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Student at Suffolk University Law School

Rappaport Urban Scholars and Rappaport Institute Co-Host Briefing on “Pay for Success Contracts”

Wednesday, June 22nd, 2011
By

More than 50 people – including several legislators – attended a special State House briefing on "Pay for Success Contracts (aka Social Impact Bonds)” by Jeffrey Liebman, a Professor of Public Policy at Harvard’s Kennedy School of Government, who is a Rappaport Institute faculty affiliate. Held on June 8th, the briefing was sponsored by the Rappaport Institute and State Representative Charles Murphy (D-Burlington), the House Majority Whip who also is a former Rappaport Urban Scholar. Gregory Mennis, director of Infrastructure Programs and Financial Policy in the state’s Executive Office of Administration and Finance, also spoke at the event.

The author of an influential white paper on this approach, Liebman explained that in the “Pay for Success” approach the government defines measurable outcomes and contracts with providers who agree to achieve those goals at an agreed-upon price. If they achieve desired outcomes, the public sector pays for the services. If not, the government pays nothing. In this approach, non-profit foundations and private investors would “invest” in the programs with the expectation that they would be repaid (and make a profit) if and when programs demonstrate that they have achieved desired goals and, therefore, will be reimbursed by the public sector. The United Kingdom currently is experimenting with this approach which has also drawn interest from both federal policymakers and officials in Massachusetts, According to Liebman, who has been working with Mennis and other state officials, “Pay for Success Contracts” are promising not only because they could improve performance and lower costs, but also because they could accelerate the adoption of new solutions to difficult problems.

For Liebman’s Center for American Progress paper click here.




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