, 8 and 9 of this report.
- Service Provider(s) [Note 1]FrontLine
- Payor(s) [Note 2]Cuyahoga County, Ohio
- Transaction Coordinator(s) [Note 3]Third Sector Capital Partners
- Evaluator [Note 4]Case Western Reserve University
- Validator [Note 5]None
- Project Manager [Note 6]Enterprise Community Partners
- External Legal Counsel [Note 7]Kutak Rock
- Technical Assistance Provider(s) [Note 8]University of Maryland; Third Sector Capital Partners
-  Delivers program interventions to target population over the course of the PFS contract
-  Makes payments when pre-determined outcomes have been met
- Roles and responsibilities may include: design and structure of PFS project and financing model; capital raise; stakeholder management; on-going performance management
-  Design and implement plan for determining whether outcomes have been met
-  Verify accuracy of data used in evaluation plan, or evaluation plan itself
-  Intermediary during service delivery phase, and/or fiscal sponsor for project funds
-  Provide assistance in drafting, reviewing and negotiating PFS contracts
-  Provide support and expertise to project stakeholders in the project development and/or project implementation phases
Evidence and Program Design
- Service Intervention(s) Model and/or TypeCritical Time Intervention; Child Parent Psychotherapy; Trauma Adapted Family Connections
- Evidence base for interventionCritical Time Intervention: 2 RCTs, 1 experimental research design [Notes 4 and 5]
- Has effectiveness of the intervention for PFS project target population been evaluated?Partly [Note 4]
- Has the service provider provided this intervention previously?Partly [Note 5]
- Is PFS project: Scaling an existing intervention by replicating at a larger scale? Demonstrating the effect of a new program model or combination of services? Transplanting an existing intervention(s) to a new target population and/or service delivery setting?Demonstrating; Transplanting
-  Critical Time Intervention has been subject to two randomized control trials. Both studied the impact of C.T.I. on individuals with severe mental illness; one study population was exclusively male. A modified randomized trial studied the impact of C.T.I. on episodically homeless families. While none of these study groups is an exact match to the target population for the Partnering for Family Success program—caregivers experiencing homelessness whose children have been placed in foster care—there is some overlap with the populations served in the three studies.
-  All of the participants in the Partnering for Family Success program receive C.T.I., which Frontline staff is experienced in providing. The other interventions are to be provided on as-needed basis to meet clients’ specific needs; Frontline Staff is not experienced in implementing all of these interventions.
- Evaluation Design MethodologyRCT
- Data Source(s) for EvaluationHomeless Management Information System; Statewide Automated Child Welfare Information System
- Outcomes Tied to Success Payments1) Days in out-of-home placement for children
- Outcomes Tracked, Not Tied to Success PaymentsFamily reunification [Note 3]
- Length of Evaluation Period5 years
-  Evaluator will also conduct a two-year implementation study to determine how different components of the program implementation relate to reduction in out-of-home placement days.
Service Provider Characteristics and Service Delivery
- Single or multiple service providers?Single
- Service provider type(s) (nonprofit, government, private)Nonprofit
- Service provider OR site selection methodAlternative procurement method
- Service Provider Experience with PFS InterventionExperienced with Critical Time Intervention (core intervention)
- Referral Method for PFS Target PopulationVoluntary enrollment of participants identified through a process led by county
- Did the project have a ramp-up phase? (Y/N; brief description)Yes: 6 month service ramp-up period prior to PFS transaction launch; 28 families served; grant-funded
PFS Contracting and Governance
- Operational Oversight Structure [Note 1]Operating Committee includes service provider, project manager, county representative and evaluator
- Frequency of meetings and/or reports1-2 times/month
- Executive Oversight Structure [Note 2]Governance Committee includes service provider, project manager and county
- Frequency of meetingsQuarterly
- Investor role in project governance?Can attend any operational or governance meeting by request
- Frequency of reporting to investorsQuarterly
- Non-standard Contract Termination Events [Note 3]1) Insufficient referrals or enrollments; 2) Unavailability of adequate housing; 3) Medicaid contract downsizing or termination; 4) Increase in labor costs
- Appropriations Risk Mitigation Strategy [Note 4]Annual appropriations into set-aside account
-  Committee or working group involved in regular and/or day-to-day monitoring of project progress
-  Oversight and decision-making body for PFS project
-  Events that allow stakeholders to exit their contractual obligations, beyond those typically found in loan agreements and contracts
-  Means by which to mitigate risk that funding is not available for investor repayment
- Senior Investor/ Lender and Total Senior Investment ($MM)The Reinvestment Fund ($1.575)
- Subordinate Investor/ Lender and Total Subordinate Investment ($MM)George Gund Foundation ($1); Nonprofit Finance Fund ($0.325); The Cleveland Foundation ($0.75); Sisters of Charity Foundation of Cleveland ($0.2); ($2.275 total)
- Deferred Fee Source and Total Deferred Fees ($MM)[Note 1]None
- Recoverable Grant Source and Total Recoverable Grants($MM)[Note 2]Sisters of Charity Foundation of Cleveland ($0.15)
- Non-recoverable Grant Source and Total Non-recoverable Grants ($MM)[Note 3]None
- Guarantor and Guarantee ($MM) [Note 4]None
- Illinois Dually-Involved Youth Project
-  Deferred fees are delayed payments for the services provided by service providers, transaction coordinators and/or project managers. Deferred fees are one way of structuring projects so that more stakeholders have a financial interest in ensuring project success.
- Philanthropies can use either their regular grant making protocols, or protocols for program-related investments (PRIs), to contribute to PFS capital stacks. If a foundation does not use a PRI, their investment may be structured as either a loan or a recoverable grant. The distinction between the two is in the expectation of repayment. A loan, even if from a philanthropic source, is expected to be repaid, and structured accordingly. A recoverable grant does not bear the same expectation of repayment.
-  Non-recoverable grants are traditional grants contributed to capital stacks; if the project is successful and generates full repayment, the non-recoverable grants can remain with the service provider or project manager, or be recycled by the original funder.
Basic Repayment Structure
- Initial Investment ($Millions)4
- Maximum Repayment Funds Committed by Payor ($Millions)5
- Full service delivery term (years)4
- Full repayment period (years)5
- Interim outcomes reported? Tied to payments?No/No
- Sustainability/ Recycling of FundsPhilanthropic funding could be remitted to service provider if repaid as success payment
Detailed Repayment Terms
- Interest5% (senior) and 0% or 2% (subordinate) annual rate
- Trigger for initial repayment of principal [Note 1]2% difference between treatment and control groups in out-of-home placement days
- Threshold for full repayment of principal25% reduction in out-of-home placement days
- Threshold for full repayment of principal plus maximum success payments40% reduction in out-of-home placement days
- Repayment timingYear 5
- Return to Investor [Note 2]Success payments up to $1 million to subordinate lenders
- Success Payment to Other Stakeholders? [Note 3]Philanthropic funding could be remitted to service provider if repaid as success payment
-  Initial repayment does not equate to full principal return. Investors may recover only part of their principal if projects do not meet a certain level of success.
-  There is no standard methodology for calculating investor return. These numbers are what is publically reported, and comparing from one project to another may not be an apples-to-apples comparison for the reason of potentially different calculation methodologies. Calculation methodologies may be provided in investor agreements, which are not available publically and were not available for this report’s analysis.
-  Success payments for other stakeholders such as project managers and service providers create a financial incentive for project success.
- Project Development Costs Not Covered by PFS Capital RaiseCounty and service provider costs for project development
- Funding source(s) for project development costs, if anyGeorge Gund Foundation; Cleveland Foundation; Sisters of Charity Foundation
- Project Implementation Costs not covered by PFS CapitalMedicaid reimbursements; Housing vouchers and units; Ramp-up period
- Funding sources for implementation costs not covered by PFS capitalLaura and John Arnold Foundation; Cuyahoga County; Public and private housing providers