When governments implement and scale innovative social programs, they face two large hurdles: funding the program and managing the risk. Although the pay for success (PFS) model addresses both—while spreading important principles and practices of improved performance management—shifting risk is how PFS adds significant value for governments.
Traditionally, if governments want to implement a new and potentially impactful social program, they bear all the risk of the program’s potential failure. Using evidence to identify successful programs helps defray—but doesn't eliminate—some of this risk. Risk of failure can discourage governments from pursuing the program altogether, particularly in the tight fiscal environments many governments face today.
