By Gary G. Mar, Janet Lane and Justin Rodych
Published in the Calgary Herald
September 14, 2022
The storylines around achieving social goals are so familiar.
Second, if agencies, community organizations and government just worked better together, they would be more effective.
Third, there might be cost savings if these goals were achieved, but it all sounds like budget cuts or poorer services in disguise.
The Canada West Foundation and its partner, Encompass Co-op, have released a report, Financing Social Solutions, that shows how saving money and saving the world can come together through true bottom-up collaboration among community organizations and their funders.
Really — no kidding — it works.
By changing the way solutions are financed, we change the goals, accountability and motivation to collaborate as well as the outcomes.
Emergency rooms, police, social workers, food banks, rehab services and the justice system all see the results of program failure. They work with the people who, despite having interacted with many excellent programs providing key supports, cycle through the system from one crisis and one agency to the next.
In 2018, the Homeless Enumeration project studied the service interactions of people who experienced homelessness in Barrie, Ont. The cohort of 100 people who had the most interactions with service agencies received 20,968 emergency and other services during the year, an average of one service every other day per person. Researchers then calculated the average cost of each police service callout, arrest, court appearance, ambulance call, mental and physical hospitalization day, ER visit, emergency shelter stay and so on. Services for these 100 people cost over $8.5 million that year — an amount much higher than the cost to provide supportive housing, a proven way to improve life for people who experience homelessness.
Through an outcomes procurement contract for services, the emergency service providers purchase a reduction in their workload. It works like this:
A supportive housing provider contracts with an emergency service provider to reduce their number of interactions with clients, thereby reducing the emergency service provider’s costs. When savings are measured at the end of the year, the agreed amount (a dollar amount per avoided service provision) is transferred from the emergency service agency to the supportive housing provider. This is a very bold contract by the supportive housing provider and is essentially risk-free for the emergency service. If it works, the emergency services providers benefit from reduced overtime, staffing and consumable expenses. If it doesn’t, they don’t pay.
First-year operating funds are provided by foundations, either through a loan, an investment (with associated dividends) or, if the program does not meet its goals, a grant.
There are wins all around. Individuals have a home from which they receive the kinds of support that reduce their interactions with “the system.” This means their quality of life is improved not just for a day but potentially for a lifetime.
The support is funded by savings from reductions in the number of emergency service interactions. Accountability isn’t measured in detailed reports on expenses; it is measured in savings from success. So, taxpayers win.
Social agencies that know what it takes to solve social issues collaborate to provide individuals with the life-changing services they need without the usual level of administrative burden.
Over time, there are fewer people who experience homelessness. Through this type of social financing, social issues can be drastically reduced, if not ended.
If this sounds impossible, there are a growing number of examples where the model is working. Aki Energy trains Indigenous community members to install geothermal heat pumps, instead of diesel generators, in remote Indigenous communities. The communities use the savings to improve health and education outcomes and lower utility bills. And the system provides construction and maintenance jobs — thus reducing social assistance.
Agencies in Alberta have expressed interest in solution purchasing. Watch this space as the experiment evolves.
Gary Mar is CEO of the Canada West Foundation. Janet Lane is the director of the Human Capital Centre. Justin Rodych is a policy analyst with Canada West Foundation.