In South Carolina, 27 percent of all children are born into poverty, and more than half are born to low-income mothers. Life in poverty at an early age is linked to severe adverse effects on a child’s cognitive development, health, and overall wellbeing, and mothers who struggle with poverty face a higher likelihood of poor birth outcomes. Nurse-Family Partnership has developed a proven model to help reduce these risks and support the health and development of low-income mothers and their children. Currently serving 1,200 families in South Carolina, a new four-year Pay for Success project will help expand NFP’s model to an additional 3,200 families, which will pair nurses with first time mothers to educate them on healthy pregnancies, giving their children the best possible start in life. Improving early childhood development will lead to stronger communities and improved life outcomes for South Carolina’s residents.
- Year Launched2016
- Service Delivery Term (Years)6
- Motivation for Project27 percent of children in South Carolina live in poverty, which can be harmful to a child’s cognitive development, health, school performance, and social and emotional well-being.
- Project Objective(s)Support the health and development of first-time mothers and their children; Build a pathway to sustainability for NFP in South Carolina; Evaluate effectiveness of efficiencies in NFP model
- Individuals Served3,200 mothers and their children
- GeographySouth Carolina
- Issue AreaMaternal and Child Health
- Initial Investment ($ millions) [Note 2]17
-  This category captures the initial private investment raised to support the project that has the potential to be repaid if the project achieves its pre-determined outcomes. Many projects, particularly those in the supportive housing and health arenas, leverage existing public resources, such as subsidized housing and health insurance, to achieve program impact; the value of these resources is not included in these dollar values but are discussed in more detail in Sections 7, 8 and 9 of this report.
- Service Provider(s) [Note 1]Nurse-Family Partnership [Note 13]
- Payor(s) [Note 2]South Carolina Department of Health and Human Services
- Transaction Coordinator(s) [Note 3]Social Finance US
- Evaluator [Note 4]J-PAL North America
- Validator [Note 5]None
- Project Manager [Note 6]Social Finance US [Note 14]
- External Legal Counsel [Note 7]Wilmer Hale; Nelson Mullins; Riley & Scarborough LLP
- Technical Assistance Provider(s) [Note 8]Harvard Kennedy School Government Performance Lab
-  Delivers program interventions to target population over the course of the PFS contract
-  Implementing agencies for the South Carolina project are: Spartanburg Regional Health Care System; Greenville Health System; Carolina Health Centers, Inc.; SC DHEC Low Country Region; SC DHEC Pee Dee Region; SC DHEC Midlands Region; SC DHEC Upstate Region; McLeod Home Health; SC Office of Rural Health Orangeburg Healthy Start.
-  Makes payments when pre-determined outcomes have been met
- Roles and responsibilities may include: design and structure of PFS project and financing model; capital raise; stakeholder management; on-going performance management
-  Design and implement plan for determining whether outcomes have been met
-  Verify accuracy of data used in evaluation plan, or evaluation plan itself
-  Intermediary during service delivery phase, and/or fiscal sponsor for project funds
-  The Children’s Trust Fund of South Carolina is the fiscal agent for the project.
-  Provide assistance in drafting, reviewing and negotiating PFS contracts
-  Provide support and expertise to project stakeholders in the project development and/or project implementation phases
Evidence and Program Design
- Service Intervention(s) Model and/or TypeNurse-Family Partnership: nurse-home visiting
- Evidence base for intervention3 RCTs
- Has effectiveness of the intervention for PFS project target population been evaluated?Yes
- Has the service provider provided this intervention previously?Yes
- Is PFS project: Scaling an existing intervention by replicating at a larger scale? Demonstrating the effect of a new program model or combination of services? Transplanting an existing intervention(s) to a new target population and/or service delivery setting?Scaling; Demonstrating
- Evaluation Design MethodologyRCT
- Data Source(s) for EvaluationState of South Carolina administrative data; Service provider data
- Outcomes Tied to Success Payments1) Reduction in preterm births; 2) Reduction in childhood hospitalization and emergency department use due to injury; 3) Increase in health spacing between births; 4) Increase in number of first-time moms served in high-poverty ZIP codes
- Outcomes Tracked, Not Tied to Success PaymentsSchool readiness; Academic achievement; High school completion; Receipt of government services(e.g., TANF, SNAP); Employment/earnings; Crime
- Length of Evaluation Period5 years
Service Provider Characteristics and Service Delivery
- Single or multiple service providers?Multiple
- Service provider type(s) (nonprofit, government, private)Quasi-public, Nonprofit, Public
- Service provider OR site selection methodNFP selects local implementing agencies
- Service Provider Experience with PFS InterventionNine existing implementation sites in South Carolina; many more nationally
- Referral Method for PFS Target PopulationReferrals made by state Medicaid office; direct marketing to potential participants
- Did the project have a ramp-up phase? (Y/N; brief description)Yes: 3-month pilot period prior to project launch; paid for with non-PFS funds; participants tracked but not included in evaluation
PFS Contracting and Governance
- Operational Oversight Structure [Note 1]Operational committee includes NFP, South Carolina Department of Health and Human Services, Social Finance, and Government Performance Lab
- Frequency of meetings and/or reportsBiweekly for first 2 months, monthly during months 3-6, quarterly thereafter
- Executive Oversight Structure [Note 2]Executive committee includes NFP, South Carolina Department of Health and Human Services, and representatives from the three largest funders
- Frequency of meetingsQuarterly for first year, annually thereafter
- Investor role in project governance?Three of the largest funders have formal roles in the Executive Committee and can observe Operations Committee meetings
- Frequency of reporting to investorsSemi-annually or as requested
- Non-standard Contract Termination Events [Note 3]None
- Appropriations Risk Mitigation Strategy [Note 4]Success payments held in set-aside account by a third party, Children's Trust of South Carolina
-  Committee or working group involved in regular and/or day-to-day monitoring of project progress
-  Oversight and decision-making body for PFS project
-  Events that allow stakeholders to exit their contractual obligations, beyond those typically found in loan agreements and contracts
-  Means by which to mitigate risk that funding is not available for investor repayment
- Senior Investor/ Lender and Total Senior Investment ($MM)None
- Subordinate Investor/ Lender and Total Subordinate Investment ($MM)None
- Deferred Fee Source and Total Deferred Fees ($MM)[Note 1]None
- Recoverable Grant Source and Total Recoverable Grants($MM)[Note 2]None
- Non-recoverable Grant Source and Total Non-recoverable Grants ($MM)[Note 3]The Duke Endowment ($8); Consortium of private funders ($4); BlueCross BlueShield of South Carolina Foundation ($3.5); The Boeing Company ($0.8); Greenville, SC First Steps ($0.7); ($17 total)
- Guarantor and Guarantee ($MM) [Note 4]None
- Illinois Dually-Involved Youth Project
-  Deferred fees are delayed payments for the services provided by service providers, transaction coordinators and/or project managers. Deferred fees are one way of structuring projects so that more stakeholders have a financial interest in ensuring project success.
- Philanthropies can use either their regular grant making protocols, or protocols for program-related investments (PRIs), to contribute to PFS capital stacks. If a foundation does not use a PRI, their investment may be structured as either a loan or a recoverable grant. The distinction between the two is in the expectation of repayment. A loan, even if from a philanthropic source, is expected to be repaid, and structured accordingly. A recoverable grant does not bear the same expectation of repayment.
-  Non-recoverable grants are traditional grants contributed to capital stacks; if the project is successful and generates full repayment, the non-recoverable grants can remain with the service provider or project manager, or be recycled by the original funder.
Basic Repayment Structure
- Initial Investment ($Millions)17
- Maximum Repayment Funds Committed by Payor ($Millions)7.5
- Full service delivery term (years)6
- Full repayment period (years)5
- Interim outcomes reported? Tied to payments?No/No
- Sustainability/ Recycling of FundsIf outcomes are achieved, success paryments will be reinvested to extend NFP servcie delivery period in South Carolina
Detailed Repayment Terms
- Trigger for initial repayment of principal [Note 1]1) Preterm birth: 13.5% reduction; 2) Healthy birth spacing: 18% reduction; 3) Child injury: 23.4% reduction; 4) Coverage in low-income zip codes: 65% of mothers enrolled
- Threshold for full repayment of principal1) 15% reduction; 2) 20% reduction; 3) 26% reduction; 4) 65% enrolled
- Threshold for full repayment of principal plus maximum success paymentsNot applicable
- Repayment timingEnd of Year 4; End of Year 5
- Return to Investor [Note 2]Not applicable
- Success Payment to Other Stakeholders? [Note 3]Yes: Service provider [Note 8]
-  Initial repayment does not equate to full principal return. Investors may recover only part of their principal if projects do not meet a certain level of success.
-  There is no standard methodology for calculating investor return. These numbers are what is publically reported, and comparing from one project to another may not be an apples-to-apples comparison for the reason of potentially different calculation methodologies. Calculation methodologies may be provided in investor agreements, which are not available publically and were not available for this report’s analysis.
-  Success payments for other stakeholders such as project managers and service providers create a financial incentive for project success.
-  Success payments will be reinvested in service delivery.
- Project Development Costs Not Covered by PFS Capital RaiseHarvard Kennedy School Government Performance Lab fellow; Legal services
- Funding source(s) for project development costs, if anyPro bono legal support; Social Finance (in-kind)
- Project Implementation Costs not covered by PFS Capital$13 million in Medicaid-funded services; Project pilot period
- Funding sources for implementation costs not covered by PFS capitalSouth Carolina Department of Health and Human Services (via a 1915(b) Medicaid waiver); Laura and John Arnold Foundation