A research note from the Public Asset and PPP Lab (ISVD-LAB-005). A sequel to The structure behind 9% PFS adoption（このサイトの記事）, reading the positions that provide no service from the Cabinet Office common guidelines and the latest implementation survey.
What is happening
When PPP/PFI discussions turn to pay-for-success, they tend to collapse into two parties. Government pays for results; an operator delivers them. The explanation closes there.
The Cabinet Office common guidelines, however, define the delivery structure as five roles.
| Role | Definition in the guidelines |
|---|---|
| Commissioner | The local government or equivalent that places the order and makes payment |
| Contractor | The private operator that carries out the project activity |
| Third-party evaluator | Measures indicators, evaluates outcomes and assesses effectiveness from an independent position |
| Intermediary support organisation | Coordinates between the parties and carries out project shaping |
| Funder | Provides the capital for the activity and carries the results-based risk |
The last three provide no service. Of those, the third-party evaluator exists to secure independence, so it cannot stand on the side that pushes the project forward. That leaves two seats on the delivery side for an organisation that provides no service: the intermediary support organisation and the funder.
The two are occupied very differently. Where a funder is present, the structure is called a social impact bond (SIB), and those are counted. According to the Cabinet Office survey, of the 379 PFS projects, 19 are SIBs, about 5% of the total.
Intermediary support organisations are not counted. The guidelines define the role and note that consulting firms have taken it in domestic cases, but no tally of how many organisations are involved appears to be published.
Background and context
The funder's seat, and SIB
In an SIB, the contractor raises capital from a financial institution or other funder, and repayment moves with what the local government pays. The guidelines set out three advantages.
- Projects carrying larger results-based risk become possible, including larger projects and those that tie a greater share of payment to improvement in the indicators
- Operators that would struggle to hold working capital across a long project, or to carry the risk at all, including smaller firms and nonprofits with weak balance sheets, can take part
- With a funder present, a third party outside the commissioner and contractor scrutinises viability and planning, which brings discipline to the project
The second matters most in practice. In dormant deposit funding and most grant schemes, a weak balance sheet counts against an applicant at assessment. An SIB moves that weakness onto the funder.
The guidelines list three examples.
| Project | Commissioner | Funders |
|---|---|---|
| Colorectal cancer screening and follow-up examination uptake | Hachioji City | Digisearch and Advertising, Mizuho Bank, individual investors, Japan Social Innovation and Investment Foundation (each investing through a silent partnership) |
| Zutto Genki! Project | Toyota City | Next Rise Social Impact Fund Investment Limited Partnership |
| SIB learning support for juvenile offenders | Ministry of Justice | Development Bank of Japan (trust beneficiary interest), Sumitomo Mitsui Banking Corporation (floating-rate lending), CAMPFIRE (lending-type crowdfunding) |
Each uses a different instrument. Silent partnership, investment limited partnership, trust beneficiary interest, lending, lending-type crowdfunding. The seat exists, but how you sit in it has not settled into a standard form.
The seat also carries a cost. The guidelines note that fees to financial institutions and the cost of establishing a special purpose company add to the project, and ask commissioners to take that into account when shaping a project. Bringing in a funder increases costs outside the project itself. The figure of 19 partly reflects how few projects are large enough to absorb that.
The intermediary that sits down before the contract
The intermediary support organisation is not a party to the contract. The guidelines note that in domestic cases the role has been filled by consulting firms, which usually carry out project shaping from a position of supporting the local government.
The breadth of the role is also stated: sometimes giving the commissioner technical advice and hands-on support, sometimes also taking on the evaluation role, varying by project.
One line here should not be skipped. The same organisation may take on both project shaping and outcome evaluation. Elsewhere the guidelines say of the third-party evaluator that "setting one up is desirable in order to secure the independence of evaluation". Desirable, not required. A design in which the intermediary also evaluates fits inside that wording.
Reading the structure
The two seats differ on three counts.
| Intermediary support organisation | Funder | |
|---|---|---|
| When it is taken | Before the contract, at project shaping | After it, at financing |
| What it carries | Nothing. Payment is a fee for services | Repayment risk that moves with results |
| Is it counted | No published tally found | Counted, at 19 |
The scheme's attention is currently on the funder's seat. The action plan decided in March 2026 says that the use of SIBs should be actively encouraged for projects where a diverse range of actors participate as funders, including through donations and crowdfunding. The direction is to widen the path for individuals and companies to enter as funders.
For the intermediary's seat, the action plan mentions building a network to promote coordination and information sharing among local governments, private operators, financial institutions, universities and intermediary support organisations, but sets no indicator for the number or quality of those organisations. The plan's three targets are 150 newly started projects, 75 organisations newly running one, and 3 newly started flagship projects. All of them count commissioners and projects, not supporters.
The same shape appears in the programme officers of the dormant deposits scheme（このサイトの記事）. A scheme defines a supporting role and builds a way to fund it, then never measures how many people hold it. What is not measured cannot be checked from outside for growth.
Open questions
Three remain.
First, how is independence secured when an intermediary also evaluates outcomes? The guidelines call a third-party evaluator desirable while allowing the intermediary to take the evaluation role. Where both apply to one project, some means of checking the independence of the evaluation is needed.
Second, how should the figure of 19 be read? Given the added cost, an SIB rarely makes sense on a small project. Whether 5% signals slow uptake or simply reflects the range of projects the structure suits cannot be settled now, because no breakdown by project size is published.
Third, should an indicator be set for counting supporter seats? With one, the growth of the supporting side could be checked from outside the scheme. Without one, it can only be inferred from accumulating cases. That judgement is taken up alongside the dormant deposits window in Three markers for spotting a supporter's seat（このサイトの記事）.
Related research notes
- The structure behind 9% PFS adoption（このサイトの記事）. Three walls that stop local governments even when the scheme is in place
- The structural gap in priority review regulations（このサイトの記事）. What sits behind an 82% adoption rate
Related guides
- Five ways into the dormant deposits scheme（このサイトの記事）. Distributing and receiving, and the branch that carries no money
References
Common Guidelines on Pay-for-Success Contracting (revised February 2024) — Cabinet Office (2024)
Status of PFS Projects in Japan — Cabinet Office (2026)
Action Plan for Promoting Pay-for-Success Contracting (decided 25 March 2026) — Inter-ministerial Liaison Conference on PFS (2026)
Statistics cited in this article
- 1Cabinet Office Status of PFS Projects in Japan（31 March 2026 (as of end of FY2025)） Open source