In her current role, former Skadden Fellow Megan Golden (’92) oversees a nonprofit’s use of a new, experimental approach to financing known as “pay for success” (PFS). A senior fellow at the South Carolina-based Institute for Child Success (ICS), Megan is using the model to help establish much needed early childhood development and education systems throughout the country.
With PFS, or “social impact,” financing, a city or state agrees to repay private investors who fund projects undertaken by nonprofits if and when the projects succeed. Success can be measured on an individual basis or by comparing the results of those served to those of a matched comparison group. For private investors, the repayment encourages contributing to innovative but underfunded programs; for governments, the financing model ensures that funding is utilized efficiently and with a guarantee of success.
“PFS enables governments to provide much needed funding to preventive programs,” Megan says. “If the government is willing to pay for these programs without special financing mechanisms, it should, but if it isn’t, the combination of paying only for successful outcomes and having ‘impact investors’ at the table makes these programs possible.”
Megan first learned of PFS funding in 2011, when she worked on what would be the country’s first completed PFS financing transaction, which funded the implementation of a New York City program to reduce recidivism rates among teenagers released from jail. In 2012, ICS approached her about conducting a PFS feasibility study on expanding the Nurse-Family Partnership in South Carolina. The program matches low-income, first-time mothers with nurses who provide a course of intense support and involvement.
The study showed that the average cost per each additional family enrolled in the program would be $7,754, an expense many governments would be hesitant to incur on a wide scale despite estimated savings per family of $19,120. With PFS financing, the state only would repay private investors when the program succeeds, as measured by, for example, a newborn avoiding the neonatal care unit. The feasibility study showed that PFS would be appropriate for expanding the program and, possibly, other early childhood interventions. Implementation of the program’s expansion is in the planning phase.
Over the next year, Megan and ICS will complete feasibility studies and other groundwork to help bring more funds to children’s services programs in five states. “Historically, early childhood services have been severely underfunded, but you can get a really big bang for your buck by investing in these programs,” Megan says. Fostering the health and education of children, particularly from birth to age 5, helps them grow up to be happy, healthy, well-educated and productive members of society, she says.
Megan began her career in the public sector, as a participant in New York City’s Urban Fellows Program, and then attended New York University School of Law. After completing a Skadden Fellowship at the Neighborhood Defender Service of Harlem, she earned a White House Fellowship, a first for a former Skadden Fellow.
Megan’s strong affinity for fellowships — she is presently in the fifth of her legal career — inspired her to develop the fellowship for Emerging Leaders in Public Service at New York University’s Wagner Graduate School of Public Service. The program offers professional development and networking tools to people starting nonprofit careers in New York City. “I took on that cause because I’ve been fortunate enough to benefit from Skadden and other fellowships,” Megan says. “I know how valuable they are, and I wanted to do my part to give others those benefits as well.”