[Review] What Matters: Investing in Results to Build Strong, Vibrant Communities

For public- and private-sector leaders working to develop and implement solutions to the challenges — inequality, racism, gaps in educational outcomes and health status — that have vexed American society since the country's founding, the last few decades have been especially frustrating. As Antony Bugg-Levine, CEO of the Nonprofit Finance Fund and one of the editors of this volume, notes in his Introduction, despite collective investments in the trillions, "over 45 million Americans still live in poverty, more than half a million remain homeless...unemployment among young African American men stubbornly persists around 30 percent in many cities, an opioid abuse epidemic [rages] across [the] country," and the United States, with 5 percent of the world's population, "hold[s] 25 percent of the world's prisoners in a system that tends to warehouse rather than rehabilitate."

In the latest addition to the What Matters series, Bugg-Levine and more than seventy-five contributors — including Peter Long, president and CEO of the Blue Shield of California Foundation; David J. Erickson, director of community development at the Federal Reserve Bank of San Francisco; Zia Khan, vice president for initiatives and strategy at the Rockefeller Foundation; Jacob Harold, president and CEO of GuideStar; and Andrea Levere, president of Prosperity Now — make the case that progress on these and other fronts will only be achieved by shifting the collective mindset of community leaders from a short-term focus on outputs (e.g., the number of beds in a shelter occupied every night) to longer-term investments in outcomes (e.g., the number of people successfully transitioned to permanent housing).

In the area of health care, for example, Long argues that nothing short of a fundamental rethink of the nation's approach to health outcome management is needed. But despite ongoing efforts by stakeholders in both the public and private sectors to adopt electronic health records, develop health exchanges, and focus on interoperability, Long worries that "we are building a measurement system that resembles the Winchester Mystery House…[one] that contains hundreds of rooms, designed individually without relation to one another, and many staircases that lead to dead ends." What is needed instead is a clear vision for the U.S. healthcare system and a national infrastructure that supports a better, more coherent outcome measurement system. Unfortunately, Long writes, "in the current political environment, it [is] incredibly challenging to have a candid conversation about our national health values and priorities."

While that assessment might be overly bleak for those who see outcomes-oriented social impact investments as the key to "affordably address our most vexing social challenges," it is impossible to read this volume without recognizing how difficult bringing about such a fundamental shift is likely to be.

Of course, none of the book's contributors argues that such a change will come easily. Indeed, in essay after essay, the chief rationale for adopting an outcomes-oriented approach is the positive effect it can have on people living on the margins. "Across the country, extraordinary leaders are overcoming the status quo, making change happen in their communities, and pushing through the challenges," writes Bugg-Levine. Isn't that enough? Or as Bugg-Levine puts it in one of two essays he's written for the book: "Don't we already provide funding to hospitals to keep people healthy, to homeless shelters to end homelessness, to childcare centers to prepare children for a fruitful life, and to job training programs to find people permanent employment?"

Well, yes...and no. We fund hospitals and nonprofits to do those things, but we don't hold them accountable for results. A better approach, argues Bugg-Levine, is to "[o]rient programs and funding around outcomes." In such a system, "the flow of money falls in line with the deepest motivations and moral commitments of the people providing and using it. An outcomes-oriented system has the potential to spur productive innovation by enabling service providers and government agencies to mobilize flexible funding and focus on delivering services that produce lasting change. Orienting programs around outcomes compensates the hard-working service providers for the impact they have achieved instead of the paperwork they file, allowing them to prioritize the work and delivery of services overt short-term widget counting."

In his second contribution to the book, Bugg-Levine describes a "generation-long journey" that will require not just leadership but political will. And it may take longer than a generation to affect real change. In his essay, David Erickson traces the concept of investing in results to the creation of community development corporations in the 1960s. "The idea was to fund local corporations that were rooted in and rooting for local communities," Erickson writes. "CDCs were nonprofit but subject to market discipline in pursuit of better local social outcomes and a stronger local economy."

Fast forward fifty years: innovative communities are looking to finance efforts to advance community improvements and well-being — and earn a return on those investments. Such an approach inevitably leads to asking how success is defined. And if there is a common thread that connects nearly every essay in the book, it is the importance of planning and consensus to the success of any community development effort. But like the years of simulation and step-by-step experimentation that ultimately made it possible to put a man on the moon, the preparation involved in transitioning organizations and communities to an outcomes-oriented measurement system seems likely to take longer than it will to apply the lessons learned during the process.

In a sense, What Matters is a toolbox for the next generation of nonprofit and community leaders ready to pursue their own moonshots, detailing as it does more than a dozen prototypes that can be applied to the task ahead: impact investments, outcomes-based funding, prize philanthropy, social impact bonds, the impact security, outcomes rate cards, and so on. But outcomes-based impact investing is not a quick fix for what ails America’s neediest communities and populations. And it isn’t suitable for every social challenge we face. As Andrea Levere, quoting Roxane White, former CEO of Nurse-Family Partnership, and Tamar Bauer, chief policy and government affairs officer, says, "Pay for Success may be the most grueling growth strategy we will one day celebrate."

Indeed, there is very little evidence that tools such as social impact bonds are even scalable in their present form. The impact investing field is young, and experimentation is the order of the day. Still, while this edition of What Matters certainly feels comprehensive, it could easily be out of date and a testament to how quickly the world is changing within a couple of years. In the meantime, perhaps the best any of us can hope for is what GuideStar president and CEO Jacob Harold calls for in his essay: "[J]udge our success not by completed actions, but by completed change."

Matt Sinclair is the editor of Philanthropy News Digest. For more great reviews, visit the Off the Shelf section in PND.