Preventive measures in the welfare sector benefit both society and individuals. Social Outcome Contracts are a model that can help municipalities implement more effective, innovative solutions. RISE has compiled the learnings from Sweden's first attempt at a social outcome contract in Norrköping municipality.
Society is making major investments in urgent, reactive initiatives within the welfare sector. It is also well known that early intervention and prevention efforts, provided that they are correctly designed, can offer a high return for both the individuals they aim to help and the public funds that were invested. Nevertheless, society’s investments in preventive measures remain at a very low level.
Social & Health Impact Center, SHIC, at RISE is a knowledge center tasked with helping the publicly financed welfare sector transition to more effective and preventive solutions. It applies a model called Social Outcome Contracts.
In a Social Outcome Contract, the party responsible for a particular outcome, such as a municipality, makes a commitment to the implementers, such as other public entities or investors, to share the economic risks of a venture and pay for the social/economic outcome. The model also includes an agreement to deliver specific actions and strive to achieve specific goals for the target group of the initiative. Implementation can be done by an entity in the public sector, civil society or the private sector. If private investors are involved, they will receive variable remuneration based on the outcome achieved.
Norrköping municipality pioneers in Sweden
The first Swedish attempt at executing a Social Outcome Contract took place in Norrköping, where the municipality felt that its conventional methods were not doing enough to help children and youth who had been placed or a special residential homes for young people run by either the municipality or the National Board of Institutional Care. With early intervention, it was hoped that costs further down the road, both economic and human, could be avoided.
– “The question was raised as to whether there might be other ways of working that could lead to better outcomes. Inspiration was taken from, for example, the UK’s way of working with Social Impact Bonds, which are also social outcome contracts,” explains Tomas Bokström, Project Manager at RISE, which has been following the Norrköping project right from the start.
An investor was willing to provide funding and a letter of intent was formulated. In 2016, the Social Contract model was launched, involving 60 children and youth. The outcome was favourable, for both the children and youth who were involved and Norrköping Municipality. Overall, the grades and well-being of these children and youth improved and measured over three years, it lowered the municipality’s costs compared to a reference group from 2013.
– “The data was difficult to interpret however, and there was a lot of variation in the results. We realized that, in order to evaluate the full effects of this initiative, we would need to monitor results over a longer period of time. Two years is too short of a period for being able to evaluate the economic impact. One must keep in mind that a Social Outcome Contract is difficult to measure and monitor. It is also difficult to know in advance just how much time is needed to evaluate the full outcome,” says Petter Skill, CFO for Norrköping Municipality.
– “We also found it challenging to measure the soft values. For example, what should we be measuring, how should it be measured and when should we stop measuring?” he adds.
It’s not reasonable to expect each municipality to be doing this on their own
Carefully selected area
Other lessons learned by Norrköping Municipality were the importance of being very careful in selecting the area to implement a Social Outcome Contract, because there simply aren’t resources available for being equally rigorous with measuring and monitoring for all activities. Also, it is necessary to have a very clear idea of the expectations before embarking on a project.
– “One positive aspect of a project like this is that it puts greater focus on a particular problem. Within the municipality, we have continued using some of the working methods that we used with the Social Outcome Contract,” says Petter Skill.
He emphasises that a Social Outcome Contract demands a great deal of time and resources. And because of that, it is better if several municipalities collaborate on bigger initiatives and it is also good to get help and support for the follow-up efforts.
– “Ideally, Social Outcome Contracts should be run as a large, national project. It’s not reasonable to expect each municipality to be doing this on their own,” says Petter Skill.
We now have knowledge of the methods and tools that we can make available
Ing-Marie Wieselgren is a project manager and national coordinator at the Swedish Association of Local Authorities and Regions (SALAR) working with psychiatric issues. She was involved in the Norrköping project, particularly with methodology development, and she is pleased with the outcome.
– “My focus with this project was ensuring that the children and youth involved would benefit from it, which they did. For a large percentage of those involved, their grades improved and they felt better,” she says.
– “It’s important to remember that you really can achieve change for these children and youth, also, it is possible to measure the soft values. Not only that, there really were economic gains as well.
The whole of society benefits when our children and youth are thriving and have a good state of mental health,” emphasises Ing-Marie Wieselgren. Less crime, a lower need for mental health services and a higher level of employment are all things that benefit society.
Next step – a joint effort
As a next step, Ing-Marie Wieselgren would like to verify the results from Norrköping in a new Social Outcome Contract that would involve several municipalities in a joint effort. Above all, it would be desirable to focus on the younger age groups and on children and youth who have been placed in residential care for the first time, since they haven’t yet lost hope in the authorities, or already firmly established themselves in a life of crime or other serious problems.
– “I think there will be more focus on this issue of children in residential care once the pandemic is over. In a society as developed as ours, there shouldn’t be a poor outcome for children who have become wardens of the state. We now have knowledge of the methods and tools that we can make available,” she says.
– “Because follow-up is so incredibly important, I’d also like to see simpler, more standardised methods for monitoring these types of initiatives even after a project has been concluded. This is where RISE has an important role to play, since we have a great deal of high-level expertise when it comes to measurement methods,” says Ing-Marie Wieselgren.
A social welfare contract is a learning experience, where everyone participates on equal terms
Builds national expertise
One of the conclusions by Norrköping Municipality was that it was very difficult to implement a Social Outcome Contract on their own, which is why RISE, via SHIC, is striving to build up a foundation of national expertise in this area. The idea is for RISE to serve as an independent third party that can act professionally and support the entire process, along with providing expertise for measuring the results.
– “We also see a need for encouraging the state to assist with funding for Social Outcome Contracts. If an initiative like the one in Norrköping can help reduce crime and reliance on welfare benefits, everyone wins,” says Tomas Bokström.
He emphasises however that a Social Outcome Contract is by no means a consulting service and neither does it represent an attempt to privatise the welfare sector.
– “A social welfare contract is a learning experience, where everyone participates on equal terms. The funding is based on a model of sharing the risks, whereby the party responsible for the outcome, such as a municipality, must budget for the activities that will be run within the scope of the contract,” says Tomas Bokström.