Since the Second World War government has become the main buyer of frontline services aimed at improving social outcomes. Over time, and with some success, public services have grown and expanded to deliver ever more responses to William Beveridge’s Five Giant Evils: Squalor, Ignorance, Want, Idleness and Disease.
Indeed, we have come a long way since the 1940s. However, the current fiscal crisis has served to highlight the difficulties that all governments face in paying for public services given an ageing demographic. The pressure is on to find ways to make savings but, when times are tight, there is even less money available to experiment with new ways of delivering services; turning ideas into actions.
This is a huge challenge for commissioners who have to allocate every last penny to existing services even if they know they are not delivering the best possible outcomes. In effect, the challenge is to be able to ‘double fund’ a service for a period long enough to demonstrate that the alternative service design works; that it delivers as good or better social outcomes either for less cost or to more clients for the same money.
The emergence of socially motivated, so-called social impact investors means that there is a potential source of financing available to support organisations, especially voluntary and community sector organisations, and social enterprises (VCSE) in the delivery of frontline services. However, unlike grant funders – some of whom are developing social investment strands – who are more likely to fund pilots and new innovations, investors evaluate opportunities against evidence of what has worked before. We end up in a cycle where there are potentially great service innovations but not enough evidence or track record to convince either conservative commissioners or investors to take the leap.
There is of course funding available now for service innovation, especially in the VCSE sector. These include social enterprise incubation funds, Nesta, BIG Lottery Funds and so on. However, these funds are sometimes used as sources of grant financing to ensure survival, and innovations and developments will, of necessity, be designed to fit the funding criteria.
Another issue is that the finance is often used to fund pilots, which are intended to test whether innovation works. In practice these pilots are almost always ‘successful’. It is arguable that no pilot of this kind would ever actually fail as the alignment of interests of the participants is such that there will always be ways of reporting the outcome in a favourable light.
Few, if any, are designed with funding to be independently evaluated in a quantitative and qualitative manner that would make them ‘socially investable’ if deployed elsewhere and at scale. Indeed, it is a source of huge frustration in central government that many piloted ideas fail to scale-up or roll-out. There are many reasons but one of the key ones, I believe, is down to the fact that they have seldom been configured and measured in a way that produces the kind of robust evidence that will convince other commissioners or investors to take them up.
So how could the RSA help? The RSA has the experience – over 260 years and track record -- of turning ideas into actions. Its model of change is to bring the best theory together, develop and test innovations and then share the outcomes and model.
I believe RSA could bring this experience to bear and play a very valuable role in either managing innovation financing monies itself or designing the evaluation of pilots so that they truly demonstrate what works – and what doesn’t – through exacting evidence and measurement.
If ‘double funding’ to drive improved social outcomes and reduced costs is ever to come from social investors, then providing the robust evidence and support that organisations will need to develop their delivery track record will be key.
Either way, RSA could play a valuable role in redefining the social investment journey and the role of robust evidence within this, influencing what is a growing, often befuddling and important market.