Describes the early development and implementation of two pilot projects targeting ex-offenders in New York and Massachusetts. Both projects sought to improve employment outcomes for participants and followed the Pay for Success model with which investors fund the interventions and the government repays the costs plus any return on investment if the project achieves its expected impacts. 

The U.S. Department of Labor (DOL) awarded the Massachusetts Executive Office of Labor and Workforce Development and the New York State Department of Labor Workforce Innovation Fund grants in order to operate Pay for Success (PFS) pilot projects. The PFS model uses financing from private sector and philanthropic sources to “promote innovation and to allow evidence-based practices to be scaled up, thus improving social or environmental outcomes for people and communities” (p.iii). The PFS pilots were the first financing model of their kind to be funded and tested by a federal agency.

“Both projects focus on improving employment outcomes and reducing recidivism among newly released ex-offenders. The Massachusetts project targets young male parolees, while the New York pilot focuses on adult ex-offenders generally.

DOL…sponsored a process study of the two PFS pilots…to document project implementation and provide information on the PFS approach for policymakers and program administrators. This is the process study’s first report…. The report is based on in-person interviews … and reviews of grantee documentation and performance data that was reported to DOL…. [T]his report examines the pilots’ early planning and operational experiences, including developing working partnerships and management structures, securing private and philanthropic capital and financing mechanisms, establishing the service intervention, setting up the evaluation design, and establishing outcome measures, outcome targets and payment amounts” (p.iii).

In order to qualify for the grants, DOL required applicants to establish the following elements:

  • “A government agency to identify the social problems to be targeted by the project and set aside grant funds to repay investors if target outcomes are achieved
  • A target population and specific employment and training related problem that would be the focus of the intervention strategy
  • An intermediary to manage the PFS pilot
  • Investors to provide operational financing for the program
  • An independent validator to verify if outcome targets were achieved, based on the results of the project’s experimental or quasi-experimental evaluation, andA service provider…to deliver an intervention to the target population” (p.iv).

    Full publication title: Process Study of the U.S. Department of Labor’s “Pay for Success” Pilots in Two States: Development of the Grant Applications and Initial Implementation

    (Abstractor: Author and Website Staff)