Investing in Social Services Programs That Work

CURE’s Star Parker believes it takes traditional values to fight poverty, along with educational choice for low-income families and building small businesses.

Traditional values, limited government, and free markets are better for low-income families than liberal policies that keep people dependent on the government.

The American Enterprise Institute (AEI) wrote about Pay for Success, a government-private-nonprofit partnership that seeks to encourage investors to fund social services programs. An excerpt:

At the core of Pay for Success are free-market principles. Under contractual arrangements, the government seeks private investors to finance a new social program. If the program meets the outcomes specified in the contract, the investors gets their money back plus a profit. If the program is not successful, the government doesn’t pay and the investor absorbs the costs. It allows government to be innovative, without the financial risk of failure. And it ensures that only those programs with proven success continue to receive government funding.

In this free-market approach, private investors pay for a program upfront. If the program meets the goals laid out in the contract, the government reimburses the investors, with a return on the investments. Pay for Success was created to reward what works and discard what doesn’t work. An example from the article:

Pay for Success has already worked in the United States. In 2012, using a Pay for Success model, private investors funded an evidence-based behavioral therapy for youth exiting jail in New York City. The city hoped to reduce recidivism, but after the first year, the outcomes specified in the Pay for Success contracts were not met. The city did not pay, the investors absorbed the cost (although, in this case the investors were underwritten by philanthropy), and the program ended. Had it not been for Pay for Success, New York City could have spent millions of dollars on a failed program.

Encouraging private investment in social services programs might help, but family stability must play a role in alleviating poverty. Intact families — even the ones in lower-income brackets — provide a stable foundation for children and generally produce better outcomes.

Photo credit: Taber Andrew Bain (Creative Commons) – Some rights reserved