A recent article in the Columbus Dispatch, United Way’s Change of Focus Has Some Nonprofits Scrambling, offered an example of a growing trend among community funding organizations: outcomes-focused funding.
What is outcomes-focused funding? It is an approach that attempts to define and measure the social return on grants and social investments. The goal is to bring alignment between social impact goals and funding.
The United Way of Central Ohio has changed how they distribute funding. Traditionally, the organization has funded a broad range of social service organizations that provided a variety of programs for individuals in the community. However, in 2013 they transitioned to a new model that focuses on strategically funding initiatives that bring about long-term community impact. This United Way has adopted the goal of “reducing poverty, one family at a time.” And it’s aligning grant resources around this goal. They have taken a comprehensive view of the causes of poverty, identifying a new approach tied to measuring outcomes, working with people and systems to change community conditions, and prioritizing neighborhoods of concentrated poverty. Key elements of their approach include:
- Focusing on community impact (both changing systems and effects on individuals)
- Prioritizing funding based on population demographics targeted approaches
- Ensuring results by identifying and tracking outcomes
Organizations that can meet these criteria are now known as “Blue Chip” social investment organizations. They are a good investment for funders because they deliver the results that they’re set up to provide. What does your organization need to do to join this club?
1. Identify how your services can align with the goals of the funder. This could require redesign of current services, or innovation to create new services that create systemic change along with impacting individuals. This new approach can also focus intensely on specific geographic areas or populations, targeting services and resources where they have the greatest impact. You will notice the similarity to population health management strategies that target super-utilizers to create the greatest impact for the dollars spent.
2. Become more data-driven and focus on outcomes. Organizations that do well in a social-investment environment develop these characteristics:
- A tactical orientation to data: They identify outcomes and collect data to measure those outcomes.
- A strategic orientation to data: They use outcomes data to enhance and improve services.
- A program value orientation to data: They demonstrate with outcomes that they achieved their goals.
How does this relate to other funding challenges across the country? This approach is being adopted by other local United Way organizations across the country because it’s a way to align funding and program outcomes with community impact goals. And, the impact is even broader. For foundations, counties, and other funders, this approach creates an opportunity to align financial resources with strategic impact goals and demonstrate results with data-based outcomes. It’s the same approach we’ve experienced with health care reform moving into value-based contracts with payers. It creates focus and accountability for results, and demonstrates the stewardship of grant dollars invested in services.
For provider organization management teams, this further reinforces the need to become data-driven. Vignettes that describe how we’ve affected consumers are helpful at showing the qualitative impact of services, but data-supported outcomes demonstrate the value of our services to the community. Becoming a “Blue Chip” provider organization by developing a data-focused culture can create even more opportunities.
To learn more about this shift, don’t miss “There Is No Plan B: How To How To Demonstrate Your Value & Create The Collaborations That Matter In A Changing Market,” the closing keynote at The 2017 OPEN MINDS Strategy & Innovation Institute, taking place June 6-7, 2017, in New Orleans. In that session, my colleague Monica E. Oss will go into more detail on the “creative destruction” happening in the health and human service field as a result of this move to value. For more updates about The Strategy & Innovation Institute, follow us on Twitter @openmindscircle – #OMStrategy.