Payment-by-results is becoming a coalition mantra. Labour’s language of ‘outcome-based commissioning’ has been replaced by an emphasis on paying charities for their impact not their process.
No doubt Conservative leaders will lay results-based-funding on thick and fast at the Tory Party Conference next week. Even before the election it was a key plank of their Big Society vision and several government departments are now considering the approach to boost employment, cut re-offending rates and deliver young people’s services.
But a fog of scepticism still lingers. Will it lead organisations to focus on the lowest hanging fruit? Could it put smaller charities out of business?
The key to achieving a move to results-based funding is having an appropriate impact-measuring infrastructure in place. Get this right and payment-by-results could lead to extra funding, helping organisations move from state support to local community-based and sustainable partnerships.
Positive Futures – a government prevention scheme targeting vulnerable 10-19 year olds – shows how to successfully move to a payment-by-results funding model. The Respect Programme in Portsmouth is a prime example. The charity recently received increased Home Office funding for its Positive Futures programme. Since 2007 it has helped cut youth crime in the Milton and Eastney areas of Portsmouth by 20 per cent, while anti-social behaviour has been reduced by 60 per cent.
Over the past 18 months the Home Office has had the confidence in the evidence provided by projects to move to a results-based funding model. Using an online monitoring, evaluation and reporting framework, organisations manage their work delivery, upload qualitative multi-media evidence and produce local impact reports.
It’s this type of infrastructure that can enable results-based-funding to work. But it will only succeed if there is a commitment to continuously building an evidence base. It won’t work if funders force charities to fill in a form at the end of the year.
Concerns about results-based-funding leading to charities focusing on short term gains are only legitimate where you have a simplistic model based on zero-sum outcomes, for example: ‘failed’ or ‘achieved’. The model for early intervention projects must reward evidence of movement along the pathway to a particular outcome and allow for payment on account where a robust audit trail demonstrates that appropriate progress has been made.
Given the 'civil society' sector’s structural weaknesses – in terms of a weak capital base, thin capacity and a cultural resistance to more entrepreneurial approaches - new social investment models will also need to be built to facilitate the creation of self sustaining social markets. But Positive Futures has shown how an infrastructure can be created to enable locally-based partnerships to work in practice. For every pound spent from the Home Office, the programme has already been leveraging in around £2.80 from local partners.
In light of severe public spending cuts, demonstrating impact is more important than ever. For those organisations already telling their story on an ongoing basis, a move to payment-by-results should be achievable. In fact, it might just start to reward those agencies that understand the purpose of their work is to deliver results.
Tim Crabbe is professor of sociology at Sheffield Hallam University and chair of social research co-operative Substance. He will be discussing payment-by-results and ten years of Positive Futures at a conference (Exchanging Views: Evidencing Impact in the New Social Markets) on 20 October at the Barbican, London
