Washington, DC – Earlier this spring, American Idea Foundation President Paul Ryan (R-WI) took part in a podcast with former Governor Deval Patrick (D-MA) focused on mobilizing capital to improve the lives of Americans in need.
The “Workforce Realigned” podcast , which was produced by Social Finance and the Federal Reserves of Atlanta, Philadelphia, and San Francisco, is part of a larger initiative promoting outcome-based financing strategies that effectively “Pay for Success” and drawing attention to those initiatives that are demonstrating tangible results for the people they serve.
In connection with the podcast, Social Finance also published a book, available here, containing a series of case studies about how results-based financing can create benefits to the government, employers, service providers, and participants, which ultimately expand economic opportunity.
Speaker Ryan authored a chapter focused specifically on the mixed results of past performance-based programs and on a promising new innovation in this space, Social Impact Bonds. Ryan also touched on a 2018 law, the Social Impact Partnership to Pay for Results Act (SIPPRA), which in his view is an encouraging federal tool to tackle specific challenges like recidivism, homeless, and early childhood development.
Speaker Ryan’s chapter is accessible here: Buying Outcomes: Lessons from the Past and some highlights from the podcast interview with Governor Patrick follow. To listen to the podcast in its entirety, click here.
The mixed history of performance-based contracting & reasons for optimism:
“The truth is there’s a pretty long history of performance-based contracting in American civic life and, you know, a lot of it hasn’t really worked all that well. We looked at a few examples over the past 40 years of programs that we were trying to achieve these kinds of goals: linking payments and performance, and frankly, we found that there was a lot of struggle. This is a little harder than it seems it should be.
“There seems to be some repeated issues though, when you dig into this. Many [performance-based contracting programs] don’t do a good job of differentiating between the different risk levels and the people being served so what happens is providers get penalized for serving people with greater needs.
“Program providers basically want to cook the books by picking the best-performing people in their pool so that they can look good and that does not give us the right kind of data that we want to rely on to make sound decisions and create the right kind of goals. Other people were allowed in evaluations that weren’t really trustworthy or they paid for outcomes that didn’t really reflect policy goals. So, I think what we can take away from this and what we’ve learned from this and what the Pay for Success movement has tried to solve is that like very many other tools, you can build performance-based contracts well or you can build them poorly.
“You have to be careful with how you design these things and you’ve got to be mindful of just the typical human errors and the mistakes of the past. If you take that into consideration, then I really believe you can build a really good Pay-for-Performance model and then we can get evidence and we can get outcomes. Then, we can use those to scale and replicate [solutions] and really move the needle on poverty.”
Developing an Evidence-Based Clearinghouse to spread awareness about successful solutions:
“One initiative that I’m really excited about is a project we are launching at the American idea Foundation, which is the non-profit foundation that I started, and that is the Evidence-Based Clearinghouse.
“What you have is all these disparate efforts around the country that are engaged in evidence-based policymaking and are using data and analytics and randomized controlled trials to figure out what works, what doesn’t, and to find evidence on how best to fight poverty. The problem is there is so much evidence and data out there and it’s in all these disparate places. It’s in various universities, in various think tanks, in various non-profit centers.
“And so, what the American Idea foundation is going to do is create a clearinghouse for all of the evidence-based policy on poverty programs so that you have a one-stop shop. So, if you’re sitting in Spokane, Washington, or Houston, Texas, or Janesville, Wisconsin, or Brooklyn, New York, and you want to design a program to solve some problem related to juvenile justice, recidivism, homelessness, addiction, or job training, you go to the American idea Foundation’s Clearinghouse on Evidence Based Policy and you find out what’s been done, what trial and error has already occurred, how you learn from the mistakes that other people made so that you don’t repeat those mistakes, and [how you] can build a successful poverty fighting effort based upon all the latest available data and science that has been conducted in America so that you can move forward with success.
“In our view, this is how you scale solutions: You measure, you replicate, and you move. And that is what the American idea Foundation’s Data Clearinghouse on Evidence-Based Policymaking is going to do. It’s never been done before. It’s one of its kind, and I’m really excited about the impact it’s going to have on fighting poverty.”
SIPPRA can bridge partisan divides and improve outcomes for people in need:
“The federal government has sort of dipped their toe in the water here a little bit. It has sporadically supported Pay for Success projects. I can think of projects at the Department of Labor, Justice, HUD, and I think even USAID. I think they all have dipped their toes in this space in the last five years. But in 2018, we started to try to chart a more unified approach towards strengthening this tool and as part of one of the bills I passed back in that year, Congress passed the Social Impact Partnerships to Pay for Results Act that we call “SIPPRA.”
“It has a $100 million fund, administered by the Treasury Department, to support state and local pay-for-success projects. This was a huge part of a bipartisan bill and it turns out there is a constituency for making government smarter or more effective. Republicans and Democrats agree on this!
“The idea behind SIPPRA is to get more states and counties to experiment with outcome-based funding. If they develop projects with strong, evidence-based interventions that are evaluated properly and evaluated well, then the federal government will do its fair share, paying for part of the social outcomes achieved and for part of the cost of evaluation. I’m really excited and I think we’re turning the corner. We’re getting better at this.”
Removing partisanship from poverty-fighting, focusing on evidence and outcomes:
“I’m hopeful that the Biden Administration will focus on this and get this right….so that we truly are using SIPPRA as a tool to leverage local Pay for Success programs. We’ve learned from trial and error in the past. We’ve got lots of takeaways about how to build these things successfully now. We know how to build pay-for-success models and I really believe that this law will be the seed corn that can grow and germinate into replicating pay-for-success programs across the country, at all levels of government, and in the private sector.
“Frankly, I think we’re on the cusp of something new and big which is to move towards evidence-based, outcome-based policymaking and what we will learn is what needs to be scaled and replicated so we can build it out.
“As a person who fought these [partisan fights in Congress], you end up getting into these ideological, partisan battles over how to get people out of poverty and there’s a status quo that wants to keep things the way there are. There are ideologues that want to make these programs and fights political and ideological.
“What Evidence-Based policymaking and pay-for-success does is it bypasses all of that. It leapfrogs the partisanship, the status quo, the ideological battles, and just goes with what works. Are we getting people out of poverty or not? And by getting to that level of debate, I really believe we’re going to move the needle on poverty.
“We’re more or less on the cusp of a new sense of social science and economics, which is evidence-based policymaking and outcome-based policymaking. We shouldn’t measure success based on effort and input; we should measure success based on outcome and results. This can help reduce partisanship and polarization in America and get people of both sides of the aisle — people of goodwill, focusing on the actual objective, which is getting people out of poverty. I’m excited about this work. I’m excited about the outcomes. I’m excited about this phase of this debate and I really think we’re on the cusp of something big here.”