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The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
The benefits of social finance and social benefit bonds
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The benefits of social finance and social benefit bonds

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Kevin Cosgriff, Associate Secretary, Resource Allocation, NSW Treasury delivered this presentation at the 2013 Social Finance Forum in Sydney/Australia. The two-day event reviewed the benefits of …

Kevin Cosgriff, Associate Secretary, Resource Allocation, NSW Treasury delivered this presentation at the 2013 Social Finance Forum in Sydney/Australia. The two-day event reviewed the benefits of social service bonds, government opportunity and policy that supports the social finance market, the investor appetite for social impact bonds, calculating risk, measuring outcomes, as well as numerous case studies and international expertise.

In 2013 Informa will host the inaugural Social Finance Summit in the UK. The event will be held on the 12th and 13th November at the Hilton London West End. For more information on the outstanding speaker line-up, please visit www.socialfinancesummit.com

Published in: Economy & Finance, Business
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  • 1. 1 Main Title Subtitle The benefits of social finance and social benefit bonds Kevin Cosgriff Associate Secretary, NSW Treasury
  • 2. 2 Social Finance Social Finance, including social investment, is a rapidly developing area in which both financial and social returns are sought by stakeholders. The benefits of social finance are varied however the underlying fundamental benefit is that social finance contributes to creating sustainable solutions to significant social, environmental and cultural issues. There are many examples, of which Social Benefit Bonds are just one.
  • 3. 3 Main Title Subtitle The NSW social benefit bond pilots and the expected benefits
  • 4. 4 What is a Social Benefit Bond (SBB)? Private Investors Social Benefit Bond Issuer Service Provider(s) Government 1. Up-front investment for working capital 2. Funding for services 3. Payment based on outcomes achieved by provider 4. Returns paid on investment based on performance A SBB is a financial instrument that pays a return based on the achievement of agreed social outcomes. Savings generated from these improved outcomes enable Government to repay the upfront investment and provide a reward payment commensurate with the outcomes achieved.
  • 5. 5 NSW Social Benefit Bonds Trial February 2011 – the Centre for Social Impact (CSI) feasibility report September 2011 – SBB trial announced November 2011 – a Request for Proposals closed March 2012 –Joint Development Phase commenced March 2013 –Contracts signed for Australia’s first SBB (Newpin SBB) June 2013 –Contracts signed for Australia’s second SBB May 2013 –$7 million raised for the Newpin SBB
  • 6. 6 Benefits of Social Benefit Bonds  A focus on outcomes rather than outputs  Additional resources towards early intervention programs and services  Innovation  Improving the evidence base  Accountability and transparency
  • 7. 7 Benefits of the NSW SBB Trial  From the NSW SBB Trial we aim to better understand:  how to strengthen families and hence reduce the number of children in foster care  how to reduce recidivism;  the appetite for social finance products in the market;  the potential for contestable outcomes-based contracting in social services;  how to realise the benefits of prevention and early intervention services;  how government can better define and measure outcomes.
  • 8. 8 The NSW SBB Trial – Joint Development Phase  The NSW SBB Trial included a Joint Development Phase where the three successful proponents worked with Government on:  Analysing the cohort and likely improvements to the targeted social problem  Designing the financial model;  Defining the outcomes to be targeted and measured;  Developing the measurement framework.
  • 9. 9 The Newpin SBB  The Bond: $7 million over a 7 year period.  Investor returns: The Newpin SBB targets a financial return of 10 to 12 percent per annum . This is dependent on the successful performance of the service and the outcomes it achieves.  Service: Intensive support to over 700 families to improve parenting styles, behaviour and practices, the program helps parents to build positive parent- child relationships.  Outcomes: The service aims to safely restore more than 400 children in foster care to their families and to prevent at-risk children entering care.  Performance indicator: The key indicator will be the restoration rate of children who enter the program.
  • 10. 10 The Newpin SBB The Newpin SBB funds an outcomes-based agreement between the Government and UnitingCare Burnside (UCB). Loan Special Purpose Vehicle OBA GovernmentUCB Investors $ $ $
  • 11. 11 The Benevolent Society(TBS) SBB  The Bond: $10 million with a Term of 5 years.  Investor returns: The TBS SBB has two tranches of investment. Returns are dependent on the successful performance of the service and the tranche of investment, and are paid at the end of year five.  Service: Intensive work with up to 400 families and their children in the Resilient Families Service (RFS).  Outcomes: The service aims to keep children safely with their families and out of foster care.  Performance indicator: A range of NSW Government data will be used to measure success including entries into foster care, reports to the Child Protection Helpline and safety assessments by Family and Community Services exhibited by children in the treatment group when compared to a control group.
  • 12. 12 The TBS SBB A Special Purpose Vehicle (SPV) issues the SBB to fund operating expenses of a service provider subcontracted to achieve outcomes. The Government contracts with the SPV and pays a return based on the achievement of outcomes. OBA Subcontract TBS Special Purpose Vehicle Government Investors $ $ $
  • 13. 13 The Mission Australia SBB  The Government is working with Mission Australia on the development of a third SBB pilot. The SBB will aim to reduce adult reoffending in the criminal justice system.  The structure of the SBB arrangement is likely to be similar to the TBS SBB.  The development of this SBB requires significant collaborative work that is ongoing.  If a viable model can be designed for the benefit of the community, investors and Government, this pilot will also be implemented in 2013-14.
  • 14. 14 Benefits of the NSW SBB Trial  The Joint Development Phase for the pilot SBBs has provided:  A better understanding of how to define and measure outcomes;  Enhanced knowledge of payment by results contract management principles;  Increased accountability for staff involved in the implementation of the SBBs;  Insights into the government’s data gathering and reporting capabilities;  A greater emphasis on the benefits of data sharing with NGO partners;  Better targeting of resources to maximise outcomes.
  • 15. 15 Main Title Subtitle Creating a mutually beneficial environment for socially- motivated investors, government and social institutions
  • 16. 16 Balancing Interests  SBBs aim to provide benefits to all parties, including the community, investors and government.  Service providers can tap into new sources of outcomes-based funding to expand and improve services for vulnerable members of the community.  Investors (institutional, retail and private) have access to a new financial instrument offering a mix of economic and societal returns. Government can reorient spending from acute services to other areas of need.
  • 17. 17 Mutually Beneficial Environment Investors Service Providers Government Social need
  • 18. 18 Essential Building Blocks  Awareness  Relationships  Capability  Evidence  Support

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