Most Ambitious Social Impact Bond Program in the Nation Will Focus on Early Childhood & Child Welfare, Health Care and Public Safety Initiatives
August 1, 2013 - Albany, NY - Governor Andrew M. Cuomo today announced that up to $30 million in funding is available to attract private-sector investment in New York State’s landmark “Pay for Success” program, which is part of the State’s efforts to transform how government does business while serving vulnerable New Yorkers. The State is seeking partners to raise up to $30 million in private investment for innovative social service programs under this initiative.
The Pay for Success initiative will attract private funding for child welfare and early childhood, healthcare, and public safety programs. If performance standards and actual savings targets are met or exceeded, the State will repay investors for program costs as well as to provide a return on investment based on the effectiveness of the program, and the State will also benefit from future savings.
“New York’s Pay for Success initiative is one of the most ambitious social impact bond programs in the country,” Governor Cuomo said. “Pay for Success is a win-win for taxpayers because we will be funding programs based on their efficiency and ability to deliver results. By partnering with the private sector, this model will transform how our state provides its social service programs to better serve New Yorkers in the areas of public safety, healthcare, and early childhood development and child welfare, and save taxpayers money in the long run.”
A Pay for Success Bond, also known as a Social Impact Bond, is a contract between government and one or more private entities. Under the contract, objectives are set by the State, and private investors are sought to finance and manage the program to ensure that it achieves the agreed-upon goals. If the program fails to meet these targeted results, the government does not have to pay. New York and Massachusetts are the only state governments currently issuing pay for success plans, and New York State’s Pay for Success initiative is the first in the nation to focus on so many key policy areas.
The Pay for Success initiative was included in Governor Cuomo’s 2013 State of the State agenda and approved in the 2013-14 Enacted Budget.
New York State’s Division of the Budget (DOB) will consider applications from non-profit intermediary organizations that are responsible for raising the funding and organizations that provide the direct services. One organization can apply to fill both roles, or two or more organizations can partner on an application.
Applications are due at the end of September, and the State may choose to fund one or more proposals. Successful proposals will be required to commit to an independent evaluation of the program’s effectiveness and savings.
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