Pay for Success Is Quietly Undergoing a Radical Simplification

• Author: George M. Overholser
• DOI: 10.1177/0002716218769036
• Published date: 01 July 2018
• Date: 01 July 2018
• Subject Matter: Major Elements of the Evidence-Based Movement

ANNALS, AAPSS, 678, July 2018 103

DOI: 10.1177/0002716218769036

Pay for Success

Is Quietly

Undergoing a

Radical

Simplification

By

GEORGE M. OVERHOLSER

769036ANN The Annals of the American AcademyPay For Success Is Undergoing A Radical Simplification

research-article2018

Recent changes to rules that dictate the permissible use

of large social spending streams are ushering in a radi-

cal simplification of pay for success (PFS). These

changes greatly reduce the amount of political effort

required to secure PFS-enabled sources of spending

for any given project; they make it easier to avoid the

complexity of social impact bond financing arrange-

ments; and they lead to PFS structures that work sys-

temically across many providers at once, rather than

with just one or two at a time.

Keywords: pay for success; social impact bond; rand-

omized controlled trials; evidence-based

policy

Most of us were taught that Wilbur and

Orville Wright invented the airplane in

1903. But a Frenchman named Félix du Temple

began the quest 29 years earlier. Du Temple

attached a steam engine to a glider and, incred-

ibly, it took off. Then, it promptly crashed.

Twenty-nine years and dozens of innovations

later, the Wright brothers finally learned how to

control flight properly. But another 24 years

passed before Charles Lindbergh figured out

how to fly across the Atlantic. All told, it took

more than half a century to realize the dream of

a truly robust flying machine.1

I mention this to put the pace of America’s

nascent pay for success (PFS) movement into

perspective. It has been just six years since New

York City began the country’s first PFS

Correspondence: georgeoverholser@me.com

George M. Overholser is the board chair and cofounder

of Third Sector Capital Partners, a nonprofit whose

mission is to accelerate America’s transition to a

performance- driven social sector. He is an executive in

residence at Northeastern University, where he teaches

social innovation, and a Boston-based angel investor.

Prior to his work in venture capital and social entrepre-

neurship, he was a member of Capital One’s founding

management team.