AN INTRODUCTION TO SOCIAL IMPACTBONDSBen Jupp, Directorben.jupp@socialfinance.org.uk
OUR MISSION                                                2WE BELIEVE THAT IF SOCIAL PROBLEMS ARETO BE TACKLED EFFECTIVEL...
SOCIAL INVESTMENT AIMS TO DELIVER A COMBINATION OF A                                                           3SOCIAL IMP...
COULD INVESTMENT IN EARLIER ACTION DELIVER A SOCIAL                                                                      4...
SOCIAL IMPACT BOND: PETERBOROUGH PRISON                                                                               5Soc...
A NUMBER OF OTHER SOCIAL IMPACT BONDS ARE NOW                                                         6LAUNCHED OR IN DEVE...
WHEN COULD SOCIAL INVESTMENT SUPPORT IMPROVEMENTS                                     7IN SERVICES? What is attractive to ...
INTEREST IN HEALTH AND SOCIAL CARE IS GROWING                                                                          8Th...
HOWEVER, SOCIAL IMPACT BONDS NEED TO BE DESIGNED                                                        9  CAREFULLY  A nu...
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Services for Later Life: Social Impact Bonds

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Presentation from Ben Jupp, Director, Social Finance, at the Services for Later Life conference, 2012

Published in: Economy & Finance, Business
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Services for Later Life: Social Impact Bonds

  1. 1. AN INTRODUCTION TO SOCIAL IMPACTBONDSBen Jupp, Directorben.jupp@socialfinance.org.uk
  2. 2. OUR MISSION 2WE BELIEVE THAT IF SOCIAL PROBLEMS ARETO BE TACKLED EFFECTIVELY, SUCCESSFUL ORGANISATIONSSEEKING TO SOLVE THEM NEED SUSTAINABLE REVENUES ANDINVESTMENT TO ENABLE INNOVATION AND GROWTHOUR ROLE IS TO DEVISE THE FINANCIAL STRUCTURES AND RAISETHE CAPITAL TO ENABLE THIS TO HAPPEN©Social Finance 2012
  3. 3. SOCIAL INVESTMENT AIMS TO DELIVER A COMBINATION OF A 3SOCIAL IMPACT AND A FINANCIAL RETURNCharitable Trusts and Foundations have been behind much social investment to date.. but affluent retail investors and some institutions are also becoming interested Sample of investors with over £100k investment assets©Social Finance 2012 Source: NESTA/Fair Banking, Investing for the Good of Society
  4. 4. COULD INVESTMENT IN EARLIER ACTION DELIVER A SOCIAL 4IMPACT AND FINANCIAL RETURN – REVERSING THE CYCLE A cycle of underinvestment Higher level • Only 4% of UK health spending is on of spending long-term preventative services1 on crisis interventions • Budget cuts restricting services to core ‘crisis intervention’ offer • Political pressure not to divert funding from core services • Public sector has an historic lack of Poorer social Fewer success in rolling-out promising outcomes, resources interventions more require available for crisis early • Little evidence about what actually interventions interventions works • Innovative programmes seen as ‘just too risky’CAN THE LONG TERM SAVINGS BE USED TO INVEST IN PRESENT SERVICES? 1 - Young Foundation Health Launchpad, 2002©Social Finance 2012
  5. 5. SOCIAL IMPACT BOND: PETERBOROUGH PRISON 5Social Finance launched the first Social Impact Bond in Peterborough in 2010 Payment on basis MINISTRY OF INVESTORS of reductions in JUSTICE & BIG re-offending LOTTERY FUND £5 million Reduction in re-offending SOCIAL IMPACT PARTNERSHIP St. Giles Trust Ormiston Trust YMCA & SOVA Other InterventionsSupport in prison, at Support to Support needed by thethe prison gates and prisoners’ families Providing a prisoner, in prison and the in the community while they are in community base community. Funded as the prison and post need is identified release 3,000 male prisoners sentenced to less than 12 months©Social Finance 2012
  6. 6. A NUMBER OF OTHER SOCIAL IMPACT BONDS ARE NOW 6LAUNCHED OR IN DEVELOPMENTDepartment for Work and Pensions’ Innovation Fund is creating around 10 projects toprevent young people from becoming Not in Education, Employment or Training (NEET) Social Investors DWP as Commissioner Organisations Young PeopleOther policy areas are also developing Social Impact Bonds:• Improving support for adolescents on the edge of care – procurement underway in Essex• Reducing rough sleeping – procurement underway in London• Supporting families facing multiple problems – four central government funded feasibility studies• Supporting drugs recovery – feasibility study in Essex• Health and social care – two feasibility studies©Social Finance 2012
  7. 7. WHEN COULD SOCIAL INVESTMENT SUPPORT IMPROVEMENTS 7IN SERVICES? What is attractive to commissioners • More flexible resources, deployed outside of traditional budget headings and cycles • Enables public sector organisations to share implementation risks • Can stimulate a focus on better performance management and implementation, including learning and organisational development • May be more willing than traditional commercial investment to fund innovative projects where social impact high SOCIAL INVESTMENT CAN ALLOW A TRANSFER OF RISK FROM THE PUBLIC SECTOR AND SUPPORT THE CAPITALISATION OF SOCIAL SECTOR ORGANISATIONS TO ENHANCE THE PROVIDER MARKET©Social Finance 2012
  8. 8. INTEREST IN HEALTH AND SOCIAL CARE IS GROWING 8There is considerable interest in applying the Social Impact Bond model to support health care• Funding for new interventions for patients with long-term conditions• Improving the management of specific pathways• Reducing emergency admissions in a local area• Step down care from hospital or residential social care Social Impact Bonds - A new way to invest in better healthcare Paul Corrigan, 2011©Social Finance 2012
  9. 9. HOWEVER, SOCIAL IMPACT BONDS NEED TO BE DESIGNED 9 CAREFULLY A number of criteria must be met for a Social Impact Bond to be suitable:1 A compelling social need2 The existence of promising interventions to meet this need3 Investors better able to manage risk than commissioners and can add wider value4 The ability to structure social investment to address the problem5 The ability to structure an outcomes-based contract • Robust outcome metrics with clear attribution • Identifiable target population • Sufficient saving for investors and commissioners6 The opportunity to achieve significant social impact, and develop a proposition that is attractive to social investors A POORLY DESIGNED PAYMENT-BY-RESULTS CONTRACT CAN BE WORSE THAN CURRENT FORMS OF FUNDING ©Social Finance 2012

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