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Develop Markets for Social Outcomes

We need to develop more effective markets for social solutions. That means explicit contracts that reward the achievement of social outcomes, such as better educational results or longer lives.

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We need to develop more effective markets for social solutions. That means explicit contracts that reward the achievement of social outcomes, such as better educational results or longer lives.

Most government funding is provided to specific programs that focus on narrow solutions to complex societal problems. Projects that offer more innovative approaches often struggle to access funding because their models fail to meet the narrow criteria—even if their approach is more effective at accomplishing the outcome.

But if funding streams instead defined the outcome they wanted and offered to support projects that could demonstrate that they could deliver the outcome—or support more established projects that had already achieved the outcome and could continue to do so at a larger scale—that would change the funding dynamic.

This new approach would allow a project that reduces childhood obesity to work by simultaneously encouraging healthy eating among children, increased exercise in the classroom, parental education, and working with food manufacturers to alter marketing practices. The federal government’s current instinct is to offer different funding streams for each of these approaches rather than finding those projects that are most effective, which would allow the best to rise to the top.

Developing a more robust and competitive market for government funding along these lines will require a culture change, in both the executive and legislative branches, that shifts funding criteria away from focusing on projects’ promised inputs and instead on the outcomes they achieve.

The key point is that federal departments and Congress need to work together to develop funding streams focused on outcomes rather than grants for projects. This requires government agencies to think of themselves as shapers of markets for outcomes—and to own the problem of putting in place the conditions that help real markets to function well.

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