Ill. Joins States Trying ‘Pay for Success’ in Social Service

Illinois is introducing its first test of the “pay for success” concept of contracting for social services, working with a coalition of foster-care and youth agencies that will be paid for positive results rather than simply providing services, reports Crain’s Chicago Business.

The move by Gov. Pat Quinn’s administration adds Illinois to the handful of states experimenting with the new model, also called social-impact bonds, in which contractors must meet specific performance goals and private investors foot upfront costs, reaping returns if the new programs yield cost savings.

Members of the Chicago-based Conscience Community Network will aim to keep troubled youths out of group and foster homes and juvenile detention centers. In the last fiscal year, the Illinois Department of Children and Family Services paid about $155.3-million under 92 contracts to keep some 1,300 adolescents in group homes or other institutions.

Read a Chronicle of Philanthropy article on some states’ embrace of pay-for-success.