Beyond Impact Bonds — Reflections on the GO Lab Social Outcomes Conference 2019
Wednesday, 2nd October 2019
Louise Savell, Director at Social Finance
“If Men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.” — James Madison
The University of Oxford’s Social Outcomes Conference — organised by the Government Outcomes (GO) Lab at the Blavatnik School of Government — has become an annual fixture for the expanding global community of practitioners and academics exploring whether and how social outcomes contracting can drive greater social impact.
It was pleasing to see that this year’s conference was the most international yet — involving practitioners from geographies as diverse as Peru, South Africa and Japan alongside those working in the more established markets of the UK, north America and Europe.
Discussions were broad and wide-ranging, reflecting the increasing diversity of the outcomes-based structures themselves. Debate was lively around the circumstances under which such structures add value.
Reflecting on the two days, three core themes emerge:
1. Impact Bonds are more a set of values than a specific tool
Social outcomes contracting is being applied in a wide variety of ways:
- with and without investment;
- with different percentages of contract value at risk on outcomes delivery;
- with and without intermediaries;
- with different models around contract flex and revision in the face of unforeseen circumstances; etc.
What unites them is some element of tying contractual payments to the demonstrated delivery of social change.
As practitioners, we are still learning what works best to deliver social impact whilst managing complexity and transaction costs. Whilst we learn, the proliferation of different models is valuable.
We should continue to challenge ourselves to identify the simplest, most scalable models that create the right incentives for social change. As we do so, it will be important to keep evaluating processes as well as results.
By co-commissioning multiple contracts, Outcomes Funds are a potentially valuable engine for accelerating this learning and taking it to scale, but the theory has yet to be tested outside the UK.
2. The lessons from social outcomes contracting can inform broader improvements in public sector practice
Whether formalised through an outcomes-based contract or not, there is value to applying key elements of social outcomes contracting more broadly. At this month’s conference, there was broad consensus around:
- the value of reforming public sector procurement and contracting to allow space for providers to flex and adapt their services to meet needs as they find them;
- to capturing and sharing data in real time to inform adaptive service delivery and improvement; and
- to creating structures that drive cross-sector partnerships to address the ‘wicked issues’ of the day.
There was less consensus around whether outcomes-based contracts per se were necessary — or even appropriate — in many circumstances, which brings me to my final reflection.
3. Outcomes based contracts may represent a pragmatic response to complexity
The GO Lab team went out of their way to involve Impact Bond proponents and sceptics in panel discussions over the two days. This refreshing approach prevented the conference from becoming an echo chamber of mutually reinforcing views and prompted some thought-provoking debate.
The debate was driven by proponents of relational theories of commissioning contrasting their “complexity-driven” approach with the “overly reductionist” approach of social outcomes contracting. Unfortunately, this dichotomy is false.
We all understand that social change is complex rather than deterministic, nevertheless public sector bodies rightly continue to demand some accountability for how public funds are spent. In fact, in the last couple of years international donor agencies like DFID have moved away from unrestricted grants to INGOs, in favour of service delivery contracts with more tightly-specified inputs and outputs.
In this context social outcomes contracting seeks to balance service provider flexibility to adapt services to the complex and changing needs of service users, with an alternative approach to accountability for public funding based around social outcomes. Social outcomes contracts are reductionist to some extent — no one is arguing that they’re not — but they aim to strike a better balance between adaptation to complexity and accountability for public funding than traditional fee-for-service contracting structures.
As practitioners we should challenge ourselves to understand the unintended consequences of the contracts we create. For the time being I for one will resist throwing the baby out with the bathwater.
GO Lab website: https://golab.bsg.ox.ac.uk