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Mayor's Office of Workforce Development receives federally funded support to advance Pay for Success in youth workforce development

Apr 13, 2016

The Mayor's Office of Workforce Development (OWD) has been selected as part of a national competition to assess the feasibility of implementing the innovative Pay for Success contracting model to Boston's Summer Youth Employment Program. 
In Pay for Success (PFS) contracts, governments fund social programs based on their ability to deliver mutually agreed upon outcomes for people in need. Private investors provide up-front funding and if the program is successful, the government repays those investors. If a program does not succeed, the government is not liable for any payment; if a program exceeds its goals, government pays a small return on investment. PFS contracts are designed to increase government accountability while simultaneously attracting more funds for high-performing programs that measurably improve people's lives.

With the federally funded technical assistance of Third Sector Capital Partners, Inc. (Third Sector), the OWD will investigate the feasibility of applying PFS to Boston's Summer Youth Employment Program, a 6-7 week program that provides youth aged 14-22 with private sector jobs and work readiness training. In their preliminary results, researchers at Northeastern University have found that participants report significant increases in job readiness skills, financial literacy, community engagement, and college aspirations.  

"This is an exciting opportunity for our Office of Workforce Development," said Mayor Martin J. Walsh. "We know that job experience and work-readiness training serve as a powerful platform to help young people reach their career and educational goals.”
Trinh Nguyen, Director of OWD, echoed the Mayor’s sentiments, “The Pay for Success model can help us potentially leverage new resources to increase our capacity to serve more young people. This is an opportunity we’re very enthusiastic about."
Third Sector’s work with the OWD is supported by a grant from the Corporation for National and Community Service’s Social Innovation Fund. Annually, state and local workforce boards receive over $800 million in federal funding for youth workforce development programs. Third Sector’s goal is to transition these funds into more outcomes-based contracts by positioning awardees as national models for scaling pay-for-performance (P4P) contracting.
Through the Workforce Innovation and Opportunity Act (WIOA), new funding dollars for Pay for Success are being made available to states. Specifically, WIOA permanently establishes P4P (a form of PFS) as an eligible use in all three of its funding streams (Adult, Youth, and Dislocated Workers), allowing states to use 15% of their total formula funds and authorizing local workforce boards to devote up to 10% of total funds toward pay-for-performance programming.
The OWD was selected for its demonstrated commitment to leveraging WIOA to promote long-term outcomes in Youth Development and Economic Opportunities. These issue areas are consistent with the priorities of the WIOA Youth Program: career exploration and guidance, support for educational attainment, opportunities for skills training in in-demand industries and occupations, and culminating in a good job along a career pathway or enrollment in post-secondary education.
Third Sector, a grantee of the Social Innovation Fund’s Pay for Success program, announced the selection of the OWD along with four other awardees (called “sub-recipients”) after a highly selective national competition. The Sub-Recipients are based in the following locations: Austin, TX; Boston, MA; Denver, CO; Northern Virginia; and San Diego, CA.
“We are honored to work with the OWD to explore how WIOA funding can be leveraged for rigorous pay for performance initiatives,” said Third Sector Co-Founder and Co-President Caroline Whistler. “Support from the Social Innovation Fund allows Third Sector to lead a diverse cohort of governments in accelerating their pursuit of Pay for Success to improve youth workforce outcomes.”  
In 2014, Third Sector received $1.9 million from the Social Innovation Fund (SIF), a program of the Corporation for National and Community Service, to help strengthen the pipeline of state and local governments and service providers prepared to implement PFS projects. Third Sector’s first cohort of awardees has been working since mid-2015 to advance PFS in nine jurisdictions. To deliver the technical assistance, Third Sector is partnering with Abt Associates, America Forward, National Association of Counties, and National League of Cities.
About Third Sector Capital Partners, Inc.
Third Sector leads governments, high-performing nonprofits, and private funders in building evidence-based initiatives that address society’s most persistent challenges. As experts in innovative public-private contracting and financing strategies, Third Sector is an architect and builder of the nation’s most promising Pay for Success projects including those in Commonwealth of Massachusetts, Cuyahoga County, Ohio, and  Santa Clara County, California. These projects are rewriting the book on how governments contract for social services: funding programs that work to measurably improve the lives of people most in need while saving taxpayer dollars. A 501(c)(3) nonprofit based in Boston and San Francisco, Third Sector is supported through philanthropic and government sources, including a grant from the Corporation for National and Community Service’s Social Innovation Fund.
About the Corporation for National and Community Service
The Corporation for National and Community Service is a federal agency that engages more than five million Americans in service through its AmeriCorps, Senior Corps, Social Innovation Fund, and Volunteer Generation Fund programs, and leads the President's national call to service initiative, United We Serve. For more information, visit
About the Mayor's Office of Workforce Development
The Mayor's Office of Workforce Development (OWD) is an innovative agency within the Boston Redevelopment Authority that seeks to ensure the full participation of all Boston residents in the city's economic vitality and future. The OWD funds and oversees programs that promote workforce development through education, jobs training, apprenticeships, financial coaching, career pathways, literacy initiatives, and the like. Please visit OWD.Boston.Gov to learn more about the OWD's work.

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