Growing the Pipeline of Pay-for-Success Projects (Federal Reserve Bank of Richmond)

Community Practice Papers

2018, No. 2

This issue of Community Practice Papers details one path to further advance the Pay-for-Success (PFS) field in the United States — the use of universities, and specifically the University of Virginia’s Pay for Success Lab.

Pay for Success (PFS) is an approach to contracting that ties payment for service delivery to the achievement of measurable outcomes. The movement towards PFS contracting is a means of ensuring that high-quality, effective social services are working for individuals and communities.
— Nonprofit Finance Fund

Article by: Jen Giovannitti and Joshua Ogburn

Over the past five years, substantial commitments from the philanthropic community and the federal government have advanced the Pay-for-Success (PFS) field in the United States. PFS projects enable federal, state and local governments to partner with high-performing service providers by tapping private investments to expand effective programs.1  As of this publication date, there are 20 PFS projects in the United States (100 across the globe) that are considered launched, meaning the feasibility and structuring processes are complete, and investors have agreed to the formal structure and terms. These projects cross a range of issue areas, including early childhood, workforce development, recidivism, homelessness and many others.2  While this number is growing, the field continues to search for ways to increase the number of projects in the pipeline and decrease the amount of time and resources it takes to launch projects. A PFS project can realistically take years to go from feasibility to financing and encumber both organizational staff and financial resources along the way. This issue of Community Practice Papers details one path to achieve these goals — the use of universities, and specifically the University of Virginia’s Pay for Success Lab.

There are three universities in the United States that have started programs to support PFS projects: Harvard University, the University of Utah and the University of Virginia. The Harvard Kennedy School Government Performance Lab (HKS GPL) has been providing government-side technical assistance on designing and implementing PFS projects with a focus on the next stage of development in the PFS field. The Government Performance Lab grew out of Harvard’s Social Impact Bond Technical Assistance Lab (SIB Lab), which was established in 2011 with support from the Rockefeller Foundation. The SIB Lab helped Massachusetts and New York become the first two states to use the PFS model.3

The Sorenson Impact Center,4 housed at the University of Utah’s David Eccles School of Business, is a “think-and-do tank that marshals capital for social good, empowers data-driven programs, breaks down silos across sectors and equips the next generation of leaders with social purpose.”5 With social impact financing, the Sorenson Impact Center acts as a connector between “leading academic research regarding ‘what works’ in social policy with programmatic design, execution and rigorous evaluation” of proposed project feasibility.6 They also provide competitive grants to PFS projects.7

The University of Virginia Pay for Success Lab (PFS Lab) launched in September 2015 with the goal of identifying solutions to reduce the time it takes to launch PFS projects by taking advantage of the two main strengths of universities: research and education. The PFS Lab focuses on identifying promising PFS projects and referring them to advisory firms that can launch them.

At the PFS Lab, teams of three to five students, with guidance from the staff director, research a specific social issue and identify localities that are facing a significant problem with that issue. For example, a team may focus on reducing a large cohort of ex-offenders from returning to prisons in a certain locality because recidivism is costly to society. Another example may be investing in early childhood education in communities with higher rates of poverty and lower testing scores since investment earlier on can lead to cost savings in later years. Once the issue has been identified and assessed, the team then reaches out to government officials, advocacy organizations, service providers, foundations and other local leaders to explain the PFS model, provide resources and begin to guide how a PFS project could take shape.

This guidance is important because in the PFS model programs go through an independent evaluation and if the program achieves predetermined outcomes that benefit society and generate value for government, then the government entity will make outcomes-based payments to the program’s initial investors. However, the government pays only at the level of outcomes achieved.

Throughout the process, the PFS Lab assists communities with assessing whether or not a PFS model might work for their issue. Specifically, the PFS Lab researches the problem definition, target population, current government expenditures, potential interventions and outcomes, service providers and local commitment. Teams also perform upfront due diligence using the Urban Institute’s Project Assessment Tool, asking questions about the commitment of the government, the data systems in existence and local programs that are already trying to address the problem.8

The team writes up their findings in Concept Outline and Project Assessment documents. Local leaders can then use these write-ups to understand if there is a promising PFS project. If the local leaders are interested in developing the project, the PFS Lab will post these documents to a newly created online Project Platform, which will serve as a clearinghouse between the projects the PFS Lab identifies and advisory firms that can offer technical assistance.

One recent example of this process is a project the PFS Lab started working on in early spring 2017. The director of the PFS Lab and a faculty member of UVA’s Department of Public Health Sciences met with several community leaders in Richmond, Virginia, to discuss how the community could leverage PFS on some key issues. Over the following few weeks, the PFS Lab identified a clear issue area on which Richmond could focus: childhood asthma. The Asthma and Allergy Foundation of America regularly cites Richmond as being one of the worst places in the country to live with asthma.9

Through subsequent conversations and research, the PFS Lab found that the community has: 1.) a comprehensive and dedicated group of local public health stakeholders; 2.) ready access to medical claims and financial data, and researchers who can analyze the data; and 3.) an evidenced-based theory of change for addressing pediatric asthma. The presence of these components indicated the potential for a project that seemed to have the likelihood of success. Through its network of people who are involved in financing PFS projects, assessing feasibility of projects or funding projects as PFS leaders, the PFS Lab was aware of an available Sorenson Impact Center PFS Feasibility Grant competition. The PFS Lab assisted the Richmond City Health District (RCHD) with an application. The Sorenson Impact Center chose the RCHD as a recipient and began providing advisory services in July 2017 to hopefully launch the childhood asthma project.

PFS continues to hold promise to transform the way we address the persistent problems of our day. For the PFS field of projects to achieve success and fulfill these lofty goals, it must reduce the amount of time and resources it currently takes to launch a project. By taking advantage of the two main strengths of universities, research and education, the PFS Lab’s model of identifying promising projects is one way to make progress. 

About the Authors

Jennifer Giovannitti, AICP, CEcD, is a member of the University of Virginia Pay for Success Lab’s advisory board and a regional community development manager with the Federal Reserve Bank of Richmond.

Joshua Ogburn is director of the University of Virginia Pay for Success Lab. He is a member of the Virginia Pay for Success Council and the founder of Social Impact Bond Review.

The original article was posted on the Federal Reserve Bank of Richmond's Community Practice Papers.

Acknowledgements

For comments and suggestions, we thank staff at the Federal Reserve Bank of Richmond.

Resources

For additional information on the universities mentioned in this article, please visit their websites.

Harvard Kennedy School Government Performance Lab (HKS GPL)

Sorensen Impact Center

University of Virginia Pay for Success Lab (PFS Lab)

1 http://socialfinance.org/what-is-pay-for-success/

2 The Non-Profit Finance Fund, a Learning Hub site in partnership with the PFS community, is an active central resource where individuals can share ideas, learn from each other’s experiences and collaborate in the search for best practices.

3 https://govlab.hks.harvard.edu/gov-lab

4 https://sorensonimpact.com/

5 http://eccles.utah.edu/news/sorenson-impact-center-social-finance-announce-pay-success-structuring-grant-awardees/

6 https://sorensonimpact.com/social-impact-financing/

7 https://sorensonimpact.com/grants/

8 Milner, Justin, Matthew Eldridge, Kelly Walsh, John Roman, 2016. Research Report: Urban Institute Project Assessment Tool, The Urban Institute.

9 Asthma and Allergy Foundation of America, 2015 Asthma Capitals.

Expanding Its National Network, The University of Virginia Pay for Success Lab Forges Partnerships in Tulsa, Oklahoma

By Adam Jones, Senior Fellow for Strategic Initiatives

This is part of a series of blog posts to share the University of Virginia Pay for Success Lab’s impact as it enters its third year. In this post, Adam Jones, Fellow for Strategic Initiatives, interviews James Wager, Tulsa’s Chief of Performance, Strategy, and Innovation.

            When G.T. Bynum ran for mayor of Tulsa, Oklahoma in 2016, he found himself in the awkward position of running as a moderate Republican in a time of hyper-partisan politics. Facing a far-right incumbent with considerable establishment support, Bynum needed a way to counter his opponent’s aggressive attack ads without losing the moral advantage. “What if, instead of responding with partisanship, we responded with a focus on results?” Bynum asks during TEDxPennsylvaniaAvenue, a gathering of political leaders and activists. “What if we ran a campaign that was not about running against someone, but was about bringing people together behind a common vision? And so we decided to respond not with a negative ad but with something people find even sexier: data points.”

  G.T. Bynum  Mayor of Tulsa

G.T. Bynum
Mayor of Tulsa

            After handedly winning the election, Bynum set in motion an ambitious plan of performance-driven policy to foster bipartisanism and improve his hometown. Enter James Wagner, a Mine Fellow with a background in civil engineering and urban planning and a penchant for data-based interventions. Wagner now leads a cross-department team in the mayor’s office with a three-pronged approach: strategy, data, results.

            “My job is to empower the city’s organizations to use data in their decision-making,” says Wagner, with the enthusiasm of an entrepreneur in the midst of his latest project. “Our first goal was to create a strategy in which, for the first time in over a decade, we have a broad view of the entire city.” Part of this strategy is to create cross-department transparency through the use of dashboards, public meetings, and autonomous teams. A major product of this strategy is a series of forums called TulStat, in which “department leaders share accurate information, create strategies, deploy resources, and provide for regular follow-up on progress toward goals.” This emphasis on strategy and data naturally leads to the third component of Wagner’s job. “By focusing on results, if something doesn’t work, we try something different. That’s the heart of our approach.” Through a combination of different results-oriented implementations such as A-B testing and randomized trials, Wagner is able to quickly see which interventions work and which don’t. This centralized data collection and analysis lends itself well to Pay for Success (PFS) agreements, which Wagner is particularly excited about.

  James Wagner  Chief of Performance Strategy and Innovation

James Wagner
Chief of Performance Strategy and Innovation

            The University of Virginia Pay for Success Lab was the first to bring Tulsa’s attention to PFS. The combination of results-oriented policy with performance-based intervention is exactly what PFS stands for, and Wagner believed this might be a viable option for Bynum’s city-wide strategy. But due to the city’s unique lack of jurisdiction over social services, Wagner was quick to point out that Tulsa would most likely not serve as an end-payer for PFS projects anytime soon. So how could the city, and Wagner more specifically, help ensure PFS projects are created to benefit its citizens? By doing what it does best: convening stakeholders through data.

            “Mr. Wagner has been a strategic partner in our effort by arranging conversations with numerous organizations doing great work on the issue of mental health,” says Josh Ogburn, the director of the University of Virginia’s Pay for Success Lab, as he describes the Lab’s latest project to improve mental health outcomes. Thanks to Mr. Wagner’s connection, the PFS Lab is now working with PACT, a program run through the Oklahoma Department of Mental Health and Substance Abuse Services that uses the Assertive Community Treatment (ACT) model. The ACT model is “an effective, evidenced-based, outreach-oriented, service delivery model using a 24-hour-a-day, seven-day-a-week approach to community-based mental health services” according to the program’s website. By focusing on individuals who are not well served by traditional psychiatric treatment, PACT and the PFS Lab hope to not only improve mental health outcomes but also reduce inefficient state spending on expenses like ER admittances. Ogburn highlights the possible benefits from a partnership between the Lab and PACT: “Our goal is to identify a results-driven approach that will provide high-quality cost-effective services to those who have mental health challenges in the Tulsa region and beyond.”

            James Wagner hopes that one day the mayor’s office can do more than just convene stakeholders, but can actually partner in a PFS agreement: “There will be something down the road that does connect with our core mission and what the city of Tulsa is trying to do. We’ll keep at it.” Until then, the PFS Lab is excited to continue working with Mr. Wagner to help improve the Tulsa region through broader projects.

Batten Student Draws National Attention to Pay-For-Success Affordable Housing Solutions

Originally posted on the website of UVA's Frank Batten School of Leadership and Public Policy.

A Senior Research Fellow at Batten’s Pay for Success Innovation Lab is drawing national attention to solutions for financing affordable housing.

Stefano Rumi, a Jefferson Scholar and Echols Scholar who is minoring in Social Entrepreneurship, told 300 housing experts and others at a Washington, D.C. symposium that Pay for Success contracts stimulate innovative approaches to finance new construction.

Rumi’s 62-page groundbreaking report, “Pay for Success & Affordable Housing,” advocates that “affordable housing (is) a fundamental right and pressing social issue” that “impact(s) on health, education, and opportunity, among other aspects of every individual’s daily life.”

   Stefano Rumi

 Stefano Rumi

Rumi, who is in the distinguished majors Bachelor of Arts program in Sociology, spoke at a meeting of the National Housing Partnership Foundation, which teamed up with Batten to produce the report. Rumi’s presentation preceded a panel discussion among experts on “Affordable Housing: Shaping The Future Today,” placing Rumi’s consequential findings squarely in the heart of policymakers’ debates about solutions to the national housing crisis. The panel’s moderator was the veteran real estate writer Michele Lerner.

  Panel participants at the National Housing Partnership Foundation conference (photo courtesy of Stefano Rumi)

Panel participants at the National Housing Partnership Foundation conference (photo courtesy of Stefano Rumi)

Held at historic Union Station, the meeting also served as the inaugural fundraising dinner for the National Housing Partnership Foundation, whose mission is to provide quality, affordable, rental housing and resident services for low- and moderate-income families and seniors. 

Two leading U.S. Senators—Orrin Hatch (R- Utah) and Maria Cantwell (D-Washington)—received inaugural Trailblazer Awards as proponents of national affordable housing policy through expansion of the Low Income Housing Tax Credit (LIHTC).

“They are among the biggest proponents of affordable housing in Washington,” Rumi said of the two senators.

“This is a testament to the fact that Pay for Success is a truly bipartisan solution, and it’s something that people all across the aisle can (support) because it involves the fiscal responsibility that conservatives push for, and involves providing adequate social welfare, which liberals push for. It’s truly the best of both worlds.”

A leading advocate of Rumi’s work is the president and CEO of The NHP Foundation, Richard Burns, who wrote an opinion essay on Pay for Success, including Rumi’s findings, last month for The Hill.

Pay for Success gets funding from philanthropies, non-profit organizations, and others to begin projects. The government then reimburses the funding groups after the project is completed—and judged to be successful.

As Burns wrote, “Because the government does not reimburse services investors until successful completion of the contract, taxpayers are insulated from inefficient spending and governments can save future costs in the process.”

The Pay for Success model, Burns wrote, “promotes what Stefano Rumi calls the ‘double-bottom’ line of social good and profitable impact investing. Rumi…writes of Pay for Success that it ‘increases the impact of philanthropic and charitable capital through entrepreneurial solutions.’”

Part of Rumi’s feasibility study included research from Charlotteville’s Thomas Jefferson Area Coalition for the Homeless, which calculated the average cost of homelessness per person on the local government.

Rumi concluded that local governments would save money if they provided adequate housing.

“It makes more sense for governments to provide quality affordable housing for homeless individuals and families than to continue paying for social services that are incurred because of homelessness,” Rumi wrote, noting that a homeless individual in Charlottesville costs the city about $22,000 per year.

“The $22,000 annual cost to the city government of a single homeless individual demonstrates the incredible price communities pay to keep people on the streets,” Rumi wrote, citing a 2012 study by the area’s Coalition for the Homeless.

“These numbers are higher in cities like New York, where the average cost of sheltering a single homeless adult in 2014 was $28,609; the figure is $37,047 for families.

“These numbers do not include the costs of social services provided to address issues stemming from homelessness, such as arrests for vagrancy and hospital visits for exposure to the elements,” he wrote.

Rumi, who is from the Los Angeles area, is self-effacing in describing his work as a “large and unwieldy report.” But his rigorous and thorough document presents case studies of clear successes of Pay for Success efforts in a several counties, cities and states: Cuyahoga County in Ohio (outside of Cleveland) and Santa Clara County in California (outside of Los Angeles); Salt Lake City and Denver; and Massachusetts.

In addition, another advocacy organization, the Corporation for Supportive Housing, has begun studying Richmond as a possible Pay for Success site, and it also is conducting feasibility studies in Clark County, Nevada (outside of Las Vegas), Philadelphia, and Oklahoma.

The Denver effort, described in detail in Rumi’s report, will build 210 newly- constructed single-site homes and 40 refurbished rental units scattered across the city.

The project shows “‘promising’ early results,” according to an article in the Denver Post. Financing included $2.7 million in Low Income Housing Tax Credits and $3.2 million in gap financing provided by the City of Denver and State of Colorado.

  A 100-unit apartment building, under construction last fall in downtown Denver for the Colorado Coalition for the Homeless, part of Denver’s social impact bond-funded homeless initiative. (photo courtesy Jon Murray of  The Denver Post )

A 100-unit apartment building, under construction last fall in downtown Denver for the Colorado Coalition for the Homeless, part of Denver’s social impact bond-funded homeless initiative. (photo courtesy Jon Murray of The Denver Post)

Rumi said advocates for affordable housing hope to use the report to influence the U.S. Department of Housing and Urban Development.

“In addition to bring light to this issue, we’re really looking to get the federal government to look at Pay for Success very seriously.

“The fact that every city in this country has an affordable housing problem (means) and there is no way that we can’t get the federal government involved.”

Rumi, Burns of the National Housing Partnership Foundation, and others also see the value in connecting affordable housing with health services for homeless individuals and others.

“We’re actually going to be following up (this) year with an even bigger symposium,” Rumi said, “underscoring the role of Pay for Success to incorporate preventive health care into the affordable housing model.”

In his opinion piece, Burns cites the value of affordable housing for “onsite programs ranging from financial literacy, to children’s afterschool programs, to job training to social service referrals,” with “the most promising of these services (being) preventive health care for low-income families and seniors.”

Rumi said, “It’s really a fundamental human rights issue. I really think we need to understand affordable housing as nothing less than a human and civil rights issue.”

  National Housing Partnership Foundation meeting last fall (photo courtesy Stefano Rumi)

National Housing Partnership Foundation meeting last fall (photo courtesy Stefano Rumi)

——

  Stefano Rumi, left, handles the business expansion of Babylon Micro-Farms, an undergraduate-led company that is bringing  small hydroponic farm prototypes to Grounds as part of an effort to make fresh fruit and vegetables easily accessible for more people. (The plants grow under violet light.) (photo by Dan Addison, UVA Today)

Stefano Rumi, left, handles the business expansion of Babylon Micro-Farms, an undergraduate-led company that is bringing small hydroponic farm prototypesto Grounds as part of an effort to make fresh fruit and vegetables easily accessible for more people. (The plants grow under violet light.) (photo by Dan Addison, UVA Today)


Dr. Ben Carson, Secretary of the U.S. Department of Housing and Urban Development, discusses the crisis of homelessness in this opinion published in USA Today.

While at UVA, Rumi has also applied his entreprenurial interests to an undergraduate sustainability initiative, teaming up with other students to develop a state-of-the-art hydroponics system.

In Its Third Year, the Pay for Success Lab is Catalyzing Social Finance

By Adam Jones

This is the first of a series of blog posts to share the University of Virginia Pay for Success Lab’s impact as it enters its third year. In this post, Adam Jones, Fellow for Strategic Initiatives, interviews Joshua Ogburn, the lab's Director.

The University of Virginia’s Pay for Success (PFS Lab) was started in September of 2015 to educate the University and its surrounding communities about social finance and evidence-based policymaking. Dr. Christine Mahoney, Director of Social Entrepreneurship @ UVA, and Josh Ogburn, then a Masters of Public Policy candidate, discussed the possibility of convening stakeholders from across the state to foster conversations around these topics. Since then, the PFS Lab has engaged with dozens of communities, employed almost 30 student researchers, and developed strategic partnerships with several leading PFS advisory firms.

“I’ve always been interested in how governments can achieve their objectives more effectively. There are a lot of evidence-based ways to solve problems, but communities aren't adopting them on a large scale,” said Ogburn, founder and Director of the PFS Lab.

Pay for Success (PFS) contracts, also known as Social Impact Bonds, are an innovative funding vehicle to draw private capital into traditionally government-funded services. Because Pay for Success facilitates government payments based upon achievement of results, instead of traditional upfront funding, these contracts lend themselves to bipartisan support - a key advantage in a purple state such as Virginia. By efficiently allocating public funds to projects that have retroactively proven their worth, PFS contracts promote fiscal responsibility. Additionally, PFS contracts provide access to private capital through investment, meaning more people get more social services. By striking this balance, PFS projects have the potential to increase services for at-risk populations through a bipartisan channel.

The advantage of housing the PFS Lab under the umbrella of the University of Virginia extends beyond the state’s political climate. “The PFS Lab gets UVA involved in one of the most exciting ideas in the public sector,” said Ogburn.

By leveraging the institutional support of the University, the Lab hopes to act as a catalyst in getting communities to adopt more innovative policy solutions. The PFS Lab also makes UVA part of a select group of elite universities that have dedicated research wings for exploring the intersection of evidence-based policy and impact investing. As the PFS Lab continues to build its brand, building connections to other national organizations at the cutting-edge of policy innovation will be instrumental to its success.

Since the opening of the Lab, Ogburn and his team have worked on projects ranging from workforce development to environmental sustainability. It wasn’t until the end of its second year, however, that the Lab found its competitive advantage in the market. In its early stages, the PFS Lab envisioned itself as having a role similar to the ten leading PFS advisory firms that provide a full suite of project development services. Now, the Lab focuses on only on “project discovery”. During this phase, the PFS Lab identifies a community wrestling with a difficult public policy issue, educates local stakeholders about PFS and other results-based strategies, and assists them with developing a PFS project outline. Should the community want to do more, it can refer them to advisory firms that can assist.

“There are a lot of organizations that help communities develop projects, but no organizations exist just to educate communities and let them know that Pay for Success is even an option,” said Ogburn.

The PFS Lab’s mission is now to identify and advance promising projects through education, engagement, and networking. Ogburn is confident that this new approach will bring more localities into the social-finance fold. With a new mission in place, the PFS Lab has high hopes for the future. Within the next five years, Ogburn hopes to partner with all leading PFS advisory firms: “Under our model, there is a streamlined progression from us to advisory firms.”

Furthermore, the PFS Lab will keep churning out the policy leaders of tomorrow. With sixteen former fellows and fifteen current fellows, the lab is on track to educate over seventy-five students on the principles evidence-based policy and social finance. Ogburn believes these students will go on to spread awareness of how communities can increase their impact.

The PFS Lab has found its place in the market, and its current trajectory is promising. But at the end of the day, it all gets back to public service. According to Ogburn, “This is about serving people, we’re making a positive impact on at-risk people’s lives.” 

How Pay for Success Can Improve Water Infrastructure

By Henry Crochiere and Joshua Ogburn

The mission of the University of Virginia Pay for Success Lab is to identify and advance impactful Pay for Success projects in localities across the nation. One of the Pay for Success Lab’s current projects is to identify communities that can benefit from an Environmental Impact Bond (EIB), a novel Pay for Success (PFS) model recently implemented in Washington, D.C. to address a critical water infrastructure problem. Combined Sewer Systems collect stormwater, domestic sewage, and industrial wastewater in the same pipe and direct it to water treatment facilities. While these systems were an innovation in the mid 1800’s, during periods of heavy rainfall, they overflow excess capacity through Combined Sewer Overflows (CSOs) into surrounding bodies of water. Over the past 150 years, society has recognized that these overflow events represent a significant hazard for the health of communities and the environment.

There are two main methods to address CSO problems. The first and most traditional method is Gray Infrastructure, which often consists of building immensely large, underground water retention tanks that store water during periods of heavy rainfall. The other option is Green Infrastructure, a term for various approaches and technologies that allow rainwater to enter the water table naturally. While Gray Infrastructure is a more certain solution, the underground tanks hold a specific amount of water, Green Infrastructure provides numerous other benefits such as improved cost effectiveness, water and air quality, job creation, and health benefits.[1] Over the past few decades, the lower costs and greater effectiveness of Green Infrastructure has increasingly made it a viable solution for communities.

Types of Green Infrastructure

  Source: https://www.dcwater.com/green-infrastructure

Source: https://www.dcwater.com/green-infrastructure

The Environmental Protection Agency currently provides localities with permits that monitor the amount of allowable CSO levels. To maintain compliance, the EPA issues fines and sometimes Consent Decrees, a court-mandated agreement for the locality to reduce the amount of overflow. Washington D.C. is one of the cities that is facing a CSO problem and a Consent Decree. George Hawkins, CEO of DC Water, wanted to address DC’s overflow problem while also being environmentally and cost conscious. However, Hawkins had a dilemma: how can D.C. justify spending the time, money, and resources on a Green Infrastructure project if it does not work? The answer was an Environmental Impact Bond (EIB), the first of its kind.[2]

The EIB is a performance-based municipal bond that allows localities to implement Green Infrastructure to address their CSO problem while also providing financial protection should the Green Infrastructure fail to meet expectations. While the EIB is a 25-year bond, there is a check-up after five years to measure the success of the GI using predetermined milestones. If it does not meet expectations, the government pays back a lower interest rate. If the EIB reduces CSOs by more than what was expected, the locality pays back a higher interest rate.[3]

The PFS Lab believes this performance-based model is applicable in many communities beyond Washington, DC. We have been working to contact every locality currently under Consent Decree. We have found that while most of the water authorities were unaware of the EIB model, they are often interested once we explain it to them in detail. Of course, the process for a locality to decide whether to utilize an EIB is not short. Over the next several months, we look forward to working with leading Pay for Success advisory firms to advance these projects. If you have any questions or ideas, please do not hesitate to reach out to us.

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Henry Crochiere is a Fellow in the University of Virginia Pay for Success Lab. He is a rising Fourth Year at the University of Virginia studying Economics and Spanish. Henry is the current president of the Inter-Fraternity Council as well as the co-chair of Pancakes for Parkinson's, UVa's largest student-run philanthropy. Henry wants to pursue a career in consulting or impact investing after he graduates.

Joshua Ogburn is Director of the University of Virginia Pay for Success Lab. He has worked to initiate numerous Pay for Success projects in the areas of early childhood education, workforce development, supportive housing, home visiting, and pediatric asthma. Joshua holds a Master of Public Policy from the University of Virginia’s Frank Batten School of Leadership and Public Policy, and a Bachelor of Arts in Public and Urban Affairs from Virginia Polytechnic and State Institute (Virginia Tech).

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[1] https://www.epa.gov/green-infrastructure/benefits-green-infrastructure

[2] http://www.investinresults.org/sites/default/files/book-chapter/WM_24_Bafford-Kim-Letsinger.pdf

[3] https://www.epa.gov/waterfinancecenter/dc-waters-environmental-impact-bond