Press Release February 26, 2014

Goodwin Advises on Nation’s Largest “Pay For Success” Social Innovation Financing

Goodwin Procter attorneys recently advised pro bono client New Profit, a nonprofit social innovation and venture philanthropy fund, on the organization’s role as a funder and intermediary in the nation’s largest financial investment in a pay for success (PFS) initiative. The Massachusetts Juvenile Justice Pay for Success Initiative was launched by Massachusetts Governor Deval Patrick on January 29 and is focused on improving outcomes for at-risk young men in the juvenile justice and probation systems.

In a PFS initiative, private and philanthropic funders provide start-up loans and grants to a promising social program. These funds may be repaid by a state or other government entity, but only if the program meets specific target outcomes that will generate savings for government as well as creating benefits to society.

In the Massachusetts initiative, up-front funding was provided by a commercial funder as well by New Profit and other non-profit funders. The Massachusetts program will provide intensive outreach, life skills and employment training to 929 high-risk young men in several communities in and around Boston and in Springfield, Mass.

In addition to providing a $2 million grant to the initiative, New Profit is providing management support to the initiative. New Profit will recycle any future repayments of its grant funds from the Commonwealth to support scaling of services to at-risk young people outside of Massachusetts.

The Massachusetts initiative is not only the largest to date in the U.S. but also the first to use a competitive bidding process to select the service provider.

More information about the New Profit, the Massachusetts PFS, and the success of the public-private partnership can be found in a recent Boston Globe article.

The Goodwin team advising New Profit included partners Sue Abbott and Mark Macenka, senior attorney Janet Rickershauser and associate Naina Bhadra.