A Vision for the Field: Equitable Outcomes Funding

We believe a new approach is needed to advance health equity holistically and systemically. In the last decade, concurrent efforts have expanded investments in outcomes and investments in equity. It is now time to bring those threads together to provide community leaders with the resources they need to innovate. At the same time, we must also shift the interconnected systems of public and private funding that hold the status quo in place. We believe that reconceptualizing outcomes-based funding to center equity and community leadership provides a path to do both and will advance health and well-being efforts at a community level across the country. 

Outcomes-based funding emerged from an interest in paying for what works and giving freedom to community providers to innovate toward an outcome. Outcomes-based funding promised to engage more private sector funding toward social good and achieve better results in a more integrated way. That promise has not been fully realized. Outcomes-based funding delivers billions of dollars to interventions that improve outcomes, but rarely support the kinds of community-led, local, cross-sector work necessary to shift the systems that stand in the way of lasting health equity. Outcomes Funding uses contracting and financing transactions to tie payments and funding to an achieved outcome(s) rather than to a set of prescribed steps, programs or processes. The field has grown tremendously in the last decade, yet much of outcomes funding -- encompassing Pay for Success  or Social Impact Bonds, impact investing, philanthropic program related investments, healthcare investments in community health outcomes and government performance-based contracting -- perpetuates  top down decision making models. 

Of the billions of dollars currently allocated in outcomes-based funding projects, very few engage communities and smaller community-based organizations leading change at the local level. 

This denies opportunities to define outcomes, priorities and what success would look like, to the people who stand to benefit most. The current, rapid growth in outcomes funding make it a critical time to establish more equitable approaches within this field. 

Attendees discussing Equitable Outcomes Funding at the Federal Reserve Bank of San Francisco. Photo credit: CommonHealth ACTION.

What we are proposing is a broadly applicable approach to supporting communities on their own unique paths to health equity, de-emphasizing a focus on a specific set of recommendations or a “silver-bullet” approach to scaling one intervention just because it worked in one community context. For outcomes-based funding to be equitable, it must be directed by communities to meet their needs and support their aspirations. Without community leadership, there is no equity. While the field is showing some promise by including community engagement approaches in project design and implementation, we argue that this is a half measure. Instead, we should be following the lead of the community and building supports, structures and systems around their efforts so that resources flow towards needs and outcomes they identify. 

In the current environment, this may seem like a radical view, yet it is grounded in an understanding of the inherent power inequalities between funders, providers and the communities they serve. An equitable approach recognizes that these inequalities usually lead to inequities and that they must be intentionally counterbalanced within the structures and systems of funding. This devolution of power may be uncomfortable, particularly given that communities have historically been held accountable to funder expectations, but this discomfort should be borne by funders and not the providers and communities they are trying to serve. This also means that funders have an opportunity to play a critical catalytic role in achieving equity in the United States, through modeling and supporting community power, resources and systems designed to acknowledge, leverage and support long histories and deep expertise rooted in local communities to address their needs. We believe the results will be equitable, powerful and hopeful, and in turn, more effective, efficient and sustainable.  

Building a field of equitable outcomes funding requires creating a vision for the field to strive towards, a set of shared, guiding principles that articulate how we can achieve that vision, and a portfolio of projects demonstrating these principles in action. Both the principles and projects are required to create a cycle of mutual refinement and reinforcement. Without the principles, the projects run the risk of being a series of one-off pilots. This could both threaten lasting partnerships within and between communities, and limit the impact and sustainability of investments. Without the projects, the principles are words on paper, uninformed by the rigor of working with community.

Our organizations have come together based on our unique experiences in the field.  We hold a point of view that we believe is valuable to the evolution of our work and the partnerships we cultivate. We also recognize that we come from a position of privilege and are committed to opening a space to seed new ideas, challenge our assumptions and build these ideas collectively.

Founded in 1980, Nonprofit Finance Fund (NFF) promotes the success of nonprofits by providing capital, strategic consulting, and using our knowledge and influence to transform the funding and financing landscape. We have been a leader in supporting innovative approaches to delivering services to communities, including our Pay for Success and Invest in Results work, which endeavours to free up community groups to focus on long-term impact instead of short-sighted metrics that can hamper meaningful change. We acknowledge that our access to financial and social capital—and that we have been white-led for 40 years—gives us a position of privilege that many organizations on the front lines fighting inequity do not have. We are committing to use this position to address decades of disinvestment in communities of color. Working with these communities hand in hand, our goal is for them to gain control of the resources they need– whether donations, contracts, or loans – and improve how money is given, gotten, and used for social good.

Shift Health Accelerator was launched in 2018 by community leaders in the Robert Wood Johnson Foundation Culture of Health Leaders program. Shift was created to solve a thorny problem. In years of work, we saw incredible leaders striving mightily to solve society’s toughest challenges: from lack of access to healthy food to unsafe and unaffordable housing, inadequate public transit that’s a barrier to keeping a job, or no parks for kids to play. At the same time, we knew funders who wanted to direct their investments to do good, but who lacked the local knowledge needed to support the organizations doing the best work. Shift was established to help them all do better at doing good. Our experiences in outcomes-based funding made us curious about the potential in the field, but it is the values that underpin our work that create our shared commitment to an equitable future.  

Much of JSI California's work focuses on the intersection and alignment of healthcare and community-driven efforts to improve health. Through projects such as provision of financial sustainability technical assistance to the California Accountable Communities for Health Initiative and qualitative research on the perspectives of Medi-Cal plans on social determinants of health, we've seen a genuine interest in new ways to invest resources to improve health and equity. However, we've also witnessed the need for a better defined and consistently applied set of practices and robust and transparent dialogue about how to address issues such as existing power dynamics, fair risk taking, the wrong pockets problem, and inclusive governance and decision-making. We are partnering to support innovative local efforts to address those issues and advance local and state policies that make equitable investment easier, more likely, and community-driven.

Our intent is to hold ourselves accountable to living our values and the principles outlined in this piece.  We are asking ourselves how we can move toward this vision, understand what is standing in the way that we need to reconcile and invite other voices to contribute to a more equitable future. 

We hope that this ongoing dialogue will build trust, unveil what might be unseen, and unearth new and creative approaches to center equity in our decision-making as a society. An ongoing space for testing these concepts will help us understand barriers and opportunities, create new partnerships and  celebrate successes. We invite both the dialogue and the testing, and commit to taking action within our own work. We invite conversation through a variety of venues. Please take advantage of the interactivity of online publishing and social media to provide your responses to this piece. We will continue to publish ideas so collectively we can create, resource and support a just, equitable future.

Please post your reactions to the article through this survey.  We are partnering with the Federal Reserve Bank of San Francisco’s Community Development Department to collect feedback and promote cross-sector dialogue on the principles outlined above.  Your comments will be helpful in shaping an upcoming issue of the Community Development Innovation Review, which will bring together perspectives, critiques, and fresh ideas from across the field that can help advance both the theory and practice of equitable outcomes funding.  For additional background on the outcomes funding field, please check out the 4^th volume in the San Francisco Fed’s “What” series: What Matters: Investing in Results to Build Strong, Vibrant Communities.