Outcomes funds as drivers for ecosystem building
Part five of our Lessons from Colombia series.
By Marta Garcia and Maria Alejandro Urrea
This blog is part of a series on the experience of Global Affairs Canada (GAC) in structuring a CAD $30–50 million Outcomes Fund for Education Results (OFFER) in Colombia. Upon launch, the fund will aim to ensure students have equitable access to education and opportunities for retention and achievement. We’re pleased to share the lessons learned around the role of the governments, donors, and non-state actors to support the development of Outcomes Funds and how these vehicles could contribute to ecosystem building.
Outcomes Funds have been launched across the globe to address different social issues, ranging from education to climate change. Most of these vehicles have been developed in higher-income countries such as the UK, the USA and a few European nations. Although fewer Outcome Funds have emerged in low- and middle-income countries, Colombia, India, Ghana, and Sierra Leone have already launched and, in some cases, started implementing these types of funds, and there are several others in design.
According to the Government Outcomes Lab (2021), aside from conforming to the basic definition of an Outcomes Fund – a vehicle created to contract and develop multiple outcomes-based projects simultaneously – existing funds share very few features. They have different types, and numbers, of stakeholders involved, focus on different population groups, and have budgets ranging from USD $4m to more than USD $100m. Moreover, their strategic aims can be radically different, from a tight focus on achieving efficient outcomes through competition and iterative learning, to a much broader ambition around ecosystem building or driving improvements in public efficiency.
Nevertheless, based on an analysis of various Outcomes Funds implemented internationally, the GO Lab has identified different typologies according to how these funds are managed, and the degree of flexibility given to service providers to define technical parameters such as the target population or outcomes, among others. They describe some Outcomes Funds areas principle-based across some or all technical dimensions when they provide flexibility to the applicants to define some of these elements. Outcomes Funds with social innovation or ecosystem building objectives are part of this category. By contrast, other Outcomes Funds have precise prescriptions regarding their outcomes and target populations, leaving a very limited scope to the applicants to change those parameters. Outcomes Funds focused on impact efficiency fall under this group.
In this diverse universe, the Outcomes Funds that are being developed in low- and middle-income countries appear to seek broader objectives than purely pooling funds to contract multiple pay-by-results projects efficiently, and are typically seen as tools to foster change at the policy and ecosystem level.
An example of a fund striving to develop an ecosystem is the Outcomes Fund for Education Results in Colombia (OFFER), led by Global Affairs Canada in alliance with a group of Colombian foundations (Fundaciones Bancolombia, Nutresa, Sura y Empresarios por la Educación) and the Colombian Ministry of Education. The OFFER, which has pulled together a group of stakeholders who aspire to contribute meaningfully to the strengthening of the local educational ecosystem, aims to achieve two strategic and equally significant objectives.
On one hand, it seeks to implement payment-by-results projects to improve, directly, the educational outcomes of the hardest to reach students in Colombia.
On the other hand, it aims to distil, consolidate, and disseminate the insights created through those projects to strengthen Colombia’s education sector and its different actors for the long term.
Since both objectives are seen as equally valuable by the OFFER sponsors, the design of the fund has incorporated five key features that enable the pursuit of ecosystem building as a deliberate strand of work that sits on top of the individual projects.
Ecosystem building as a strategic priority
The OFFER sponsors have designated ecosystem building as a strategic priority of the fund, alongside direct impact on students. Many of the fund’s strategies, components, and design features focus on learning, public policy shaping and market strengthening
Resources for learning and ecosystem strengthening
The OFFER allies have agreed to put aside financial and human resources to support the learning and capacity building activities of the fund, right from the outset.
A governance structure to drive learning towards system change
The fund has distinct and independent decision-making bodies in charge of making key decisions to promote learning and share insights with relevant stakeholders and critical ecosystem actors. These bodies are accountable for achieving the goals of the OFFER’s ecosystem building strategies.
Individual project decisions aligned with the broader learning objectives
The OFFER allies have agreed that the strategic and technical decisions pertaining to each payment-by-results project launched within the fund will need to consider and contribute to the fund’s learning goals.
A team to deliver ecosystem building
The fund will have staff dedicated exclusively to deliver its ecosystem building strategies. This team will work alongside those responsible for developing the pay-for-results projects, so that their respective strategies remain aligned.
Much like the Employment Outcomes Fund in Colombia (FPR) did in its own field, by incorporating these elements into its design, the OFFER has signalled its ambition and commitment to strengthen the Colombian education ecosystem for the long term.
This blog is the final part of series on the experience of Global Affairs Canada in structuring an Outcomes Fund for Education Results (OFFER) in Colombia. For further information, or for support to design outcomes funds or outcomes-based contracts to deliver education outcomes, contact: marta.garcia@socialfinance.org.uk.