Over the past decade regulations, systems and markets have been developed for reinvestment in effective programs to scale them to their optimal size. There are plenty of technical tools, examples and experts available, such as the Government Outcomes (GO) Lab, Urban Institute – Pay For Success, Social Finance, Third Sector Capital and Nonprofit Finance Fund – Invest in Results.
This work began when the Global Financial Crisis threatened traditional grant funding. With traditional funding affected by much larger COVID-caused recession and debt levels, now is the time when program providers need to develop credible savings reinvestment proposals and governments need to pursue them.
Governments in the UK have entered into over a hundred reinvestment agreements, the most of any country. An example is the Ways to Wellness program.
Below are some key terms and links to relevant knowledge hubs about them.
This is any investment with a view to any amount of social and financial return. Those with paying consumers (such as green electricity) do not need governments as the investors.
This is any type of agreement for which the funding is dependent on results. They are usually government funded. This Results Based Funding Database has plenty of examples, many from developing countries. These can be done through end-of-program payments when overall targets achieved.
Large scale versions are known as Social Impact Bonds (SIBs), or Pay for Success (PFS) in the US. These are agreements where funding is dependent on final outcomes. Because any payment is only made at the end of a program (usually after 3-5 years), program capital is provided by investors who take the risk for whether the program succeeds. See this PFS Projects Infobase for US programs and this SIB / PFS database for programs around the world.
These potential payments are more frequent and so do not require special capital investor arrangements. The financial risk is held by the program provider. The basis for rates agreed per incident prevented are often called Outcomes Rate Cards. Summaries about them are at socialfinance.org/rate-card and investinresults.org/rate-cards. Some examples: a simple Outcomes Rate Card was used in the UK to deploy £30 million to reduction projects through contracts with six providers to serve up to 17,000 at risk youth. The most recent example in Australia is on homelessness. Jobactive providers in Australia place around 1 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. Repayments of A$7.3 billion are projected over 5 years.