Credit: Office of Social Impact Investment

Traditional grant processes seek programs which can demonstrate they are most likely to succeed, though they do not pay a proportion of that success. Funding levels are capped for all in the application process so that applicants can submit costed activity plans within the cap. These levels are determined by how much the grantor is willing to give at the outset, it cannot grow when funded programs start to return savings. Especially in times of debt and deficit these ‘capped activity’ processes do not reflect actual value of effective programs and are akin to keeping them in Captivity.

It became clear to some in aftermath of the Global Financial Crisis (GFC) that this was self-defeating and so ‘pay for success’ options started to emerge with the intention that the best programs could escape their Captivity. The idea was to have larger contracts based on value and outcomes negotiated between interested program providers and the governments which saved from avoided response costs. These are called Pay for Success contracts in the US or Social Impact Bonds elsewhere. An overview of every such contract since the GFC is on the Impact Bond Database. The contracts have so far mainly been with governments in developed countries. The main issues addressed to date are recidivism, welfare dependence and homelessness – issues with immediate cost savings from a defined cohort.

While most of these completed contracts have achieved their target outcomes, the model has not grown as quickly as hoped because it takes too long to negotiate each contract. While the capable program providers could be quickly selected, it then often took more than a year to determine the metrics, calculate the value of each outcome and research other technical details for an agreement. That approach has been called ‘Ready, Fire, Aim’. Even after all that work, the usual result is only one contract.

Re-invest Some Savings to Escape Captivity

Rate Cards
and Contracts

To overcome those technical delays and ‘aim before firing’, some governments have recently decided to do the technical work upfront and state the value they were willing to offer for certain outcomes. This typically called an Outcomes Rate Card (or Rate Card) process.

Usually a government will issue such a Rate Card and then open a tender process which results in contracts with multiple providers in multiple locations. The potential payments for Rate Card processes are more frequent and so do not require the long-term up-front investor arrangements often needed in Social Impact Bonds which might only re-pay after several years.

Some examples: a simple Rate Card was used in the UK to deploy £30 million through contracts with six providers to serve up to 17,000 at risk youth.

The largest example of a program similar to that of a Rate Card is Jobactive in Australia. Here providers place around one million people on welfare in jobs every 3 years. There are 42 providers operating over approximately 1,700 sites who are repaid on the basis of agreed outcome rates. Prior to COVID-19, repayments over the next five years were projected to be A$7.3 billion, funded through avoided welfare costs. 

The most recent Rate Card example in Australia is on homelessness, using this Rate Card:

For more details about Rate Card processes, including US examples, see overviews at: Social Finance; Invest in Results; or CHCS.

The problem with Rate Cards is that they are only issued by a government so savings programs have to wait until one is issued by each government which addresses their issue. To date none have put a direct value on saving a life from any cause.

Savings Cards and Contracts

A Savings Card process would be the simplest way to overcome this problem. It is a way for sectors with effective, scalable life and cost-savings programs (‘savings programs’) to develop the metrics, savings and re-investment arrangements which can apply to multiple locations.

The starting point is the card itself which should set out the estimated gross savings, before re-investment, for a government of a particular location and level for particular outcomes. The average years of life saved per outcome is also added. Much of the technical work underpinning the resulting contracts for multiple jurisdictions can be done by the sector or its leading agencies and provided to each target government.

The proposed re-investment portion per outcome will differ per savings program is added by each interested savings program provider, along with total targets for each outcome.

Save a Million Cards and Contracts

Save a Million Cards are mega-Savings Cards. They don’t just seek to save lives and cost, they seek to demonstrate they can save a million years of life, if they receive agreed re-investment on the basis of saving a million dollars per set of prevention outcomes for each target government.

This is a template Save a Million Card for any type of Savings Program.

For an example of a particular type, see Save a Million – Urban Violence.

Template proposal, contract and other technical details will be added shortly