Pay for Success Financing: Diffusion Dynamics in the U.S.

Across the United States (U.S.), communities struggle with numerous social and environmental issues while the funding to provide programmatic services to address these issues continues to diminish. As such, actors both inside and outside of government are seeking new policy solutions that both effectively and efficiently address these issues. Significant hurdles to embarking on a new policy approach exist, however, including a lack of up-front funding and a reluctance to take on the risk inherent in implementing new programs. A recent innovation in the policy domain, Pay for Success (PFS) financing, has been specifically designed to overcome these hurdles. Policy innovation does not come easily, however, and change within government is often slow and methodical. Motivated by the question, “What catalyzes a jurisdiction to innovate?,” this dissertation seeks to more fully understand the case of diffusion of PFS in the U.S. Agenda setting, diffusion of innovation, and policy entrepreneurship theories were used as an a priori frameworktoguide research design, implementation and analysis. An embedded, mixed-methods, case study approach utilized a unique dataset, elite interviews and participant observation to examine the case. This research provides insight into the tactics utilized to influence diffusion of policy innovation, economic and social factors impacting diffusion, and the associated power dynamics and relationship structure of actors engaged in diffusion efforts.