An area agency has been tapped to help blaze the trail for a new initiative backed by state funding to create innovative efforts to solve social problems.
But there’s one catch: The funding comes through only if the plan works.
Chelsea-based Roca, a youth development organization, was one of three agencies selected by the state in a competitive bidding process to take part in a Social Innovation Financing, or “pay for success,” pilot program.
State officials say Massachusetts is the first state to use of the model, which is intended to help service providers test new approaches while ensuring taxpayers only bear the cost of those found effective.
Roca and Youth Options Unlimited — a Boston program — were chosen to carry out initiatives to help youths aging out of the juvenile justice system make successful transitions into adulthood and employment. The Massachusetts Housing and Shelter Alliance was picked to develop solutions to homelessness in the state.
“We are thrilled and honored to be considered,” said Molly Baldwin, the founder and executive director of Roca.
Started in 1988, Roca works to help the highest-risk young people confront and overcome destructive behaviors and learn the skills needed to reengage and succeed in society. From its Chelsea office, the group serves Chelsea, Revere, and East Boston. Two years ago, it opened a Springfield office.
Baldwin said Roca has been working for the past six years to measure the performance of its work with young people to try to assess if “we are giving them the skills they need to change their lives and succeed.”
“We are really . . . just committed to demonstrating what we do is of value. So the fact that the state is looking at performance-based contracting and to drive the quality and really make changes, I think is really exciting,” Baldwin said.
The state also selected intermediary organizations that will partner with the selected agencies to raise funding from philanthropic organizations and other investors to pay the upfront cost of the services.
Under the model, the state will provide the funds to repay the investors only if the programs achieve agreed-upon goals. If they do not, the costs of the services will be absorbed by the investors and potentially, to a smaller extent, by the agencies.
The bid selections are contingent on the state and the selected organizations successfully negotiating contracts that will spell out in detail the specific measures of success and the funding involved.
In the case of the juvenile justice contracts, the measures of success will revolve around whether the participating youths reoffend at a lower rate and make greater strides in education and employment than the general population of youths aging out of the system.
Governor Deval Patrick last month signed into law legislation establishing a method for the state to fund the initiative.
Jay Gonzalez, the state’s secretary of administration and finance, said in an interview that the use of the pay for success approach in juvenile justice “is one way in which we are trying to get better results in government for lower cost for taxpayers.
“Right now we have a very bad outcome” for youths aging out of the juvenile justice system “because we don’t really provide intensive services for these kids,” Gonzalez said, citing figures that 75 percent of males end up convicted of a crime within five years, and that 67 percent are incarcerated.
“We can get a better outcome if we can partner with an organization like Roca that has a lot of experience and has demonstrated positive results in . . . providing intensive community services to this population, and helping them to get jobs and to get educated and to get housing,” he said. “That would be a much better result for the kids and their communities and save the government a lot of money.”
Gonzalez said if the pilot efforts prove successful, the state will look to use pay for success for other projects.
Third Sector Capital Partners, a Boston-based nonprofit financial advisory firm, has been selected to work as the intermediary organization for the juvenile justice project, working in partnership with New Profit, Inc., a Cambridge-based nonprofit venture philanthropy firm.
George Overholser, CEO of Third Sector Capital Partners, said his firm – which is also participating in the homelessness project – thinks pay for success can be a valuable tool.
“It’s a way to fund prevention, which is often the first type of program to be cut during tight fiscal times,” he said. “It’s a way to keep your eye on funding what works, using rigorous scientific data. And it’s a way to accomplish social benefits while remaining fiscally prudent.”Continued...