Should Grant Programs Become "Pay-For-Performance?"

February 9, 2011 | By Adrianne Fielding | 1 comment

Yesterday’s New York Times included a provocative article by David Leonhardt, and we wanted to hear what you think about it. Leonhardt claims that policymakers don’t really know which programs work and which ones don’t, “because rigorous evaluation is rare in government.”  He points to a recent Brookings Institution report finding that only one of ten major grant-funded social programs actually produces meaningful positive effects.

He goes on to describe an “intriguing” approach that is being tried in Britain, under consideration by states like New York and Massachusetts and potentially receiving pilot funding of $100 million in the Obama administration’s FY 2012 budget request that will be released next week. Leonhard cites a White House source who indicated that the administration’s seven pilot programs will include ones for job training, education, juvenile justice and children’s disability care.

The pilot programs and the approach Leonhardt considers is known as “pay for success bonds” or “social impact bonds,” and involve nonprofits or other groups underwriting and overseeing specific social programs.  The sponsors get reimbursed, but only if the program meets certain performance measures, and potential bonuses for overperforming programs could sweeten the deal.

Leonhardt is quick to admit that implementing this type of approach would be complicated, and that it just wouldn’t be feasible for certain federal programs.  But he seems to be a big fan of the overall concept.

What do you think?  Do you agree with Leonhardt about a lack of rigorous evaluation in government programs? What about the federal government’s Program Assessment Rating Tool, otherwise known as PART?  What about the logic models and evaluation plans that measure specific outputs and outcomes of individual grant-funded projects? How would running social programs through pay for success or social impact bonds change things for you or your organization?

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One Comment

  1. redwest
    Posted February 24, 2011 at 5:33 pm | Permalink

    If only this type of common sense were applied to other aspects of Federal spending. Rather than throwing billions to the wind (no pun intended) in every direction hoping against hope that uses the funding to come up with clean energy solutions, why not propose a simple incentive to the private sector guaranteeing a multi-billion dollar award to any organization or individual who successfully finds a solution to a specific clean, affordable energy target goal. Clear success measures are identified up front, applied consistently across all competitors. No solution? No cost to the taxpayer.

    In the end, you’ll have a stimulated the private sector and offered the catalyst that gives us affordable clean energy. At the same time, you’ve removed the burden of paying for trial and error from the shoulders of the taxpayer. And just imagine what could stem from the runner up solutions.

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