Giving Compass' Take:
- Louise Savell and Mara Airoldi examine how outcomes-based contracts have allowed service providers to better adapt their programming to a reality that has been transformed by the pandemic.
- Why might outcomes-based contracts be particularly practical during times of crisis or uncertainty? How much of a role should funders play in determining the methods used by service providers to achieve desired results?
- Learn about the implementation of outcomes-based programming.
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Impact bonds, a subset of outcomes-based contracts, involve multiple partners and purport to create more flexibility and incentives for service providers in adapting to changed circumstances. Historically, these contracts have been used to drive better outcomes for populations with complex needs: the homeless, looked-after children, and disengaged young people, or in complex delivery contexts like low- and middle-income countries or where multiple stakeholders need to work together to deliver better outcomes.
No contracts were designed to react to such a profound shock as that of the COVID-19 pandemic, of course. Along with significant operational constraints around service delivery and social outcomes, the pandemic has also affected the ability to collect data and verify contractual outcomes metrics.
However, the mechanisms for rapid adaptation that were built into many of these contracts, have enabled them to shift their operations to provide continued support to vulnerable populations in this time of crisis.
What can we learn from how outcomes-based contracts have responded?
- Where service delivery could continue in some form outcomes-based contracts have allowed projects to adapt well.
- COVID-19 restrictions are driving a shift to remote data collection and outcomes verification.
- Where continuation within original contractual terms has not been possible, contractual parties have been quick to make amendments.
- Strong stakeholder relationships and active governance have underpinned rapid adaptation of services, outcomes evaluation and contracts.
In a context of ongoing radical uncertainty, COVID-19 recovery programs could be strengthened by applying three principles from outcomes-based contracts:
- Align cross-sector partnerships around a shared definition of success and drive accountability through strong relationships and effective governance.
- Use real-time data to measure progress and course correct.
- Issue flexible contracts that allow service providers to respond to uncertainty and pivot to meet emerging needs.
Whatever else we know about the coming years, we can be certain that the road will not be straight. Lessons from outcomes-based contracts may support us when we come to bends. Structures that foster trust and collaboration will be key.
Read the full article about outcomes-based contracts by Louise Savell and Mara Airoldi at Stanford Social Innovation Review.