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INTRODUCTION TO OUR SOCIAL IMPACT BOND WORK NOVEMBER 2012 Jane Newman, International Director
[email protected] Emily Bolton, Director
[email protected]
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SOCIAL FINANCE IS PASSIONATE ABOUT IDENTIFYING NEW WAYS OF TACKLING ENTRENCHED SOCIAL ISSUES – IN SUSTAINABLE AND SCALABLE WAYS
©Social Finance 2012
WHAT DO WE DO?
Develop deep understanding of key social issues
Identify effective interventions; analyse where the costs of failure rest
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Develop new revenue models which reward effective social action
Build investor confidence in the financial and social value of these models
Work hard to make the models deliver in practice
Build and share evidence of what works
IN ORDER TO
Change the way government seeks to tackle problems
Help build and support growth of strong, effective social enterprises
AND THEREBY DELIVER SOCIAL ©Social Finance 2012
Expand the range of investors able to participate in social investment
CHANGE
OUR ROLE IN THE MARKET
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SOCIAL FINANCE DESIGNS FINANCIAL STRUCTURES THAT ENABLE MORE CAPITAL TO REACH THE SOCIAL SECTOR
Investors
Government
Social Finance
Social Service Providers
Research & Development Financial Structuring Capital Raising
Key social issues Supporting Effective Organisations
©Social Finance 2012
Social Investor Market Growth
Long-term Social Change
THE STARTING POINT: CONSISTENT UNDER-INVESTMENT IN PREVENTION
Higher level of spending on crisis interventions
Poorer social outcomes, more require crisis interventions
Fewer resources available for early interventions
CAN THE LONG TERM SAVINGS FROM AVERTING POOR OUTCOMES BE USED TO INVEST IN PREVENTATIVE SERVICES? ©Social Finance 2012
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SOCIAL IMPACT BONDS CAN UNLOCK THIS
SOCIAL IMPACT BONDS
Money to invest in earlier interventions
More early interventions Lower spending on crisis interventions
Better outcomes; fewer individuals requiring crisis interventions
SOCIAL IMPACT BONDS CATALYSE POSITIVE CYCLES OF GOVERNMENT SPENDING, IMPROVING SOCIAL OUTCOMES AND REDUCING COSTS ©Social Finance 2012
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FUNDING REHABILITATION AT PETERBOROUGH PRISON
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INVESTORS
£5 million Return depends on success
SOCIAL IMPACT PARTNERSHIP
Payment based on reduced convictions
MINISTRY OF JUSTICE/ BIG LOTTERY FUND
Reduction in re-offending St. Giles Trust St Giles Trust
Ormiston Trust
SOVA
Other Interventions Other Interventions
Support in prison, at the prison gates and in the community
Support to prisoners’ families while they are in prison and post release
Providing volunteer support post intensive phase or with lower risk/need clients pre and post release
Support needed by the prisoner, in prison and the community. Funded as the need is identified eg. Lower level mental health support
3,000 male prisoners sentenced to less than 12 months
©Social Finance 2012
RECENT PROGRESS Young people in or on the edge of care
• Announced 23 November 2012: Awarded contract by Essex County Council to deliver and
finance multi-systemic-therapy to over 380 adolescents on edge of care system in Essex over next 8 years – outcomes financed by savings from reduction in care placements
• Advising Manchester City Council on options to raise social investment to fund multi-dimensional foster care working with vulnerable adolescents
Improving education and employment prospects for young people
• Announced 31 October 2012: Awarded two contracts by Department of Work and Pensions to
work with specific groups of 14-16 year olds with outcome payments made at agreed milestones
Prisoner rehabilitation
• Advising two consortia on bids to participate in £20 million of outcomes payments pledged by the Ministry of Justice
Homelessness
• Announced 23 November 2012: Advising Greater London Authority on procuring interventions to address rough sleeping financed by £5 million outcomes budget
A RECENT NCVO REPORT IDENTIFIED 28 ACTIVE PAYMENT BY RESULTS INITIATIVES ACROSS UK PUBLIC SECTOR ©Social Finance 2012
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INTERNATIONAL CONTEXT
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International interest has surged in the past two years Scotland
Canada
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Manifesto commitment from new government
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Exploring applications in criminal justice and worklessness
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Manifesto commitment from new government
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Spending review outlined plans for at least two areas
Germany
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Bertelsmann Stiftung Social Venture Fund
US
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Separate sister organisation launched
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Massachusetts started procuring two SIBs in youth justice and homelessness
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Connecticut, New York State and Minnesota developing SIB projects
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NYC and Goldman Sachs announced a Social Impact Bond in August 2012 for rehabilitation of offenders from Rikers Island ©Social Finance 2012
Israel Ireland
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Manifesto commitment from new government Presently exploring five areas
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Government interest
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Plan emerging around employment for ultra orthodox communities
Australia
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New South Wales has announced three co-development partners for applications around reoffending and out of home care
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Federal government interest Emerging intermediaries/large NGOs
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SOCIAL IMPACT BONDS ARE NOT A UNIVERSAL SOLUTION – THERE ARE KEY INGREDIENTS
©Social Finance 2012
WHAT IS REQUIRED FOR A SIB?
Robust outcome metric
Cost of intervention is small relative to potential public sector value
Clearly defined target group
Evidence-based interventions
Issue area a priority for public sector
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Measurable attribution
Issue area a priority for investors
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BUILDING THE INVESTOR BASE
©Social Finance 2012
ENGAGING WITH KEY POOLS OF INVESTOR CAPITAL MEDIUM TERM FOCUS
NEAR TERM FOCUS
HIGH NET WORTH INDIVIDUALS
TRUSTS AND FOUNDATIONS £70bn assets in UK
MASS AFFLUENT ISAs £92bn
INSTITUTIONS
Family Offices
Private Banks
Global Social Impact Fund of Funds
Venture Capital Trust
Enterprise Investment Scheme as a wrapper for SIBs ©Social Finance 2012
Could philanthropy be an asset, not an expense in their balance sheets?
IFA
STRUCTURED FUNDS Investor Advisory Services
CORPORATES
£488 bn
Early signs of Local Authority Pension Funds interest. Fund Managers
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BIG SOCIETY CAPITAL SEEDED FUNDS The Results Fund
Impact Ventures UK Fund Nesta Impact Investment Fund
Investors Intermediaries
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APPENDIX
©Social Finance 2012
NEW PRODUCTS
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Global Social Impact Fund
Social Impact Venture Capital Trust
• $250m institutional quality fund of funds
• London listed regulated product supported
focusing on 15-20 private equity and debt funds across Africa, LatAm and SE Asia.
• Five key sectors: financial inclusion,
agriculture, healthcare, micro-cap SME and community based energy.
• Working with fund management team with over fifty years combined experience.
• Targeted at family offices and private banks across the globe.
©Social Finance 2012
by a strong independent board which IFAs comfortable to promote.
• Offers mass affluent investors a tax
enhanced return on a portfolio of investments in social enterprises working with disadvantaged groups, improving community cohesion, providing better health and social care and ethical consumerism.
• Targeted for completion in 2012/13 tax year.
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THANK YOU!
©Social Finance 2012
