Overview

Research shows that investing in housing, nutrition, transportation, and other social determinants of health (SDoH) improves well-being for vulnerable populations and reduces downstream costs. These benefits extend across multiple sectors — hospitals, health plans, governments, nonprofits — and often exceed the initial investment. Yet most communities still struggle to secure sustainable funding for these critical services.

The Collaborative Approach to Public Good Investments (CAPGI) is a practical financing method that helps multi-stakeholder coalitions co-invest in social needs interventions. Rather than relying on a single payer, CAPGI enables communities to pool local resources, align self-interest, and co-finance services that no one stakeholder could fund alone — but from which many benefit.

Unique Value

SDoH investments behave like public goods: the benefits are shared widely, which leads to “free-rider” challenges and chronic underinvestment. For example, a hospital might reduce uncompensated care by supporting housing for people experiencing homelessness — but fears that another hospital or health plan may capture most of the savings — resulting in too few dollars invested upstream.

CAPGI addresses this problem by coordinating contributions across parties who stand to benefit, ensuring the investment burden — and the return — is shared. Unlike approaches that depend on external investors or new government funding, CAPGI leverages existing community assets and aligns stakeholder incentives to drive collective action.

Origins

CAPGI is grounded in decades of economic research on how to solve the free-rider problem. Economists developed a mechanism — the Vickrey-Clarke-Groves (VCG) auction — to reveal stakeholders’ true willingness to pay for a shared investment while ensuring fairness and confidentiality.
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Len Nichols and Lauren Taylor laid the foundations for CAPGI in 2018 by tailoring the VCG auction mechanism to real-world community contexts and health-equity applications. Nichols and Taylor shared insights from CAPGI implementation in 2024. CAPGI’s strength lies in aligning stakeholder self-interest, so financing solutions come from within communities — not from new government funding or external capital.

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Methodology

Conditions

The following conditions make this model viable:

1. Local stakeholder coalition committed to solving shared problems collaboratively. Best if the coalition has been working together for three years or more and has trusted working relationships.
2. A financially neutral trusted broker who can manage bidding and preserve confidentiality.
3. Strong commitment to equity — racial, ethnic, and socioeconomic — that drives the willingness to collaborate to improve people’s lives in your own community

These conditions have emerged in many communities partly due to health-system responses to ACA readmission penalties, Medicaid expansion, and crises like the opioid epidemic — all of which highlighted the need for upstream, cross-sector solutions beyond traditional healthcare.

Process

The CAPGI process follows a structured 12-step approach designed to surface shared priorities, reveal true willingness to invest, and finance interventions sustainably and fairly.

1. Convene key stakeholders
   Initial conversations identify the local health and social service entities that bear financial risk — and gather existing insights and data on social needs in the community.
2. Select a Trusted Broker
   Stakeholders appoint a neutral convener with three essential qualities: managerial competence, confidentiality, and impartiality — plus the ability to communicate and build alignment.
   
   Place-based nonprofits or neutral intermediaries are often well-suited to play this role. They already coordinate multi-source funding and build cross-sector trust. CAPGI strengthens this role by solving the free-rider problem through transparent, self-interest-based cooperation rather than coercion or reliance on charity alone.
3. Assess community needs
   The group reviews existing data and community assessments to identify the most pressing SDoH deficits, focusing on those with meaningful health and financial impact.
4. Select an intervention
   Stakeholders review projections and agree to enter a collaborative funding process for the selected upstream intervention.
5. Solicit individual bids
   Each stakeholder privately determines how much they are willing to contribute — reflecting their expected benefit, cost avoidance, and mission-based values.
6. Assign prices and contributions
   The trusted broker calculates each stakeholder’s cost share and adjusts for externalities through side payments — ensuring the investment is beneficial to all parties.
7. Identify an implementation vendor
   The group evaluates and selects the organization best positioned to deliver the intervention.