Martin Rich will explains why the Social Impact Bond is a highly innovative funding tool that has captured the imagination of many and Tim Jones demonstrates how the Charitable Bond is a straighttforward tool that releases funds for Charities.

1. Charity Finance Directors’ Group
Social Impact
Bonds
Martin Rich – Social Finance

2. Overview of Social Finance
• Social Finance is an FSA regulated, non‐profit organisation
• We are a team of bankers and social sector specialists. We
believe that if social problems are to be tackled effectively,
successful organisations seeking to solve them need
sustainable revenues and investment to enable innovation
and growth
• Our role is to devise the financial structures and raise the
capital to enable this to happen

3. Financing better outcomes - the
problem
Fewer
resources
available for
early
interventions
Poorer social
Higher level of
outcomes –
spending on
more requiring
crisis
crisis
interventions
interventions

4. Financing better outcomes - the
solution?
SOCIAL Money to
IMPACT invest in early
BONDS interventions
Lower
spending on More early
crisis interventions
interventions
Better social
outcomes,
fewer
individuals
needing crisis
interventions

5. Social Impact Bond Mechanism
Returns
dependent on Payments
outcomes based on
Social Impact defined
Investors Government
outcomes
Partnership
Initial
investment
Reduced social
issue
Service Providers Reduced costs to
Government
Services Wider benefits to
society
Flow of funds Target population

6. The Peterborough Scheme
% of cost
savings from Ministry of
Investors
reduced re‐ Justice
offending
£ 5 million
Social Impact Bond
Reduction in
re‐offending
Ongoing operating funding
Other
St Giles Trust OrmistonTrust YMCA
Interventions
Support in prison, Support to Providing a Support needed
at the prison gates prisoners’ families community base by the prisoner, in
and in the while they are in prison and the
community prison and post community.
release Funded as the
need is identified
3,000 male prisoners sentenced to less than 12 months

7. What is needed for an effective SIB?
• Clearly defined target group Stakeholders need to trust an objective
and outcome metrics mechanism for assessing and agreeing the
extent to which outcomes are achieved
• Controls to mitigate external To ensure that outcomes are attributable to
factors the success of the interventions, not factors
outside of their control
• Reward schedule that avoids Encourage service providers to work with
perverse incentives the entire target population rather than just
on “quick wins” and ensure that investors
are rewarded for all the value they create
• Value-based rather than cost- Encourage development of more cost-
based reward payments effective outcome delivery models

8. Contact
Martin Rich, Director
Social Finance Ltd
131-151 Great Titchfield Street
London
W1W 5BB
T: 020 7667 6379
E: martin.rich@socialfinance.org.uk