Massachusetts Launches Workforce Development Pay-for-Success Project

Massachusetts Gov. Charlie Baker (R) announces the launch of a $12.43 million Pay for Success (PFS) workforce development initiative to help limited English speakers transition to employment, higher wage jobs and a path to education.

The state and Social Finance, a Boston-based non-profit, launched the Massachusetts Pathways to Economic Advancement Project to target earnings and education outcomes for immigrants and refugees.

Social Finance raised $12.43 million from 40 impact investors. Prudential Financial, Inc., in collaboration with Maycomb Capital, provided nearly 50% of the total investment capital. Bank of America Merrill Lynch served as the placement agent for certain qualified high net worth and institutional investors. Other investors provided critical early support, including Living Cities’ Blended Catalyst Fund and Combined Jewish Philanthropies’ Donor Advised Funds.

PFS is a public-private partnership that funds social services through a performance-based contract. PFS projects in the United States have addressed a range of social issues, including recidivism, juvenile justice, homelessness, child welfare, maternal and children’s health, and education.

Many high-performing service providers do not have access to the funding needed to scale-up their services. In addition, government support for social programs is not always tied to results.

PFS engages investors to cover the upfront costs and take on the risks of scaling promising programs, and establishing performance goals that allow government, impact investors, and project partners to measure outcomes and track success. If, following an independent evaluation, the program achieves predetermined outcomes that benefit society and generate value for government, then government will make outcomes payments to investors. However, the government pays only at the level of outcomes achieved.

The first Pay for Success project launched in Peterborough, U.K. in 2010. As of June 2017 there are more than 70 Pay for Success projects in 18 countries, with 17 projects in the U.S. and three in Massachusetts.

The Massachusetts Pathways to Economic Advancement Project will deliver services to approximately 2,000 participants in Greater Boston over three years. Vocational English language classes, integrated with job search assistance and coaching, will assist limited English speakers, including documented immigrants and refugees, in making successful transitions to employment, higher wage jobs, and higher education.

At the core of the project is JVS, one of Greater Boston’s largest community-based workforce and education providers.

The Commonwealth will repay investors only if JVS successfully achieves positive outcomes for participants, as defined in the contract. The Project will measure three outcomes among project participants: 1) earnings, 2) successful transitions to higher education, and 3) program engagement.

Outcomes Based

The returns investors will receive are dependent upon the achievement of agreed-upon outcome metrics, the governor’s office said. Outcomes will be measured on a quarterly basis, and success payments will be made quarterly. To the extent that outcomes are met as measured by the evaluator, the state will make up to $15 million in success payments. If the highest level of outcomes is not met, success payments to investors may be reduced and if no outcomes are produced investors may face full losses. JVS is paid for the services they have agreed to provide as part of the project – their payments are not contingent on client outcomes, although they will be held to certain enrollment requirements. JVS and Social Finance are both eligible for a success fee, paid only at outstanding levels of performance in the project, the office said.

“One of our administration’s top priorities has been to expand workforce development opportunities for everyone in the Commonwealth and to help individuals obtain the skills needed to participate in Massachusetts’ nation-leading innovation economy,” said Baker. “The Pathways to Economic Advancement Project is a forward-thinking public-private partnership that will help match employers with potential employees, and employees with the skills employers need, strengthening the Commonwealth’s workforce.”

Info: (PFS).

About Frank Klimko

Frank Klimko is a nationally known journalist, grants expert and speech writer/speaker. He has years of experience helping nonprofits devise lists of the right funding opportunities and secure funding from these foundations and corporate entities. Clients have focused on an array of areas including child care, homeless, hunger and K-12 education. Additionally, he is a Freedom of Information Act expert, who has helped numerous clients with securing proprietary information from the federal government. Currently, Frank Klimko writes the Children & Youth Funding Report and Private Grants Alert, which are Washington DC-based publications. CYF is a daily publication covering Congress, the Education Dept. and the various federal regulatory agencies. PGA, another daily publication, covers the world of private philanthropy.
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