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Financing of long-term social investments

Because social investments in society are long-term in nature and typically involve many parties, the municipalities and regions in Sweden tend to have a hard time putting them into practice. The public sector also needs to become better at succeeding with innovation by overcoming obstacles and the boundaries between organisations and authorities in charge. One solution is for the state to help with funding as part of a model called National Outcomes Fund.

Each social investment typically requires an overall approach and having a long-term perspective. What is invested today, could pay off in the form of lower costs far into the future. But, the ones making the investment might not be the same as those who benefit from it.

– “The benefits of, for example, long-term initiatives by municipalities aimed at preventing mental illness typically end of going to the regions. Everyone is concerned about their own budgets, which is why national support is needed,” says Lovisa Vildö, Project Manager at RISE Social Health and Impact Center.

Model for a National Outcomes Fund

RISE has developed a model for a National Outcomes Fund whereby the state contributes funds. The concept not only includes funding, but also tools that support development of the welfare sector. The financial aspects are just one part of it all. Implementing new ways of working that lead to the desired outcome is every bit as important. It requires active support to the organisations and individuals affected by the new or improved working methods.

Three examples of areas suitable for National Outcome Funding are higher safety and security in socially vulnerable areas, less exclusion for people with mental disabilities and ways to help new immigrants to Sweden more quickly become established.

During spring 2021, RISE and the Swedish Association of Local Authorities and Regions (SALAR) collaborated to present a proposal for the model for National Outcomes Funds for representatives of the Government Offices of Sweden.

– “It was well received and as the next step, we hope we will be able to make a similar presentation at the political level,” says Lovisa Vildö.

It is difficult for a municipality or region to, on its own, initiate, build up, implement and not least, evaluate the results of a long-term social investment

The model for National Outcomes Funds involves the state allocating a certain amount of money earmarked for different areas where the government wants to see results. Lovisa Vildö takes the issue of safety and security in society as an example.

– “Here, the state could define a desired outcome, such as increasing citizens’ sense of safety and security in a specific area,” she says.

National Outcomes Funds is not about the state covering all the costs of a project. Rather, it is about sharing the costs between those involved, for example, the state and municipalities. The idea is for everyone to lose if the outcome is poor and for everyone to win if the outcome is good. The model that has been developed for National Outcomes Funds can also be supplemented with guarantee funding, whereby the state would cover a certain percentage of any losses. That is needed because innovative, previously untested projects typically involve a certain amount of risk.

Likewise, implementation funding has also been included in the model. It is funding to cover the costs of disseminating knowledge about a project so that more stakeholders have access to how the project has been designed, run and its results.

– “We also think that the state should be able to provide structural funding support. It is difficult for a municipality or region to, on its own, initiate, build up, implement and not least, evaluate the results of a long-term social investment. They need help and support from, for example, those of us at RISE and SALAR. RISE has a great deal of expertise, particularly when it comes to implementation and outcome evaluation,” says Lovisa Vildö.

Lovisa Vildö
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