Santa Clara County Project Welcome Home

Last updated Tuesday, October 17, 2017

Quick Facts

Current Phase
Issue Area
Service Period
Project Scope
Implementation Start
A woman reading with two young children. Photographer: Alain McLaughlin

In August of 2015, Santa Clara County, with support from Third Sector Capital Partners, launched Project Welcome Home, California's first social initiative financed by a Pay for Success model. Over the next six years, the project will provide community-based clinical services and permanent supportive housing to 150-200 chronically homeless individuals who are currently frequent users of the County's emergency rooms, acute mental health facilities and jail. The lead service provider for the project is Abode Services; one of the Bay Area's most effective housing service providers with a track record of high-quality programming. Additionally, the University of California San Francisco is serving as the lead evaluator for the project.

Following the launch of Project Welcome Home, Santa Clara County, in partnership again with Third Sector Capital Partners, began developing "Partners in Wellness," their second Pay for Success project, aimed at improving the coordination and care for County residents who are frequent users of the County's emergency and inpatient psychiatric services. Many of these clients have multiple occurring issues such as acute mental illness and substance abuse, often necessitating a multi-disciplinary response. This project will focus on clients who have frequent or extended stays in psychiatric emergency, in-patient, and other institutional settings, ensuring they are stabilized in community-based, less restrictive environments where they can receive proper medical treatment and coordinated case management services. Success of this project will be measure by a reduction in utilization of the County's Emergency Psychiatric Services. Santa Clara County has selected Telecare Corporation to serve as lead service provider. The project will be evaluated by Stanford University.


  • Market Overview

    • Year Launched
    • Service Delivery Term (Years)
    • Motivation for Project
      More than 2,200 chronically homeless individuals in Santa Clara County lack access to stable housing and long-term supportive services.
    • Project Objective(s)
      End homelessness, increase stability and improve health by achieving 12 months of housing stability
    • Individuals Served
    • Geography
      Santa Clara County, CA
    • Issue Area
    • Initial Investment ($ millions) [Note 2]
    • [2] 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.
  • Project Partners

    • Service Provider(s) [Note 1]
      Abode Services
    • Payor(s) [Note 2]
      Santa Clara County, California
    • Transaction Coordinator(s) [Note 3]
      Third Sector Capital Partners
    • Evaluator [Note 4]
      University of California, San Francisco School of Medicine
    • Validator [Note 5]
    • Project Manager [Note 6]
    • External Legal Counsel [Note 7]
      Fenwick & West LLP; Gibson, Dunn & Crutcher LLP; Miles & Stockbridge P.C.
    • Technical Assistance Provider(s) [Note 8]
      Third Sector Capital Partners; Palantir Technologies
    • [1] Delivers program interventions to target population over the course of the PFS contract
    • [2] Makes payments when pre-determined outcomes have been met
    • [3]Roles and responsibilities may include: design and structure of PFS project and financing model; capital raise; stakeholder management; on-going performance management
    • [4] Design and implement plan for determining whether outcomes have been met
    • [5] Verify accuracy of data used in evaluation plan, or evaluation plan itself
    • [6] Intermediary during service delivery phase, and/or fiscal sponsor for project funds
    • [7] Provide assistance in drafting, reviewing and negotiating PFS contracts
    • [8] 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 Type
      Permanent supportive housing; Assertive Community Treatment
    • Evidence base for intervention
      Permanent Supportive Housing: 15 experimental/quasi-experimental studies [Note 7]; Assertive Community Treatment: 27 experimental/quasi-experimental studies [Note 8]
    • Has effectiveness of the intervention for PFS project target population been evaluated?
    • Has the service provider provided this intervention previously?
    • 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?
    • [7] The evidence base for permanent supportive housing is summarized by the Washington State Institute for Public Policy, which includes a cost-benefit analysis based on studies using a comparison and treatment group, available at:
  • Evaluation

    • Evaluation Design Methodology
      Validated service provider data; RCT [Note 4]
    • Data Source(s) for Evaluation
      Santa Clara Valley Health and Hospital System; Homeless Management Information System; Criminal Justice Information Control; Service provider
    • Outcomes Tied to Success Payments
      1) Months of stable tenancy
    • Outcomes Tracked, Not Tied to Success Payments
      Health care, social service and criminal justice system utilization
    • Length of Evaluation Period
      6 years
    • [4]The evaluator will use data generated by the service provider to determine whether stable tenancy has been achieved. This is what triggers investor repayment. The RCT will be used to examine differences in health services, social services and criminal justice system utilization, as a means of determining the impact of the PFS program beyond its effect on housing stability, including how permanent supportive housing generates efficiencies and economic benefit for Santa Clara County.
  • Service Provider Characteristics and Service Delivery

    • Single or multiple service providers?
    • Service provider type(s) (nonprofit, government, private)
    • Service provider OR site selection method
    • Service Provider Experience with PFS Intervention
      Experienced with ACT and permanent supportive housing (PSH); currently operates 30+ PSH programs
    • Referral Method for PFS Target Population
    • Did the project have a ramp-up phase? (Y/N; brief description)
      Yes: 3 month ramp-up period prior to PFS transaction launch; county-funded
  • PFS Contracting and Governance

    • Operational Oversight Structure [Note 1]
      Operating Committee includes 1 County representative and service provider staff
    • Frequency of meetings and/or reports
    • Executive Oversight Structure [Note 2]
      Executive steering committee includes 2 county representative and 2 service provider representatives
    • Frequency of meetings
    • Investor role in project governance?
      Can attend any operating or steering committee meeting as non-voting member [Note 6]
    • Frequency of reporting to investors
    • Non-standard Contract Termination Events [Note 3]
      1) Insufficient referrals/ underenrollment; 2) Insufficient supply of adequate housing; 3) Substantial reduction in Medi-Cal funding
    • Appropriations Risk Mitigation Strategy [Note 4]
      Annual appropriations part of county baseline budget; Service provider can terminate contract for cause in case of annual appropriations failure
    • [1] Committee or working group involved in regular and/or day-to-day monitoring of project progress
    • [2] Oversight and decision-making body for PFS project
    • [6] Under certain circumstances, investors can direct the service provider not to approve a certain course of action recommended by the operating or steering committee. This is articulated in the agreement between the investors and the service provider, which was not available for this report.
    • [3] Events that allow stakeholders to exit their contractual obligations, beyond those typically found in loan agreements and contracts
    • [4] Means by which to mitigate risk that funding is not available for investor repayment
  • Investors

    • Senior Investor/ Lender and Total Senior Investment ($MM)
      The Reinvestment Fund ($0.5); CSH ($0.5); ($1 total)
    • Subordinate Investor/ Lender and Total Subordinate Investment ($MM)
      The Sobrato Family Foundation ($1.5); The California Endowment ($1); The Health Trust ($1); The James Irvine Foundation ($0.28); ($3.78 total)
    • Deferred Fee Source and Total Deferred Fees ($MM)[Note 1]
      Abode Services ($0.5)
    • Recoverable Grant Source and Total Recoverable Grants($MM)[Note 2] ($0.5)
    • Non-recoverable Grant Source and Total Non-recoverable Grants ($MM)[Note 3]
      Laura and John Arnold Foundation ($1)
    • Guarantor and Guarantee ($MM) [Note 4]
    • Illinois Dually-Involved Youth Project
    • [1] 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.
    • [2]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.
    • [3] 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 ($Millions)
    • Maximum Repayment Funds Committed by Payor ($Millions)
    • Full service delivery term (years)
    • Full repayment period (years)
    • Interim outcomes reported? Tied to payments?
    • Sustainability/ Recycling of Funds
      1) Recoverable grant will be reinvested into service provider for capacity building; 2) Nonrecoverable grant will be reinvested in county
  • Detailed Repayment Terms

    • Interest
      5%; (senior); 2% (subordinate/PRI); 0% (Philanthropic)
    • Trigger for initial repayment of principal [Note 1]
      Client achievement of three months of housing stability
    • Threshold for full repayment of principal
      Not available
    • Threshold for full repayment of principal plus maximum success payments
      83% of clients achieve 12 months of housing stability
    • Repayment timing
      Annually, starting at the end of year 1
    • Return to Investor [Note 2]
      Not available
    • Success Payment to Other Stakeholders? [Note 3]
      Yes [Note 6]
    • [1] 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.
    • [2] 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.
    • [3] Success payments for other stakeholders such as project managers and service providers create a financial incentive for project success.
    • [6] Success payments for higher rates of success are made to the service provider, who in turn will pay 25 percent of any success payments received to investors.
  • Project Costs

    • Project Development Costs Not Covered by PFS Capital Raise
      Feasibility assessment; Transaction coordinator fees
    • Funding source(s) for project development costs, if any
      Health Trust; James Irvine Foundation; Social Innovation Fund; Santa Clara County
    • Project Implementation Costs not covered by PFS Capital
      $7.7 million in Medicaid services; $4 million in housing units and vouchers
    • Funding sources for implementation costs not covered by PFS capital
      Santa Clara County; State of California