Code of the District of Columbia

Subchapter VI. Pay-for-Success Contract Authorization.

§ 2–211.01. Definitions.

For the purposes of this subchapter, the term:

(1) “Pay-for-success contract” means a contract between the District and a social service intermediary that establishes outcome-based performance standards for social programs performed by nonprofit service providers and initially funded by private investors through a social impact funding instrument and provides a mechanism by which investors shall receive a return of their investment and earnings thereon only if outcome-based performance standards are met by the social service intermediary.

(2) “Social service intermediary” means an organization that is organized and operated pursuant to section 501(c)(3) of the Internal Revenue Code of 1954, approved August 16, 1954 (68A Stat. 163; 26 U.S.C. § 501(c)(3)), or an affiliated legal entity thereof that is so organized and operated and that is capable of entering into a pay-for-success contract with the District that sets forth outcome-based performance standards, contracting with service providers to deliver social services, raising capital to finance the delivery of social services via a social impact funding instrument, and administering the social impact funding instrument by providing ongoing investor relations and project management.

(3) “Social impact funding instrument” means an investment product established by a social service intermediary to raise private investment capital for social programs.

(Feb. 26, 2015, D.C. Law 20-155, § 1132, 61 DCR 9990.)

Emergency Legislation

For temporary (90 days) addition of subchapter, see §§ 1132-1134 of the Fiscal Year 2015 Budget Support Emergency Act of 2014 (D.C. Act 20-377, July 14, 2014, 61 DCR 7598, 20 STAT 3696).

For temporary (90 days) addition of subchapter, see §§ 1132-1134 of the Fiscal Year 2015 Budget Support Congressional Review Emergency Act of 2014 (D.C. Act 20-449, October 10, 2014, 61 DCR 10915, 20 STAT 4188).

For temporary (90 days) addition of subchapter, see §§ 1132-1134 of the Fiscal Year 2015 Budget Support Second Congressional Review Emergency Act of 2014 (D.C. Act 20-566, January 9, 2015, 62 DCR 884, 21 STAT 541).

§ 2–211.02. Authorization of pay-for-success contracts.

Notwithstanding any other law, the Mayor may enter into pay-for-success contracts. Each contract shall include:

(1) A requirement that payment from the District be conditioned on the achievement of specific outcomes based on defined performance targets;

(2) An objective process by which an independent evaluator will determine whether the performance targets have been achieved;

(3) A detailed scope of the social service intermediary’s service under the contract;

(4) A calculation of the amount and timing of payments to the social service intermediary during each year of the contract if performance targets are achieved as determined by the independent evaluator;

(5) A requirement that the social service intermediary create a social impact funding instrument to obtain the funds required for the social program;

(6) A sinking fund requirement under which the Mayor shall request a multiyear appropriation for every fiscal year that the contract is in effect, in an amount equal to the expected payments that the District would ultimately be obligated to pay in the future based upon service provided, if performance targets were achieved pursuant to the terms of the contract;

(7) A process for the District to review payments made by the social service intermediary through reporting requirements pursuant to the contract; and

(8) A determination by the Mayor that the contract will result in significant performance improvements and budgetary savings to the District across all impacted areas if the performance targets are achieved.

(Feb. 26, 2015, D.C. Law 20-155, § 1133, 61 DCR 9990.)

§ 2–211.03. Pay-for-Success Contract Fund.

(a) There is established as a special fund the Pay-for-Success Contract Fund (“Fund”) which shall be administered by the Mayor or his or her designee in accordance with subsection (c) of this section.

(b) Each fiscal year there shall be deposited into the Fund the amount of the annual appropriation estimated to be paid in the next fiscal year for any pay-for-success contract.

(c) The Fund shall be used to fund payments to be made pursuant to pay-for-success contracts. The Chief Financial Officer shall create separate accounts within the Fund for each pay-for-success contract entered into by the District.

(d)(1) The money deposited into the Fund, and interest earned, shall not revert to the unrestricted fund balance of the General Fund of the District of Columbia at the end of a fiscal year, or at any other time.

(2) Subject to authorization in an approved budget and financial plan, any funds appropriated in the Fund shall be continually available without regard to fiscal year limitation.

(Feb. 26, 2015, D.C. Law 20-155, § 1134, 61 DCR 9990.)