Outcomes Finance

Using new funding models to improve societal outcomes

Outcomes financing is an innovative way for governments or other stakeholders to fund better outcomes for communities. The most common form of outcomes financing, the Social Impact Bond, is based on a contract where the government promises to pay for improved social outcomes, such as reduced reoffending rates by inmates released from prison. Based on this contract, private investment is raised to provide the money necessary to fund activities to generate the specified outcomes. These social services are provided by community organizations to tackle root causes, and their outcomes generate downstream savings for the government by decreasing the need for remedial treatment. If the intervention is successful, the government pays back the investor with a financial return from a portion of the projected cost savings realized from improved social outcomes. 

Outcomes financing has the potential to change the way we think about social programs by shifting our focus from outputs (what the program does) to outcomes (the impact the program achieves). It offers community organizations greater flexibility to adapt the delivery of service according to their experience, and can facilitate the expansion of effective prevention and early intervention approaches. The Social Impact Bond is only one model of outcomes financing that has emerged; other innovative models are also evolving.

With demonstrated interest to engage in Social Impact Bonds at both the federal and provincial government levels, community organizations will benefit from an understanding how they might benefit from the model, their readiness to participate, and the capabilities they require. 

The Innoweave Outcomes Financing self-assessment tool is designed to help organizations explore whether outcomes finance (e.g. Social Impact Bonds) might be right for them.

Content for this module has been developed by: