Using pay-for-success financing for supportive housing interventions: Promise & challenges

abstract:Pay for success (PFS) is an emerging public-private partnership strategy for providing housing to chronically homeless individuals, people with mental or behavioral disorders, and adults recently released from prison. Socially minded private investors from both for-profit and nonprofit organizations provide the up-front funding for the projects. If an independent evaluation demonstrates that the intervention achieved predetermined metrics of success—such as decreasing the number of days children spend in foster care or increasing the number of people with stable housing—the public sector then "pays for success" by repaying the private investors, sometimes with interest. In this article, we describe seven ongoing PFS housing projects in the United States. Most are "housing first" interventions that provide permanent supportive housing to a chronically homeless population without setting any preconditions, such as sobriety. As projects are completed, analyses of the results should provide further insights into the complexities of designing behavioral-based PFS housing programs.