By Charles Ramsey
and Steve Wray
In 2014, the City of Philadelphia commissioned a study to assess a new approach to reducing crime.
One aspect of the study focused on a familiar topic: transitional employment to help individuals recently released from prison become productive citizens who are less likely to re-offend.
Another aspect focused on an innovative way to finance the program through investments from the private sector, foundations, and nonprofit organizations.
The approach is commonly referred to as "Pay for Success." The investors provide funding for programs designed to improve lives and receive a return on those investments if - and only if - the programs produce tangible outcomes. Pay for Success programs - which can be operated by government entities and other providers - benefit by being able to obtain funding that would not otherwise be available.
In every case, the government and the investors agree on the target population, participating service providers, the types of interventions that will be employed, expected outcomes, the monetary value of these outcomes, and how the savings, which are achieved as a result of the interventions, will be shared with investors and government.
A Pay for Success approach could provide invaluable funding for transitional employment for offenders here in Philadelphia, which has one of the highest incarceration rates of any large U.S. city. Right now, about 57 percent of those who have been incarcerated in the Philadelphia prison system are locked up again within three years of being released, and studies show that unemployment is one of the most influential predictors of recidivism.
The study on a proposed Pay for Success project found that for every dollar invested in a transitional jobs program, approximately $1.70 would be generated for the government and society based on reduced expenses for beds in state corrections facilities and for victimization and public safety costs. The Pay for Success model would allow for that 70 cents in savings to be split between the investor and the government entity administering the program.
The approach - which essentially pays for preventive as opposed to remedial measures - can be applied to numerous challenges for families and communities.
It could fund preschool opportunities so more children start school ready to learn, thereby reducing taxpayer expenses for special education.
It could fund voluntary home visits by trained mentors and nurses to help young, at-risk parents learn how to care for their children, thereby reducing child abuse and neglect, both of which cost taxpayer dollars.
And it could be an especially smart way to prepare troubled men and women in Philadelphia and elsewhere to be contributing members of society, which is obviously better than paying for food and lodging behind bars.
Right now, there are more than 50 Pay for Success programs in various stages of implementation around the country. In the past, these partnerships have been developed after the passage of legislation at the local or state levels that established authority for the contracts. But now there's a new opportunity to proceed through bipartisan federal legislation known as the Social Impact Partnership Act.
This legislation would encourage Pay for Success arrangements because the federal government would be able to enter into agreements and pay for outcomes that save money on programs that are funded at the federal, state, and local levels. We believe it would also encourage states and localities to set a higher bar for tangible results for a wide range of social programs that are typically paid for in whole or part by taxpayers.
As the commissioner of the Philadelphia Police Department and the executive director of the Economy League of Greater Philadelphia, we have a joint stake in supporting this bipartisan legislation, which is also being championed by the ReadyNation business leader group (www.readynation.org) and Fight Crime: Invest in Kids (www.fightcrime.org), a nonprofit public safety organization.
This legislation offers a smart, strategic way for the private sector to invest in social programs that strengthen our communities, yielding rich rewards in quality of life for our citizens and achieving a smart return for taxpayers as well.