Payment by Outcomes (PBO)

Payment by Outcomes (PBO) is a form of investing to help address long-standing social issues. PBO trials are designed to test the effectiveness of these investing contracts.

How it works

The government has committed $15.7 million from 2019-20 to 2026-27 to co-develop, implement and evaluate 3 PBO Trials in the social services sector.

PBO is a form of social impact investing (SII) contract, between a funder and service provider. In the PBO Trials, the contract funder is the government. In the PBO Trial contracts, service providers are paid part of the contract fees upfront and part on achievement of agreed outcomes.

This means the service provider takes on more of the risk for achieving the outcomes than under a traditional grant arrangement.

The objectives of the PBO Trials are to inform:

-the appropriateness and efficiency of PBO contracts

-how to improve the design and use of robust outcome measurement

-whether PBO contracts are suitable funding tools in social services

-whether the policy focus areas tested are suitable for PBO contracts.

The learnings will inform future potential funding arrangements and community sector reform.

The 3 PBO Trials were co-developed and are being implemented and evaluated with service provider partners.