New Book Documents What We Know About Innovative Financing Models

Governments on both sides of the Atlantic are attracted to financing models that encourage social innovation, but challenges persist around when and how to apply these outcomes-based models, and how to right-size these investments, according to a new book.

The book, Payment by Results and Social Impact Bonds, published by Policy Press evaluates what’s known to date about the effectiveness of an approach to contracting that ties payment for service delivery to the achievement of measurable outcomes. The approach includes Payment by Results and Social Impact Bonds in the UK, where it originated, and Pay for Success in the US. Regardless of differences in implementation between the UK and US, this approach offers a way for governments to scale up effective programs and interventions, as well as test innovative models of service delivery.

The book is jointly authored by experts from Manchester Metropolitan University, University of Southern California, and Nonprofit Finance Fund. Among its findings:

  • While still untested across many policy areas, the approach has potential for addressing social challenges that have proven resistant to traditional policy responses.
  • In the UK, Payment by Results and Social Impact Bonds originated as a means to attract new sources of funding for public services, increase competition among service providers and drive innovation. Over 30 Social Impact Bonds have been launched and £15 billion of government services involve Payment by Results. However, evaluation has been limited and, to date, there is little evidence that these approaches have driven substantial innovation in service response.
  • In the US, Pay for Success projects have been characterized by rigorous evaluation to minimize the potential risk to taxpayers if outcomes aren’t achieved. More than 20 Pay for Success projects have addressed, for example, criminal justice, homelessness, and early childhood needs in at-risk communities.

“Social Impact Bonds and Payment by Results represent an innovative and radical approach to commissioning and funding important social services, yet there has been remarkably little evaluation of these programs in the UK,” said Chris Fox, the book’s lead author and a professor at the Policy Evaluation and Research Unit, Manchester Metropolitan University.

“I felt it was essential to make this contribution now to help those working in spaces where they might consider Social Impact Bonds to drive social change,” said co-author Gary Painter, a professor at USC Sol Price Center for Social Innovation. “This is a new strategy and funding method for social services that a lot of people in the field still don’t fully understand.”

“We’ve all learned a great deal from piloting this approach in the US over the last eight years, as our sector continues to seek better ways to connect effective services to vulnerable people,” said co-author Jessica LaBarbera, Vice President at Nonprofit Finance Fund, which has been involved in many US PFS projects and also maintains the Pay for Success field-wide learning resource.

Payment by Results and Social Impact Bonds: Outcome-based Payment Systems in the UK and US, authored by Kevin Albertson, Chris Fox, Chris O’Leary, and Gary Painter, with Kimberly Bailey and Jessica LaBarbera, was published by the Bristol University Policy Press in the UK in February 2018 and will be released in the US on May 15, 2018; it is distributed in the US by the University of Chicago Press.


About Nonprofit Finance Fund
Nonprofit Finance Fund® (NFF®) advances missions and social progress in underserved communities through financing, consulting, partnerships, and knowledge-sharing that empower leaders, organizations, and ideas. A leading Community Development Financial Institution (CDFI), NFF currently manages over $310 million. Since 1980, we have provided almost $700 million in financing and access to additional capital in support of over $2.3 billion in projects for thousands of organizations nationwide. Learn more at and @nff_news

About the USC Sol Price Center for Social Innovation

The USC Sol Price Center for Social Innovation develops ideas and illuminates strategies to improve the quality of life for people in low-income urban communities. Housed in the USC Price School of Public Policy, the Price Center develops social innovation approaches, including new models of delivering social impact, to identify pathways of opportunity for residents of low-income neighborhoods. The Price Center also works to develop and apply new evaluation frameworks to support the social innovation process. Learn more at and @USCPriceCSI

About The Policy Evaluation and Research Unit at Manchester Metropolitan University
The Policy Evaluation and Research Unit, located in the Sociology Department at Manchester Metropolitan University brings together evaluators, sociologists, political scientists and economists all with an interest in policy evaluation and public service reform. The Unit delivers projects for funders including The European Commission, UK Government Departments and voluntary sector organisations. Its work cuts across sectors including welfare, criminal justice, early years, housing and political radicalization.