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Adopting an Outcomes-Based Approach for Lasting Impact

A photograph of the Seattle skyline.The city of Seattle’s Pathways Home initiative addresses the root causes of homelessness by reorienting city government and service providers towards long-term solutions and clear performance measures.

A joint campaign of the Federal Reserve Bank of San Francisco and Nonprofit Finance Fund, Investing in Results examines how nonprofit organizations, investors, and government officials can achieve lasting outcomes. One part of the project, What Matters: Investing in Results to Build Strong, Vibrant Communities is the fourth volume in a series that addresses the potential for a governance and financing system that better orients policymakers toward an outcomes-based approach. On September 12, 2017, the Federal Reserve Bank of San Francisco and Nonprofit Finance Fund launched the book in Washington, D.C., during an event called Invest in Results Because Outcomes Matter. The event brought together policymakers and nonprofit leaders to discuss how to put an outcomes-based approach into practice in their respective fields. Panelists examined differences between outcomes and outputs, advantages and barriers, and the applicability of an outcomes-based approach to community development. Using an outcomes-based model, housing officials and practitioners can develop strategies that solve the underlying causes of homelessness, displacement, and other housing challenges as well as track progress over time.

Making the Shift From Outputs to Outcomes

The Investing in Results campaign is premised on the idea that public and private investments to ameliorate social challenges are oriented largely toward short-term fixes, or outputs, that are not sustainable. In contrast, an outcomes-based approach strives to understand the underlying causes of social challenges and fund programs that are proven to be effective at addressing them. Although the shift to an outcomes-based model will challenge policymakers to collaborate across agencies and sectors and establish clearer performance goals for government grantees, it could provide a new avenue to fund programs that are proven to be effective, said Deval Patrick, former governor of Massachusetts, in the foreword to the book. In her remarks, Andrea Levere, president of Prosperity Now, stated that we must shift funding based on the evidence for the success of a given program to support the results we wish to achieve. For example, rather than focusing solely on the number of clients housed each night in a shelter, an outcomes-based approach would identify the practical results that the shelter achieves, such as the number of clients that transition to permanent housing. The funding stream for an outcomes-based model, in the case of a homeless shelter, would also channel resources into onsite health clinics, nutrition programs, counseling, and job skills workshops. Jen Talansky, managing director of knowledge and impact at Nonprofit Finance Fund, suggested that an outcomes-based approach requires substantial followup with clients, who benefit more from “holistic care” than from mere short-term fixes.

Advantages of an Outcomes-Based Approach

An outcomes-based approach has the potential to solve the root causes of social challenges beyond fulfilling the immediate needs commonly associated with outputs. Eric Belsky, director of the division of consumer and community affairs at the Federal Reserve Board of Governors, discussed several advantages of an outcomes-based approach. First, this approach focuses on the multidimensional causes of problems and invests in sustainable solutions. Second, this approach demands more critical thinking about the outcomes we wish to achieve through community development and human services initiatives. Third, this approach challenges policymakers to identify effective strategies that produce intended outcomes, which in turn requires matching the strategy appropriately with the desired result.

Cross-Sector Collaboration To Improve Community Development

A clear understanding of the agenda and a roadmap for success are critical components for achieving a desired outcome for communities, emphasized Michael Nutter, former mayor of Philadelphia. John Bridgeland, former White House domestic policy director, suggested that an outcomes-based approach requires “an environment of continuous learning in departments and agencies.” Developing “learning agendas,” Bridgeland said, would help foster information sharing and communication across government agencies. In addition, collaborations with universities and hospitals can inspire partnerships in which these institutions become a research and development arm of city government, said Nutter. One national initiative in particular — “What Works Cities” — strives to increase cities’ use of data and evidence to improve communities. This initiative demonstrates a shift toward a new practice of putting money into programs that truly work.

Michele Jolin, CEO and co-founder of Results for America, moderates a discussion between Michael Nutter and John Bridgeland, who are sitting on stage during the event at the Center for Strategic and International Studies. Panelists discussed the need for cross-sector collaboration when implementing outcomes-based approaches. Photo Credit: Nonprofit Finance Fund

Scott Kleiman, program director at the Harvard Kennedy School Government Performance Lab, gave an example of the positive outcomes that came about when the city of Seattle improved lines of communication, consolidated contracts, and established better-connected data systems to reduce homelessness. Seattle’s formerly disconnected services prevented the city from tracking individuals through their homelessness journey. The city’s partnerships with service providers focused on short-term outputs such as the number of meals served or the number of people in a shelter on a given night. Although this information was important, it told policymakers little about the progress being made in preventing homelessness and whether formerly homeless people were acquiring stable housing. To this end, Seattle’s Human Services Department created the Pathways Home framework to reduce homelessness through a people-centered approach that funds programs proven to be successful while reducing racial disparities. With more uniform performance measures and improved accountability, the city now funds programs that directly mitigate the root causes of homelessness. Pathways Home takes stock of data resources and has eased the city’s administrative burden by consolidating service provider contracts, and the results are promising. From 2016 to 2017, the average length of stay in an emergency shelter decreased from 55 days to 32 days, and the transition to permanent housing increased by 7 percent.

The Future of Outcomes-Based Approaches

As elected officials shift toward an outcomes-based approach, they must be transparent with citizens so that they are aware of how a program will affect them. At the same time, public officials must also be willing to hear feedback from citizens and be held accountable for results. Although outcomes-based approaches take considerable time and effort, they provide a new opportunity to arrive at long-lasting solutions to some of the most challenging social issues.