This fund aims to solve social exclusion and poor health – but only gets paid if it succeeds

The initiative, called Utfallsfonden (The Outcomes Fund) is designed to tackle social problems through collaboration with Swedish municipalities. But the fund will only receive local or regional funding if the projects they back succeed.

"The risk profile is different and not necessarily higher," Jenny Carenco, co-founder of Utfallsfonden (The Outcomes Fund) tells Impact Loop.

Carenco is passionate about Sweden creating economic growth through impact companies. But she suggests that social issues like unemployment, mental health problems, or poor school results need to be prioritised just as much as climate issues, which have tended to dominate the agenda.

"We need completely new financing and business models for social issues. Sweden is lagging behind in this area", she says over coffee and a cinnamon bun. "We can't finance social transformation through flashy stock investments in companies with hockey-stick projections."

We need completely new financing and business models for social issues

Payment only if goals are met

This is where The Outcomes Fund and its so-called “outcome contracts” come into play. There are precedents in other countries, particularly in the UK. But in Sweden, Utfallsfonden is the first to work with these sorts of contracts.

Simply explained, they work like this: A municipality or region has a problem, such as an increasing number of people with poor mental health. Together with Utfallsfonden, they conduct a thorough analysis to identify the root cause. They then identify solutions, which often involve different stakeholders working together, and build a model showing what change they believe the intervention can achieve. The initiatives are funded by Utfallsfonden, which gets paid if and when the interventions show results. Utfallsfonden is in turn funded by regular investors, who receive returns on their invested capital.

Utfallsfonden has been working with Härnösand municipality in north east Sweden since March 2023. So far Carenco's team has raised 350 million kronor (around €31m) to fund projects in the area, from sources including the European Investment Fund (EIF) and state-owned Saminvest.

Their biggest venture so far concerns interventions for the elderly in the area. The municipality had a vision to empower pensioners and improve their living conditions. At the same time, elderly care costs were significantly higher than comparable municipalities.

Utfallsfonden’s analysis suggested there weren’t enough preventative and proactive healthcare measures in place, while money was instead being spent inefficiently on home help.

“Part of the explanation lies of course in the pandemic, which hit all elderly care services hard,” says Carenco. “Other reasons might be that they've made cuts in the wrong areas or haven't known how to calculate the returns on preventive and proactive measures", says Carenco.

With support from Utfallsfonden, Härnösand municipality is now restructuring to expand services such as day centre activities for pensioners and support for relatives. But the major shift lies in thinking differently when assessing an individual's need for home help.

But the major shift lies in thinking differently when assessing an individual's need for home help

Carenco gives an example of a woman who contacts the municipality because she can no longer shower without assistance. Typically, this would result in visits from home care staff. Instead, she argues the municipality should investigate if the reason the woman can’t shower is because she only has a shower in a bathtub, which is difficult for her to climb into. Installing a more accessible shower would be “better and more dignified” for the woman, and “save significant costs for the municipality," argues Carenco.

"We get back more than we put in"

In Härnösand, the deal works like this: Utfallsfonden invests 10 million kronor (about €880,000) each year, for up to five years. The contract clearly spells out how success will be measured through things like reduced care costs or improved health outcomes for the elderly. When these goals are hit, any money saved is split: Utfallsfonden gets 40%, while the municipality keeps 60%. And if they save even more money than expected, those extra savings go straight to the municipality.

"We can get back more than we put in. That's the premium we can receive for risking losing all the money if the intervention doesn't succeed. If it does succeed, however, we can finance other interventions in other parts of the welfare system and eventually pay back money to our investors with some return," says Jenny Carenco.

Many of Sweden's municipalities face similar challenges due to the nation’s aging population. Jenny Carenco hopes that the lessons from Härnösand municipality can contribute to a more dignified old age for elderly people elsewhere in the country too.

"We work completely open source, so we're constantly sharing our learnings from the various projects. Therefore, any other municipality can do exactly the same as Härnösand, for example, even without funding from us."

Utfallsfonden recently began working with another municipality on the country’s eastern coast, Gävle, funding a three-year initiative to improve schoolchildren's reading abilities.

We work completely open source, so we're constantly sharing our learnings

Growing interest in the model

Similar outcome-based contracting models have been tested elsewhere in Europe including the UK, Italy and Spain. While some academic research has highlighted challenges such as complex stakeholder coordination, difficulty in replicating successful programs across different settings, and the need for sophisticated monitoring systems, there is growing evidence that they can work effectively when properly structured.

An independent report, released by ATQ Consultants for one of the UK's largest social impact investors, Better Society Capital, found that using these types of contracts in the National Health Service have been highly cost-effective. For every £1 (€1.17) spent, they generated £9 (€10.53) in public value. Overall, this saved British taxpayers £507 million (€593.2 million), while maintaining high-quality care.

The demand for more similar initiatives in Sweden is clearly there. As growing numbers of Swedish municipalities reach out wanting to work with Utfallsfonden, Carenco and her team are already planning their next move. While their first fund is still deploying capital, they're preparing to launch a second, much larger fund – targeting over 1 billion kronor (approximately €88 million).

"We hope the European Investment Fund will back us again for the second fund," says Carenco. "But we're also looking to bring in pension funds – the progressive ones who understand this isn't just about doing good, it's a solid investment opportunity."

We're also looking to bring in pension funds – the progressive ones who understand this isn't just about doing good

"We want to be a catalyst"

Before launching Utfallsfonden, Carenco had built a conventional corporate career: economics degree, strategy work at global consulting firm Bain & Co, and founding a children's food company.

But it was an assignment with Swedish impact company Leksell Social Ventures that changed her trajectory, introducing her to the world of impact investing and eventually leading to the creation of Utfallsfonden.

"We want to be a catalyst," she says, then pauses thoughtfully. "In an ideal world, we'd eventually make ourselves obsolete by proving that prevention works better than cure. But that would require a society without complex challenges - and we're nowhere near that reality yet."

Additional research by Maddy Savage