A report by GSG Impact and Bridges Outcomes Partnerships identifies the challenges preventing outcomes partnerships from becoming mainstream and provides a set of action-oriented recommendations to scale the approach and deliver better outcomes in public service delivery.
GSG Impact has published a report in collaboration with Bridges Outcomes Partnerships, part of UK-based Bridges Fund Management, which reveals the challenges preventing the scale-up of outcomes partnerships.
GSG Impact describes outcomes partnerships as ‘collaborations where funding is tied to the achievement of measurable results, rather than inputs, enabling effective and impactful public service delivery’.
The report finds that despite their proven track record, outcomes partnerships have faced institutional, political and perception challenges that have prevented their adoption at scale.
Responding to questions from Impact Investor, Emilia Cerra, policy manager at GSG Impact, said: “Despite well-documented evidence that outcomes-based partnerships can deliver up to nine times the public value for every pound spent, their adoption in the public sector remains limited.
Cerra said that with this report, GSG Impact aims to better inform and strengthen its network’s advocacy efforts by recommending these solutions and exploring avenues for collaboration.
“At GSG Impact, we strive to mainstream impact in every investor, company, and more important to this matter, every government decision. Promoting the adoption of outcomes-based partnerships is crucial to this end as they help governments to drive the creation of impact economies.”
Mila Lukic, CEO and co-founder of Bridges Outcomes Partnerships, told Impact Investor she believed outcomes partnerships could deliver more personalised, person-centred as well as more accountable and flexible outcomes for individuals and communities than traditional means employed by funders and donors to deliver social services. But, she said, this requires a transformational shift.
“We have this very strong experience, evidence and conviction around the potential of outcomes contracts but we also recognise that this requires a systemic shift. We need to elevate our insights and learnings beyond individual projects, which is why we partnered with GSG Impact for this report.”
This latest report builds on findings by a previous joint paper GSG Impact and the Education Outcomes Fund (EOF), published in 2021, which synthesised shared learnings and best practices for advancing results-based mechanisms in support of a just COVID recovery and to foster impact-driven economies.
Challenges facing outcomes partnerships
Research for the report included a series of interviews with experts from across the globe as well as an extensive literature review, identifying seven challenges to advancing the use of outcomes partnerships by governments.
Lukic said the authors of the report were most struck by the universal nature of some of the structural challenges that exist across geographies that are preventing widescale adoption of outcomes partnerships.
“We were surprised by the consistency of the challenges, particularly around some of the institutional challenges related to procedures and policy-making practices, including the annual financing cycles and budgeting regulations. These same challenges cropped up across a range of different partners, including governments, foundations and corporates in low and middle income countries as well as in high income country contexts,” she said.
One of the challenges concerns public contracting procedures. Lukic said it was interesting to observe how many outcomes partnerships tried to develop entirely new procurement processes, rather than thinking about how to work within existing structures.
“Our recommendations are focused on how to enable an outcomes-based approach within existing practices. This recognises there are some changes you need to implement, but it does not necessarily mean starting from scratch,” she said.
“It was interesting to understand the extent to which people were trying to introduce a whole new regulatory framework or a whole new procurement process that was resource-intensive and not necessary.”
Social impact bonds
The report also draws attention to the challenges facing social outcomes partnerships, also known as social impact bonds (SIBs), in particular. Like any other type of outcomes partnerships, SIBs are a payment-by-results contract whereby private investors pay for an organisation to deliver a service, and the outcomes funder, repays the investors based on the success of the service.
In the UK, where the world’s first SIB was launched in 2010 and nearly 100 outcomes contracts and partnerships have been launched since, equal to $275m (€262m) of funding deployed, this is just a drop in the ocean when compared to the $214bn annually spent by the UK government on social services.
According to the report’s authors, if a mere 1% of the latter funds were catalysed for spending on outcomes, it would outpace five times what has been allocated to social services in the past decade.
Cerra said that innovation in the delivery of public services is difficult, but that business as usual wasn’t working.
“Allowing the private sector to support governments to address complex issues, and rewarding the investors backing these projects only in the case of achieving successful results, can be a game changer,” she said. “While these types of projects may appear more expensive and complex than those made through the traditional input-based approach, they can be scaled-up with the associated cost efficiencies and generate better public value.”
Misleading definitions
Lukic said that to encourage the adoption of outcomes partnerships, investors and donors would also have to move away from thinking about these as a product or market, but rather as an approach to tackling the world’s most pressing social challenges.
“Definitions in the area of outcomes partnerships can be misleading. What we have tried to capture in this report and the main shift we are trying to push for from local and central government donors, as well as from foundations and corporates, is towards a more outcomes focus, by encouraging better ways of working that catalyse better outcomes,” she said.
Lukic reiterated that this could be achieved within existing infrastructures for contracting and funding.
“There are multiple ways to do this. In some situations, you may need upfront funding from social investors, such as through a SIB or a health impact bond, but in many situations, you may not need that, and funding can come from the delivery organisations themselves, from their balance sheet reserve for example,” she said. “The key is to always ask, how you can make funding more outcomes focused?”
Outlook
The report provides a series of long-term strategic recommendations to create an environment conducive to the uptake of outcomes partnerships by governments, and includes examples from across different geographies to demonstrate where and how these have been done well.
Asked about the outlook for outcomes partnerships and their role in meeting the UN’s SDGs, Lukic said that the opportunity over the next 10 to 15 years was “significant”.
“After all, unless we are measuring outcomes, how do we even know whether we are meeting the SDGs?” she said.
“Whenever there is any talk about the SDGs, there is a lot of discussion around funding gaps. There is limited discussion around funding effectiveness and to what extent the funding that has already been deployed, can be more outcomes focused and take us closer to meeting the 2030 goals.”
