Impact At Scale

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Pay for Success Social Impact Beeck Center

Building Public-Private Partnerships to Scale Pay for Success

By: Congressman John Delaney (MD-6)

Having taken two companies public before joining Congress, people often ask me if I find it frustrating that the government doesn’t operate like a business. They’re often surprised when I respond that the government is not a business! Unlike a business, the government doesn’t have a bottom line of producing profits. Unlike a business, the government often can’t afford to take risks; when the government fails, profits don’t suffer, people do. That doesn’t mean that the government shouldn’t take certain lessons from business, such as the benefit of eliminating unnecessary bureaucracy to increase efficiency. But there are some aspects of the private sector that the government just isn’t set up to replicate; the government will never be able to match the private sector’s creativity, innovation, focus on metrics, and due diligence in risk management.

The good news is that we don’t have to. All we have to do is work in partnership with the private sector to leverage those private sector traits for the benefit of the American public. When you look around the world and see how governments and the private sector interact, you quickly realize that you get the best economic outcomes when the government and private sector are working together, rather than against each other. Many state and local governments throughout our country do well at this. The federal government, however, has a lot of room for improvement in this category.

But I view that as a big opportunity. We can improve the lives of the average American by forging better partnerships with the private sector. That’s one reason why I’m such a huge supporter of Pay For Success and Social Impact Bonds, and why I’ve worked so hard with my Republican colleague Congressman Todd Young to advance this bipartisan initiative in Congress. Pay For Success is a model that incentivizes the government, investors, and non-profits to work together to produce better outcomes for our citizens. That would be a positive change on its own, but the model provides an additional benefit because it produces these better outcomes in a way that saves taxpayer dollars.

It’s an exciting time in the Pay For Success world. Only a handful of projects are underway in the U.S., but the pending deals will already increase the number by several multiples. With the new grants awarded this month by the Social Innovation Fund at the Corporation for National and Community service to expand and scale Pay For Success, I expect the number to soon be in the hundreds as states and local communities adopt this approach. When we pass the bipartisan Young-Delaney Social Impact Bond Act, to allow the federal government to contribute to Pay For Success deals, in which a portion of the savings occur at the federal level, that will expand the scope of possible Pay For Success projects even further.

When business leaders work together on deals, they don’t care if the person at the other end of the table is Democrat or Republican. I know I never did. The goal is to find a way for both parties to benefit. With Pay For Success, we can all benefit, not by making the government into a business, but by letting the private sector help the government improve lives and save taxpayer dollars. We don’t have to choose between these goals. As long as we work together, we can accomplish both.

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