With a Few Pay-for-Success Plans Under Way, the Idea Is Gaining Currency and Criticism

With a Few Pay-for-Success Plans Under Way, the Idea Is Gaining Currency and Criticism 1

A participant in the transitional-jobs program at the Center for Employment Opportunities.

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A participant in the transitional-jobs program at the Center for Employment Opportunities.

Social-impact bonds, one of the most talked-about ideas in the nonprofit world, are quickly building momentum—and sparking controversy over the unproven financing mechanism.

The goal behind the new form of financing is to help government agencies shift from reimbursing nonprofits for the number of people they serve to paying for measurable results.

Sometimes referred to as pay-for-success contracts, social-impact bonds allow private investors to pay for a social program