Outcomes Based Financing for Mental Health

Pakistan is grappling with a severe mental health crisis, with estimates suggesting it has one of the highest rates of mental health issues in the world. Data from the Aga Khan University puts the number experiencing common mental health disorders at around 50 million people, though the true figure is likely higher, driven by economic challenges, displacement from natural disasters and a pervasive lack of awareness. Despite this high prevalence and escalating risk factors, Pakistan continues to score poorly on almost all development indicators relating to governance, resources, and service availability and uptake for mental health. Radical change is required to drive a step change in mental health provision across the country, particularly for young people.

Young people are disproportionately affected. With nearly one third of Pakistan's population aged 10 to 24, and significant mental health issues among adolescents, including 17.2% experiencing depression and 21.4% experiencing anxiety, young people make up 40% of those affected by mental health issues. Most concerningly, around 90% of individuals who need mental health support are unable to access it. 

This project is an extension of our current Mental Health Project Ecosystem Catalyst Grant and focuses on preparing the youth mental health sector for scalable, sustainable and results driven financing through outcomes-based approaches. We are designing a best fit outcomes-based financing model, aligned to the local context and shaped by priorities identified by youth and stakeholders. A pool of credible service providers are being identified, with their readiness to implement outcomes-based youth mental health programmes carefully assessed. Throughout this process, potential investors, donors and government stakeholders are engaged to ensure long-term financial sustainability. The advocacy and evidence generated through implementation will inform both the financing and delivery models, keeping them relevant, accountable and capable of driving lasting impact. Outcome verification frameworks will be developed and validated, and readiness for outcomes-based funding assessed, to help build the case for greater public and private investment in youth mental health.

Drawing on our extensive experience pioneering OBF initiatives across South Asia, we believe that instilling a sector wide outcomes orientation will help achieve our mental health goals by strengthening programme delivery through a flexible, iterative and collaborative process, aligning the incentives of multiple stakeholders around specific outcomes, strengthening monitoring and evaluation, and improving accountability in ways that boost funder confidence and catalyse sector growth.

Benefits for Service Providers and Funders

For service providers, tying funding to outcomes rather than inputs allows greater flexibility to pursue innovative approaches and respond dynamically to beneficiary needs, an approach particularly valuable when working with a challenging group such as children and youth, and one that empowers local organisations to adapt as they learn. It also supports the development of a performance based culture, as rigorous monitoring, evaluation and learning processes create an iterative opportunity for providers to discover effective pathways to outcomes while strengthening their own MEL capabilities.

For funders, OBF offers greater value for money, since philanthropic funding pays only for outcomes achieved, transferring the risk of non achievement away from the funder and ensuring the greatest impact per dollar spent. It also increases accountability, as OBF transactions involve rigorous monitoring, evaluation and verification of results, building funder confidence and helping to align incentives across stakeholders for better coordination and mutual accountability.