Would “pay for performance” be good for the social services? | JustPhilanthropy.org
Steven Mayer argues that paying nonprofits to accomplish specific outcomes will result in them focusing on quantifiable results that might not be high quality. However, one of the nice things about the Pay For Success program is that the government as payer has a vested interest in making sure that the results are “real”, otherwise they won’t get the cost savings they expect.
The number of entry-level bureaucrats that would be needed to police Pay for Success outcomes and the financial transactions underlying them will make Medicare administration look miniscule. If we’re going to rationalize and monetize social service, let’s create a Consumers’ Union for Social Services to rate the quality of different vendors. Promoting a key set of performance dimensions for these services is the key first step, just as CU tells us what a really good toaster, or insurance plan, does.
I think that’s a good idea. One thing that has been troubling me is that the current nonprofit rating systems do not differentiate between rating the organization and rating the program. For the Government as a buyer of results, they need good guidance on which programs work, not which organizations are strong. See my discussion on Philanthropic Investors vs Strategic Philanthropists vs Charitable Buyers.