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The first outcomes fund (OF) was established in the UK in 2012. Since then the number of OFs has steadily increased and they now exist in a variety of contexts around the world. As OFs are evolving over time this document will be updated to reflect emerging developments. Please send us information on your experiences, challenges and recommendations by emailing

What are outcomes funds?

6 minute read

An outcomes fund is a funding mechanism that enables several outcomes-based contracts to be developed and supported in parallel, under a common framework.

A primary goal of OFs is to improve services and programmes that tackle complex social issues by scaling up the outcomes-based contracting market (particularly by funding impact bonds and other payment-by-results mechanisms). In their broadest sense OFs signal a commitment to pay for measurable social outcomes at scale, rather than paying for activities or outputs. 

There is considerable variation in the way OFs are being designed and there are currently several models under development. A simplified operational process for OFs follows four key stages:

  1. Outcomes funding is designated – One or several actors (public, private and/or philanthropic) allocate capital to the operation of an OF. This is money that will be mainly used to pay for social outcomes, allowing funders to act as outcomes payers
  2. Call for outcomes-based project proposals – A partnership comprised by actors such as service provider(s), social investor(s) and/or intermediary(s) apply to the available funding with proposals for social projects based on outcomes. 
  3. Selection of successful projects – The OF selects proposals which become outcomes contracts to be implemented.
  4. Payment conditional on measurable social outcomes – If social outcomes are achieved through the proposed service, contractors receive payment based on the specified outcome. To do so, a process of outcomes validation is set, based on administrative data or other evaluation methods. There are different approaches for defining the payment for outcomes achieved, such as the rate card approach, which provides a menu of highly specified outcomes each with specific maximum prices attached by the outcomes fund administrator. See more about pricing outcomes here. 

Diagram 1 provides a stylised depiction of how an OF works. Reading the diagram from left to right, it shows the general process starting with the capital provided by potential funders and concluding with the payment for social outcomes, which is only made when social impact has been verified by an outcomes evaluation. 

Outcomes funds .png
Diagram 1 - General process for Outcomes Funds

Diagram 1 has a series of operating assumptions that it is important to clarify, given the different models that could be launched in reality. 

  1. It assumes there are several outcomes funders, while in some OFs there is only one agency acting as an outcomes payer. 
  2. It assumes that after the application process, all the fund applicants were successful in launching, while in reality not all the projects that apply to the OF may be selected to be funded by the OF. 
  3. In this example all of the outcomes-based contracts operate in the same education policy area, revolving around a single social issue. In practice, OFs may encourage applicants from a diverse range of policy areas. 
  4. The diagram shows the presence of upfront capital provided by investors for the implementation of outcomes-based contracts. However, in OFs this upfront investment is not always required.

What is the purpose of outcomes funds?

The primary goal of OFs is to improve services that tackle complex social issues, thereby improving social outcomes. OFs aim at scaling the use of outcomes-based contracts so as to incentivise service providers to achieve improvements in social outcomes for specific target populations. Through greater collaboration and synergy between actors, they aim to contribute to more effective solutions for addressing complex social issues.

Nevertheless, OF are not always able to achieve the outcomes targeted by the outcomes-based contracting projects. The achievement of outcomes relies on many factors linked to the local implementation context and the outcomes-based contracting market in each targeted geography and policy area. The capacity of local actors to administer OFs and to apply a flexible approach to learning may also affect the successful adoption of the approach. 

At present the evidence on the effectiveness of OFs themselves and of the contracts funded by OFs is limited. You can read more about the evidence on impact bonds in our introduction to impact bonds. Currently there are promising signs but it is too early to tell.

What are the key features of outcomes funds?

OFs may differ in many ways. For instance, OFs may vary in how closely they define a specific geography or target social issue. It may be helpful, however, to highlight two key characteristics common to all OFs:

  • Focus on outcomes – All OFs share the desire to create better social outcomes. This indicates a transition of focus away from an activity-based approach (i.e. the number of frontline staff or hostel beds) and output-based approach (i.e. the number of engagements with a person who is homeless) to an outcome-based approach (i.e. a person who was homeless is now living in independent accommodation for 12-weeks). This focus is linked to the creation of outcomes-based contracts for funding social projects. OFs aim to grow the outcomes contracting market by directly supporting the adoption of tools such as payment-by results and impact bonds.

  •  Welcome multiple outcomes-based contracts – Rather than funding and developing outcomes-based contracts one at a time, OFs facilitate the funding and development of several of these projects, which sometimes could even be designed and/or implemented simultaneously. Even when the design/implementation of projects is sequential, the speed at which these projects are set up and launch could be significantly reduced by accessing standard procedures and design features.

Alternative Outcomes Fund models: the spectrum of OFs

OFs vary considerably in their scale:

  • the amount of money available for paying for outcomes;
  • the number of outcomes-based contracts funded; 
  • the number of different actors contributing to the fund.

The time frame allocated, population, policy theme and geography to be targeted also vary.

Here are the main ways that OFs differ: 

  1. Where the outcomes funding is from: This could be public money administered by government departments; private capital (eg. a bank); philanthropic or donations; international aid or cooperation for development; and mixed.  
  2. Which institutions administer or manage the OF: OFs can be administered by a national government department or federal government. In some situations philanthropic foundations lead in the management of the OF. There are also examples of international OFs where the funders are from several countries and/or where different countries are invited to prepare outcomes-contracts to receive funds. OFs could also be created as a mix of these. 
  3. The geography and sector targeted by the fund: This could be local (OFs centred on projects for a certain municipality or province) or for larger geographical areas (welcoming proposals from all over the country) or international (through development assistance to multiple countries). The outcomes funding could be allocated only to projects to be delivered by public service providers; projects by private service providers or a mix of both.  
  4. The number and type of outcomes-based contracts funded: OFs might support one, two or several outcomes based contracting projects. These projects could be payment-by-results (PbR), social impact bonds, development impact bonds, other kinds of outcomes-based contracts, or a mix of them. The type and number of contracts could vary significantly as could the size of selected projects (number of intended programme participants) and the available money for paying for each project’s expected outcomes (contract value). 
  5. The policy issue they focus on: The focus may be on one predefined policy issue (e.g. only projects for children’s social care); a few predefined policy issues (e.g. only projects on health and primary education); a predefined policy issue which leaves open the possibility to fund further projects on other policy areas (e.g. an OF focused on employment but welcoming other topics in a future application round); broad policy themes gathering different potential social issues in each of them; or a completely undefined policy area (e.g. applicants identify their own priority social issues).  
  6. The target populations: There may be one predefined population group (e.g. a project focused on elderly people in a particular geographical area); a few predefined population groups (e.g. funding projects on children and young people across a number of regions); or a more flexible approach.
  7. Different contexts and legislation: Different institutional contexts (for example, the rules applying to public budget allocations or laws applying to cross-sector partnership) may have substantial implications for the way an OF is structured and managed. The level of trust and accountability held by different institutions may also influence the OF approach. 

Further Reading

We have compiled a list of readings that will be helpful to further your knowledge of outcomes funds. 

European Venture Philanthropy Association, EVPA (2018). Outcomes Funds in Europe. Policy Brief. European Commission

Global Steering Group for Impact Investment (2018) Social Finance India & India Education Outcomes Fund Business Plan. Preliminary Draft.

Government Outcomes Lab (2016). Building the tools for public services to secure better outcomes: Collaboration, Prevention, Innovation. Evidence report. Click to download:

Government Outcomes Lab (n.d.). An introduction to outcome-based contracting.

UK Government. Innovation Fund Key facts.

Social Finance (2018) Outcomes Funds

The Education Outcomes Fund for Africa and the Middle East (2019). Flyer:

You can also view the UK outcomes funds contracts and the UK based outcomes funds for social impact bonds that we have compiled. 


The GO Lab has put together this guide with help from many members of the team. We are also grateful to Social Finance who reviewed this guide.

We have designated this and other guides as ‘beta’ documents and we warmly welcome any comments or suggestions. We will regularly review and update our material in response. Please email your feedback to