Financing welfare services – international best practices and options for Hungary

Within the framework of SROP 5.4.1-12 Modernization Project, the Budapest Institute analysed the financing methods and tools of basic social services and child welfare provisions in Hungary and abroad. The goal of our mapping was to identify good practices and assess their relevance in the Hungarian context – notably covering also related sectors, such as public education, health. Our investigation focused on incentives effects of various financing solutions w.r.t. the availability, quality, and effectiveness of services. One of our findings is that financing solutions might be more efficient and effective in case of integrated services. Therefore alternatives and possibilities of such integrations seem to be crucial in any reform aiming at improving efficiency and effectiveness of the basic social services. Consequently, we concluded the project with policy recommendations related both to the improvement of the financial mechanisms and to the integration of the related basic services in the social sector.

We reviewed the relevant international and national literature, we conducted interviews with domestic experts and stakeholders, though the added value of our research was that we applied an economics-based approach to elaborate the typology of the related services, and based on this typology we analysed the incentive effects of the different financial solutions.