Payment by Outcomes: Measuring the effectiveness of jobs-focused social enterprises

The Centre for Social Impact at Swinburne University has been engaged to deliver an independent evaluation of the innovative Payment by Outcomes trial, over a 3-year period.

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On this page, find information relating to:

• First-year evaluation results
• Snapshot of first-year individual outcomes
• Second-year evaluation results
• Snapshot of second-year outcomes

What is the Payment by Outcomes trial?

The Payment by Outcomes trial for social enterprise is the first federal government-funded trial of its kind in Australia, where jobs-focused social enterprises are paid for employment outcomes they create.

The Department of Social Services has partnered with White Box Enterprises and 16 social enterprises to measure the effectiveness in creating long-term meaningful employment for people who face barriers to work. WBE is a jobs-focused social enterprise intermediary established in 2019, that aims to grow the number and scale of jobs-focused social enterprises in Australia.

This trial focuses specifically on creating outcomes for jobseekers with a disability or those eligible for the Community Development Program , who’ve been out of work for at least nine out of the last 12 months.

Social enterprises are being paid for the first time for job outcomes they create at six, 12 and 18 months. These payments are designed to cover the costs of wrap-around supports.

What is the aim of the Payment by Outcomes trial?

The changes that the trial aims to bring about at the individual, organisational and systems-level are:

1. Individual: enhanced and improved well-being for employees of social enterprises, who are also participating in PBO
2. Organisational: access to a reliable mechanism for Participating Social Enterprises (PSEs) to fund the costs of providing workplace supports for their target employees; and
3. Systems-level: developing a means for social enterprises to become an integrated and integral part of the employment services system in Australia.

Commissioned by White Box Enterprises with support of Macquarie Group Foundation, CSI Swinburne’s evaluation engages all key stakeholders to identify, measure and evaluate the outcomes of the trial in terms of what each stakeholder group identifies as important. These learnings can inform future potential funding arrangements and community sector reform.

First-year evaluation results

The first report spans the initiation, design, development and implementation of the Payments by Outcomes trial in the first year of service delivery (July 2022 – June 2023).

The first-year evaluation consists of:

1. An outcomes evaluation focused on how effectively the Payment by Outcomes trial has brought about change
2. A process evaluation which documents design, implementation and operationalisation (inputs, activities, and outputs).

“The structure of this particular PBO is complex, yet innovative, and we’ve uncovered some valuable learnings and insights that demonstrate how social enterprises have adapted to accommodate the requirements of government employment systems.”

Snapshot of first-year individual outcomes

The report found that:

1. People living with a disability are more fulfilled when working in a social enterprise   

• 98% said their lives are better
• 88% experienced change for the better in income and financial independence
• 88% experienced change for the better in relation to their learning and skills development
• 74% reported improvements in their sense of belonging

2. Unique wrap-around supports are a key differentiator

• Positive outcomes for individuals is the result of the unique additional supports provided by social enterprises, such as counsellors, youth and case workers, mental health practitioners, but most importantly flexibility and people-centred approaches to work.
• These supports differ from the traditional ‘wrap-around’ supports disability employment service providers offer and are what the trial outcome payments help to fund.

Beyond individual outcomes, CSI Swinburne also evaluated the process of design and implementation of the trial, providing insights to aid further collaboration between government and social enterprise. It also recognises the systems change that has come from the trial so far.

Second-year evaluation results

The second report records the outcomes that stakeholders of the Payments by Outcomes trial are experiencing in the second year of service delivery (July 2023 – June 2024).

The second-year evaluation consists of:

1. The outcomes of employment in jobs-focused social enterprise that Payment by Outcomes participants experienced in the second year
2. An outline of the service innovations amongst social enterprises that Payment by Outcomes funding contributed to in the second year
3. Insights into what the evaluation tells us about positioning jobs-focused social enterprises in a reformed employment services system

“For the first time, the evaluation articulates three distinct employment transition models through which social enterprises are supporting people into meaningful, sustained employment—Fresh start transitions, supported transitions and secondment-first transitions”

Snapshot of second-year outcomes

At the conclusion of the second year, individual outcomes include:

• 89 of the trial’s 132 participants (67%) were still in award wage employment, with 65 individuals employed in a social enterprise, and 24 transitioned to mainstream employment
• 76% of survey respondents said their sense of belonging had improved over the last 12 months, enabled by new friends at work and feeling a sense of community with like-minded people at work
• Almost two-thirds (64%) reported their mental health had improved over the last 12 months, and more than half (56%) said their physical health had improved

In addition, the evaluation concludes that jobs-focused social enterprises offer effective employment pathways for 10-20% of people in the employment services system who need more people-centred support to help them re-enter the workforce. To include social enterprises in a reformed employment services system, policymakers should consider that:

1. The aggregator model – which is unique in Australia and globally – presents a potential pathway for scaling and replicating outcomes-based funding for social enterprise. In the PBO Trial, White Box Enterprises coordinates 17 social enterprises that employ and support unique cohorts, via different employment models. This unique design is beneficial for:
   1. Government by efficiently channeling funding to varied cohorts with complex needs
   2. Social enterprises by reducing transaction costs, and
   3. The aggregator (White Box) by allowing flexibility to support PBO success
2. People with complex barriers to employment may not have linear employment pathways. Outcomes-based funding should be flexible to recognise that:
   1. people’s capacity to work ebbs and flows and does not always align with standardised, one-track milestones, and
   2. progress in employment takes various forms, with transitioning to a new employer being one of many types of progression in one’s employment

More information: Payment by Outcomes and Social Impact Investing

In 2019, the Australian Government committed $15.7 million towards three Payment by Outcomes (PBO) Trials in the social services sector. The Trials aim to test the effectiveness of social impact investing as an innovative financial model to address social disadvantage.

PBO is a form of social impact investing and involves a contract between a funder (in this case government) and a service provider. The payment of contract PBO fees is split between an upfront payment and a later payment that is conditional on the achievement of agreed outcomes.

The PBO Trials build on the Australian Government’s objective to be a market enabler as outlined in its ‘ principles for social impact investing ’ by addressing regulatory barriers that hinder market development. The Trials also provide an opportunity for government to be a market participant and use policy instruments to become a purchaser of social outcomes as a substitute to grant funding in social service delivery.