The Kresge Foundation, Prudential Financial, and philanthropists Steve and Connie Ballmer have announced commitments totaling $40 million in the Community Outcomes Fund, the first outcomes-based pay-for-success (P4S) fund in the United States.
Raised and managed by New York City-based Maycomb Capital, the fund matches private capital with the priorities of public-sector agencies to scale solutions to social challenges that produce measurable outcomes and deliver financial returns to investors.
To date, the fund has raised $30 million in cash commitments from Prudential and the Ballmers, while Kresge has pledged a loan guarantee of up to $10 million that will provide limited credit protection to Limited Partner (Class A) investors in the fund. When fully funded, the $75 million fund will enable Maycomb to provide most of the senior capital needed in any P4S deal, giving it the leverage needed to ensure that structuring and negotiations are more efficient and that best practices from early-stage pay-for-success transactions are incorporated.
The fund’s first investment is in the Massachusetts Pathways to Economic Advancement initiative, which provides English language classes and employment services delivered by Boston-based Jewish Vocational Services to approximately two thousand limited-English speaking adults in the greater Boston area.
"Outcomes-based financing has the opportunity to scale effective social and environmental interventions and align the interests of government and providers," said Kresge managing director of social investment practice Kimberlee Cornett. "This fund will reduce complexity and increase efficiency to bring additional transactions to market, condense the time required to structure a transaction, and aid evaluation both within individual transactions, as well as at a field level. We hope the fund proves to be an important vehicle in this emerging field."
(Photo credit: Jewish Vocational Services)
“Prudential Financial, Inc., Ballmer Family, and Kresge Foundation Invest in Largest U.S. Pay-for-Success Fund to Date.” Kresge Foundation Press Release 05/14/2018.