Community Colleges are important providers of education and job pathways for people with various barriers to learning and employment. They sit at the intersection of adult education and social impact, and government funders are increasingly looking to explore outcomes-based funding in this sector.

Latitude Network is working with the peak body Community Colleges Australia and five community colleges to run a collaborative data project with the NSW Department of Education. The aim is to develop a common set of data collection standards across multiple colleges to allow comparative data on outcomes and performance.

This is an exciting project that demonstrates how data systems, continuous improvement and innovation processes can be applied at a systems level in social and education sectors. The project is designing a system that works for multiple different organisations using different student management systems (databases), in a range of different geographies serving a wide range of student needs. The de-identified data can then be collated across multiple organisations in a consistent way to create dashboards and analysis covering different programs, locations, services and outcomes.

In the next phase Latitude Network will build common dashboards and conduct periodic ‘deep dives’, or data analytics reports, to generate insights that enable colleges to improve (optimise) services and social impact. Comparative data is very powerful because it allows individual colleges to anonymously see their performance in the context of the performance of other organisations delivering in different regions. This provides evidence to flag performance gaps and to learn from best practices with objective data (not just those who claim to have good practice). 

This work is important for peak bodies to consider as a tool to improve system performance in any sector or sub-sector of the social services system. Watch this space for more information as the project moves to implementation. Feel free to reach out to us about lessons from this project if you are seeking to improve performance in multi-stakeholder or cross-organisation collaborations.

​Latitude Network are thrilled to announce that we will be working with Reclink Australia and Vichealth on a unique outcomes challenge: to get 100,000 young Victorians to be more physically active and socially connected. In doing so, this project will tap into 160 different underutilised sites across Victoria to transform them into physical activity spaces for young people. 

Funded by VicHealth and supported by a host of youth organisations and agencies, the project will be genuinely co-design and produced by young people, using open innovation thinking to ensure that physical activities and environments meet the needs and preferences of the young people who will use them. 

Latitude Network will bring its expertise in open innovation and data-driven performance management to ensure that this project generates lasting, measurable outcomes for young Victorians, whilst building capability in Reclink (and partners) in its approach to data, program design, segmentation, outcomes and impact measurement. 

More on the project here.

SOCIAL ISSUE 

Prior to 2021, the South Australian homelessness funding, like most homelessness systems around the country, was divided between multiple different service providers who weren't incentivised to work together as one system. 

The three key limitations of the system were: 

• Outcomes were not being achieved: the system was not solving or reducing homelessness, with 73% of clients having  previously received homelessness services (‘service-cyclers) 
• Disproportionate emphasis on crisis: leaving little resource for those in the system or at risk of entering the system. 
• A poorly integrated response to homelessness: not easy to access or navigate and failed to offer wrap support to meet individual and family needs. 

CLIENT CHALLENGE  

The South Australian Housing Authority (SAHA) sought to redesign the homelessness system in order to reduce the number of those at-risk of entering homelessness and the length of time people are in the system. To do this, SAHA divided its jurisdiction into five discrete regions and called on social service providers to develop solutions. 

In the Adelaide City and South region, Baptist Care SA, Lutheran Care, Mission Australia, The Salvation Army and Sonder came together to form the Toward Home Alliance. 

The challenge for the Toward Home Alliance was to redesign the homelessness system so that service users received a tailored and individualised response. Resources, accommodation and services needed to be aligned to the outcomes for each of the service user groups 

• First-time users of homelessness services; 
• Those at-risk of entering the homelessness service system;
• Long-term users (‘cyclers’) through our system, including rough sleepers; &
• Aboriginal people - who required a culturally appropriate, First -Nation led response. 

The challenge of service design was compounded by the prevalence of factors that contribute to homelessness such as mental health, physical health, disability, drug and alcohol and life trauma - requiring the intervention to holistically address these issues too. 

THE ROLE LATITUDE NETWORK PLAYED 

Latitude Network played a central role in supporting the Toward Home Alliance. The process involved uniting a diverse set of national, state, local and Aboriginal-run service providers toward a common goal of reducing homelessness in a defined geographical region. The key functions of the Latitude engagement included:

• Supporting and advising the parties in establishing the Alliance, including facilitating the decision of Lead Agency, and deciding a sound governance structure, with a clear decision-making authority;
• Cohort segmentation: using data to identify priority groups and with Alliance partners, designing/ adapting the service system to address their needs;
• Working with partners to identify client and system outcomes, together with the necessary thresholds and target success rates for each outcome ;
• Planning a seamless, sensitive transition of clients from the existing system to the new system, and then developing a comprehensive implementation plan ;
• Designing a data system and measurement: mapping data to outcomes, dashboard reporting and promoting a ‘performance culture’;
• Working with the Alliance to develop a full commercial and financial model, including avoided costs.

THE IMPACT 

The first impact was that the innovative proposal was accepted by the South Australian Government with the Alliance winning the funding for Adelaide city and South. The funding changed on July 2021, and as with any significant system change, there are always lots of elements to work through. The team has formed well together and built a strong culture of collaboration, but it is still early days to work out how well the elements are working and how best to refine and iterate them. We will keep an eye out on the Toward Home progress and now doubt the challenges of making progress.

​One client reflected on the ‘innovation’ aspect of PADs/SIBs suggesting that learning or borrowing from other models is a good way to augment your proposed solution. While PADs give us a chance to trial new approaches ‘...that doesn't mean reinventing the wheel necessarily - look around for what is being done in another place or with a similar cohort and talk to the organisations delivering the program.’
 
Perhaps one of the most powerful aspects of an outcomes contract is the need for us to zero-in on lived experience. One client reflected that ‘when including people from the front line, or those with lived experience, prepare and encourage them to bring their experience and knowledge to the table…’
 
Indeed, the process may be uncomfortable for staff, ‘...they may feel outside their comfort zone [but should be encouraged] to think about how they go about their work in a different way.’ 

At the heart of a PAD is ‘being clear on your cohort and outcomes. Make sure you confirm this in the initial part of the project because you don’t want to get 6 months in and find you're not 100% clear on who and what.’
 
There is a flip-side to this outcome journey in all PADs and that is the service system journey for clients currently - what we can loosely call the ‘counterfactual’. ‘Make sure you understand the extent to which your clients currently use the service system and ideally understand how much this reduces through your program financially - savings are critical to government.’

One organisation suggested that ‘patience and a flexible approach is probably the most important’ thing in outcomes contracting. ‘Don’t expect it to be quick or straightforward.’ Another said to ‘be prepared for discomfort as you grapple with an intense and unfamiliar process, lots of workshopping, many unknowns and wondering how it will all come together.’ ​

​This excellent phrase was shared by one of our clients and nicely captures the way that PADS are trying to harness the relative strengths of each of the parties involved. ‘Don’t be afraid to tell the Government they are wrong. It's BAU for them to be conservative, NGOs should own the innovation space in front of Governments and be persistent’.
 
PADs really do alter the dynamics between Government and service provider. One of our clients put it this way: ‘You’ll need a thick skin and a strong commitment to what you know works. The Government’s needs aren’t necessarily your or the program’s needs and so you need to know what is non-negotiable.’
 
PADs also highlight the value of complementary skillsets. ‘You will be negotiating with numbers people… brilliant numbers people who have a limited understanding about the client group or how to do community development. They are great at what they do but so are you so don’t let them have it all their way!’
 
One of the benefits of an outcomes focus is that everyone is, effectively, a problem-solver. While Treasury officials are focused on the value-for-money challenges, officials from the line agencies will bring a practice-based focus: ‘Get other departments in the room. The line agencies will better know the sector people and programs - let them fight some of the programmatic battles for you.’

​The outcomes contracting process is nothing if not intensive. It needs resourcing internally. One client advised that you will ‘need to have at least one person dedicated to developing this. Most NGOs will fund this internally, however, this should be seen as a valuable investment, even if you don’t get the program up.’
 
As for the mix of the team engaged in the process, you will need ‘a mixture of ideas people and do-ers who can buckle down and progress the hard yards of research, seeking out answers and project management.’

​Some of the elements of an outcomes-based contract are highly-technical and specialised. One of our clients suggested that you will need ‘bloody good guides who have been there before and who can tell you when you are focusing on the wrong question’.

The process of negotiating a PAD, while intensive, can bring enormous benefits to the organisation itself. Becoming literate with data and how it can be used to check and adjust performance was seen as critical.
 
“Start with data… get literate about how numbers and data work because, at times, the process will become about the numbers ... Become an expert at it really fast and get your team used to measuring and counting at least something.’  
 
Creating a culture of measurement and the gathering and use of evidence is seen as key to success: ‘Having a culture of using measurement and evaluation to improve the services you provide to clients really helps with structuring and implementing a SIB/PAD/SII’. And even where data might be scarce, start with a hypothesis and ‘...use external sources including public data sets (ABS, AIHW etc), research and evaluations …’ to try to confirm your hypothesis.
 
The journey of negotiating an outcomes-based contract can be revolutionary for an organisation, giving it the tools, confidence, funding and time to re-imagine the way that services are delivered for a specific cohort of people. 

First published in Pro Bono News

The Living Learning program is important, writes Dale Renner, not just because of its social impact on young people, but also because of the way the impact investment is structured. It provides a new way to partner for the delivery of social outcomes.

The Living Learning program was launched last week at the Hester Hornbrook Academy (HHA) in Sunshine in Melbourne’s west. HHA is an independent school run by Melbourne City Mission for young people disengaged from the traditional school system. The program is funded as an impact investment under the Victorian government’s $30 million Partnerships Addressing Disadvantage (or PAD) program (also known as social impact bonds, or SIBs). 

The service innovation which will be tested through the program is a more integrated mental health and flexible secondary school education program for young people whose educational and long-term employment prospects are being affected by ongoing mental health challenges.

The program is important not just because of the social impact on young people, but also because of the way this impact investment is structured. We have worked on a variety of social impact investments in the last few years and have encountered a range of barriers to a wider takeup of social financing mechanisms such as SIBs. They are complex to negotiate given the three parties involved (government, social organisation and investors) and their need to balance a range of risks as well as target measurable financial and social outcomes. SIBs were originally designed to allow socially-minded investors to help fund the upfront costs of social programs where their investment was “at risk”, meaning they would lose some of their investment if the program did not deliver the target outcomes. They were specifically designed with private investors, not philanthropic trusts, in mind.  

Philanthropic trusts operate differently to a traditional impact investor. 
Philanthropic trusts and foundations usually have a corpus of funds built from an original or historic donation invested in “safe” market investments so that the interest earned on those investments can be given away as grants. For an overly simplified example, if your corpus is $10 million and you earn 5 per cent per annum from your investments, you can give away $500,000 (less expenses) per year and keep the trust going “in perpetuity”’. A more modern way of thinking about the granting side is that, it too is an investment but the return is in social outcomes rather than in financial returns. This means each alternative use of grant money should be compared to the level of outcome it achieves compared with the next best use of that money.

As a result, the amount of money that philanthropic trusts and foundations give away each year is tiny compared with the amount that is locked away in their corpus. People in the social impact space have been thinking for years about how to unlock this corpus for investing in impact directly. The social finance innovation that enables the Living Learning project represents one way we can now unlock that corpus to be used for specific types of social impact investment projects. This is a “philanthropic impact investment” (PII) model, as distinct from the more common impact investing model which tends to focus on investors that may not be philanthropic trusts.

Why is it difficult for some philanthropic trusts to use the corpus for social impact investing? 
The problem is that social investments are competing against asset classes that are very well known – whether listed companies, property or, increasingly, renewable energy investments. Social impact investments are newer and far more variable (a SIB service model and program logic is usually an innovation that is unique or new to the sector), so it is harder for an investor to assess the risk of an investment in such a project compared to those in well-known assets. As a result, the understandably conservative investment strategies employed by trusts and foundations mean these newer and more complex social investments are passed over. 

The new PII approach developed for the Living Learning program enables a trust or foundation to combine both its corpus and its grant funding in the same investment through a “split tranche” structure. The investment generates a return if the project achieves its social outcome goals while the grant portion is called upon to cover the loss if the program fails to achieve the target social outcomes.

Latitude Network with Social Enterprise Finance Australia (Sefa) and Melbourne City Mission worked together with the Victorian government to ensure this model suited the program and complied with all legal and government requirements. This approach has the potential to make it easier for social service organisations to develop high impact social programs that attract impact investment from their philanthropic partners.

Benefits of the new split tranche structure 
One of the benefits of this new structure is that it leverages and deepens the natural relationship between philanthropy and the social sector and allows philanthropists to use part of their large capital base to help unlock funding from the government for worthy programs. Philanthropic trusts can use their dual ability to invest capital, but also to provide grants that enable them to reduce the internal risk of these investments and provide the working capital that outcomes based contracts require. 

This is useful because outcomes-based contracts are powerful tools to drive higher accountability for social impact. One of the core public benefits that we at Latitude Network have witnessed in organisations that undertake outcomes contracts (such as SIBs or PII projects) is that the focus on outcomes and the rigour of the contracting and financial structure create strong incentives to achieve social outcomes. This in turn leads to stronger use of data and performance systems that drive continuous improvement in programs. Well-designed outcomes contracts align financial and mission-based incentives to deliver high performing social programs.

While SIBs have been important vehicles for helping the social sector develop new tools and skills for achieving outcomes, they are very complex to develop and negotiate and are not suitable for all forms of social service funding. Government, philanthropy and the social sector need to continue to find new and lower-cost ways of contracting for the delivery of social outcomes. The PII structure developed for Living Learning is an example of a new way to partner for delivery of social outcomes.