Pay for Success (PFS) describes a type of social impact contractual arrangement that enables local, state and federal governments to scale up an early childhood program that has a proven record for improving desired outcomes and reducing government costs. Governments pay for a program expansion only if the program actually results in cost-avoidance savings and, governments pay using only a portion of the savings that actually occur.

For a one-page summary on ReadyNation’s work on Pay for Success, click here. To be kept up-to-date on early childhood PFS finance developments, click here to be put on the PFS email list today.

The money to initially pay for program expansion comes from private and philanthropic investors who believe, based on research-based feasibility studies, that the program will have expected cost-avoidance effects. If it does not, they may lose all or a portion of the money they invested. In this way, governments take on little or no financial risk if cost-avoidance savings are not realized. PFS social impact financing can be an excellent way for business and philanthropic leaders to increase funding and demonstrate the economic power of quality early childhood investments.

New Pay for Success Updates

ReadyNation specializes in applying PFS finance to scaling up early childhood programs. It is leading an active effort to develop the research, operational and legal frameworks needed to set up successful early childhood PFS arrangements. We also provide technical assistance and make presentations to organizations on early childhood PFS. For more information and assistance in this regard, please contact Phil Peterson on our staff. For sponsoring ReadyNation’s work in this area, we greatly appreciate the generous support of the Pritzker Children’s Initiative, a national project of the J.B. and M.K. Pritzker Family Foundation.

ReadyNation’s 2012 and 2013 papers on paying for pre-k using special education cost savings led the way to development of the Salt Lake City Utah pre-k PFS project and examination by many other local governments and school districts of the feasibility of PFS to improve school readiness and increase k-12 education productivity. To see our 2012 paper on pre-k PFS finance click here. To see the 2013 paper click here.

ReadyNation experts, such as Phil Peterson, are on hand to speak at high-level events. Photo courtesy John Watkins at The NWI Times

ReadyNation experts, such as Phil Peterson, are on hand to speak at Pay for Success events. Photo courtesy John Watkins at the NWI Times.


ReadyNation’s 2014 paper on paying for prenatal counseling is showing state governments across the country how infant health can be financed using Medicaid cost avoidance savings in a PFS framework. Click here to see ReadyNation’s work on prenatal counseling PFS finance.

Though there are more than 50 PFS projects in development in the U.S.; only nine projects have been implemented so far. Of the nine, four are early childhood PFS projects – the Utah High Quality Pre-School Initiative, the Chicago Child-Parent Center Pre-School Initiative, and South Carolina Nurse-Family Partnership Project, and the Connecticut Family Stability Project. ReadyNation partners with the Institute for Child Success (ICS) to disseminate new information and updates on PFS initiatives. To facilitate understanding of some of these projects, the Institute for Child Success (ICS) prepared a brief showing project participants, financing, evaluation, timeframe and expected impact. Click here to see the ICS presentation.

Read more about early childhood PFS in the following papers:

Early Health ‘Pay for Success’ Social Impact Finance: Scaling Up Prenatal Care in Virginia.” Janis A. Dubno, Robert H. Dugger, Debra L. Gordon, David Levin, and Philip A. Peterson. ReadyNation Working Paper, November 2014.
• Click here for the financial model used in Early Health ‘Pay for Success’ Social Impact Finance

Financing Human Capital Development for Economically Disadvantaged Children: Applying Pay for Success Social Impact Finance to Early Child Development.” Janis A Dubno, Robert H Dugger, and Michele R Smith. ReadyNation Working Paper, June 2013.

Early Childhood ‘Pay-For-Success’ Social Impact Finance: A PKSE Bond Example to Increase School Readiness and Reduce Special Education Costs.” Robert H. Dugger and Robert E. Litan. Report of the Kauffman Foundation/ReadyNation Working Group. April 2012.

Past Events and Webinars

December 11, 2014-Early Health ‘Pay for Success’ Social Impact Finance: Scaling Up Prenatal Care

June 20, 2014—Webinar: State and Federal Pay for Success Legislation

March 27-28, 2014—Conference of the Early Childhood Social Impact Performance Advisors

March 11, 2014, conference call – The South Carolina Home Visiting PFS Project: ReadyNation – Human Capital & Economic Opportunity Working Group conference call.

December 5, 2013 conference call – PFS Success Social Impact Finance: Salt Lake City Pre-K Project

October 7, 2013 conference call — Pay for Success Social Impact Finance: Theory and Practice

October 25–26, 2012 – Kauffman–PAES Conference on Financing Early Childhold Development, Care, and Education

April 26, 2012 conference call — Early Childhood “Pay for Success” Social Impact Finance

April 3, 2012 – Webinar: Social Impact “Pay for Success” Finance: A PSKE Bond Example

January 5, 2012 conference, Human Capital & Economic Opportunity Working Group, University of Chicago, Chicago Illinois – Financing Human Capital Investment

October 25, 2011 – Invest in Kids Working Group 2011 Meetings, Webinar: The Sustainable Financing Model–Evidence from the Granite School District

July 20–21, 2011 – Kauffman–PAES Early Childhood Finance Innovation Conference Call

May 20, 2011 – Kauffman–PAES Early Childhood Finance Innovation Conference Call

ReadyNation Materials on Pay for Success

As Congress debates legislation to provide resources for the development of pay for success social impact finance projects (HR 4885: The Social Impact Bond Act), both ReadyNation and the Institute for Child Success provided statements.

Statement of ReadyNation on HR 4885: The Social Impact Bond Act to the Human Resources Subcommittee, Ways and Means Committee, US. House of Representatives. Robert H. Dugger, Ph.D., Philip A. Peterson, FSA, and Sara Watson, Ph.D.

Comments for the Record of the Hearing on Social Impact Bonds: Can They Help Government Achieve Better Results for Families in Need. In the Subcommittee on Human Resources of the Committee on Ways and Means. Bryan Boroughs, J.D., M.P.P., and Megan Golden, J.D.

Responses to Federal and State Requests for Information

General Readings on Pay for Success Social Impact Finance

U.S. Map of State Statutes and Activities