Pay for Success: Opportunities and Challenges in Housing and Economic Development

Pay for Success (PFS) initiatives have received widespread attention in the United States in the past several years. The outcomes-based projects hold great promise, especially as they compel service providers and government entities to forcus on the results of an intervention. Yet because their complexity makes them at present difficult to structure and finance, PFS projects are likely to be useful only in limited circumstances; the PFS model should therefore be used judiciously and carefully. However, the interest in and discussion about PFS projects has highlighted approaches that could be carried out by the public sector without the structure of PFS arragements.

This report provides a basic explanation of the design, structure and process of a Pay for Success (PFS) project. It then describes how existing PFS projects have been structured, and review current PFS projects in the housing and community development field. Finally, the report provides a framework for assessing benefits and costs of PFS projects for practitioners in the housing and community development fields.