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Jane Newman

Jane Newman






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    Jane Newman Jane Newman Presentation Transcript

    • WHERE CAN SOCIAL FINANCE TAKE US INTHE FUTURE? Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: 497568 SYDNEY, AUGUST 2013 Jane Newman, International Director Jane.newman@socialfinance.org.uk
    • ©Social Finance 2013 ABOUT SOCIAL FINANCE 2 SOCIAL ORGANISATIONS Social Issues Change the way government tackles social problems Expand the range of investors participating in social investment Support growth of strong and effective social enterprises INVESTORS GOVERNMENT DELIVER SCALABLE AND SUSTAINABLE SOCIAL CHANGE OUR MISSION IS TO DEVELOP AND BUILD FUNDING MODELS TO TACKLE ENTRENCHED SOCIAL PROBLEMS
    • ©Social Finance 2013 THEVALUE OF ACTIVE MANAGEMENT OF SOCIAL INVESTMENT 3 Controlled innovation Due diligence rigour Immediate capital requirements Investment in management, skills & info. Service integration & partnerships Active investment Impact New service delivery landscape In our experience, the value of social investment is often in the expertise, rigour and capacity it can bring to addressing social needs and scaling enterprises
    • ©Social Finance 2013 BUILDING A SOCIAL INVESTMENT MARKET 4 INTERMEDIARIES Matching supply and demand; product development “….practitioners agree that, for impact investing to work, attention needs to be paid to all the key dynamics of the marketplace.” (IMPACT – Australia, 2013) DEMAND FOR CAPITAL Who needs finance for social or charitable purpose objectives? SUPPLY OF CAPITAL Who will provide capital and on what terms? EFFECTIVE ENABLING ENVIRONMENT Source: Adapted from IMPACT – Australia. 2013, DEEWR and JBWere; and Social Finance UK
    • ©Social Finance 2013 BUILDINGTHE UK SOCIAL INVESTMENT MARKET 2001-2012 5 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Social Impact VCT to be launched Impact Investment Fund launched GSIF to be launched BSC launched Impact Ventures UK Fund to be launched, Berenberg Bank/LGT BSC Results Fund to be launched Bridges Social Entrepreneurs Fund launched Big Issue Invest Social Enterprise Fund launched Deutsche Impact Investment Fund launched Social Venture Fund UK to be launched 5
    • ©Social Finance 2013 BUILDING A SOCIAL INVESTMENT MARKET 6 INTERMEDIARIES Matching supply and demand; product development “….practitioners agree that, for impact investing to work, attention needs to be paid to all the key dynamics of the marketplace.” (IMPACT – Australia, 2013) DEMAND FOR CAPITAL Who needs finance for social or charitable purpose objectives? SUPPLY OF CAPITAL Who will provide capital and on what terms? EFFECTIVE ENABLING ENVIRONMENT Source: Adapted from IMPACT – Australia. 2013, DEEWR and JBWere; and Social Finance UK      e.g. investment contract and readiness fund Social investment tax relief? - consultation
    • ©Social Finance 2013 7OPPORTUNITIES FOR SOCIAL INVESTMENT ASTHE MARKET MOVES FORWARD Health and Social Care • Scale up established models – e.g. Shared Lives • New models – support for long term conditions, palliative care • ‘Internal investment’ models Social Housing • Housing e.g. • Bringing empty homes back into use • Development of affordable housing • Specialist accommodation and support e.g. • elderly; disabled; homeless etc • Regeneration Increasingly we see interest in exploring how social investment could be a used to tackle some of our ‘mature economy’ challenges. E.g. Social Impact Bonds • Children in care • Addiction and reoffending • Families with complex needs • Social isolation • Tackling long term conditions • Thematic funds – e.g. care and wellbeing
    • ©Social Finance 2013 HEALTH AND SOCIAL CARE INTHE UK –THE SOCIAL NEED 8 A radical shift is required to develop new forms of care and support, which are more preventative, more community based and better draw on people’s own resources. Four major challenges : • Forms of care for older people with long-term health conditions that provide better continuity and integration of support and promote dignity and independence. • A wider range of provision for people with disabilities. • Improving the health of the population, particularly among more disadvantaged groups. • Supporting people to address health conditions that prevent them from working. • The number of over 65 yr olds is due to increase from c. 11 million to c. 16 million by 2021.The majority will have one or more long term health conditions. • Over a quarter of disabled people feel they do not have control and choice over daily life. • The average difference in disability-free life expectancy between people living in the 5% most deprived wards and the 5% least deprived wards is 17 years. • The cost to the Exchequer alone of ill health among the working age population is c. £70 bn per annum. ← ← ← ←
    • ©Social Finance 2013 9EXAMPLE 1: SHARED LIVES Shared Lives is a service in which an individual becomes a carer and shares their family and community life with someone in need of care support. In many cases that person becomes a permanent part of their supportive family. • Shared Lives carers are paid a modest amount to offer long- term accommodation, short-term breaks and respite care in their family home. There are now around 8,000 Shared Lives carers in the UK supporting nearly 11,000 people, with the sector doubling in size in the last six years.1 • Shared Lives arrangements are organised in the UK by 152 registered local schemes, which play a recruitment, training, support, and supervision role. • Individuals in need of a placement are matched with a carer, through a collaborative process in which they have significant input. This lays the conditions for a strong personal relationship in an arrangement. • Personalised care and the opportunity to share in their carer’s social networks encourages an individual to gain independence and work towards achieving personal goals, improving their quality of life and reducing isolation. Alan, aged 22 from SouthTyneside, suffers from Asperger’s Syndrome and alcoholism. His family care broke down, and this was followed by a series of expensive residential placements, none of which helped Alan and led to deteriorating behaviour. Alan was introduced to a Shared Lives carer and his local Shared Lives scheme carefully managed a matching process, which started with get-togethers, progressed to overnight then weekend stays, and finally a week-long stay prior to a care arrangement formally being established for him. He is now settled and regularly participates in community education classes and leisure centre activities, and is working towards achieving a work placement. Alan’s Shared Lives arrangement has significantly improved his quality of life, and saved the local authority £49,000 per annum (£965 per week). Notes: (1) Based on data from the NHS Information Centre. We are developing an investment model to enable a substantial expansion of shared lives schemes, including through enabling in-house services to ‘spin-out’ and grow.
    • ©Social Finance 2013 CARE AND WELLBEING FUND 10 Social Finance is developing a £20m proof of concept Fund with the following objective: ‘The Fund’s objective is to improve health and wellbeing in the UK with particular focus on disadvantaged groups such as the frail elderly, those with a long-term health condition and those with a disability. The Fund aims to support, with investment, the growth of ambitious charities, social enterprises and ventures which deliver improved wellbeing. The focus will be on prevention, early intervention and community-based solutions.’ A strongly mission-driven fund, seeking to attract socially motivated investment with cornerstone from Big Society Capital and matched by co-investors Investment Strategy Equity-like investment approach: • Active portfolio management • Risk capital – using combination of equity, quasi-equity and loan stock • Aim to build diversified portfolio to include a range of risk profiles Key Themes • Ageing and long term conditions • Disability • Health improvement • Health and employment Proof of concept fund: mid single digit net IRR Social impact assessment and reporting
    • ©Social Finance 2013 SOCIAL IMPACT BONDS: PETERBOROUGH PRISON PILOT STARTED IN 2010 12 INVESTORS £5 million SOCIAL IMPACT PARTNERSHIP 3,000 male prisoners sentenced to less than 12 months Reduction in re-offending MINISTRY OF JUSTICE/ BIG LOTTERY FUND Payment based on reduced convictions Support in prison, at the prison gates and in the community St. Giles Trust Support to prisoners’ families while they are in prison and post release Ormiston Trust Providing volunteer support post intensive phase or with lower risk/need clients pre and post release SOVA Support needed by the prisoner, in prison and the community. Funded as the need is identified eg. Lower level mental health support Other Interventions Return depends on success
    • ©Social Finance 2013 PERFORMANCE MANAGEMENT: AN ILLUSTRATIVE EXAMPLE Performance management has enabled the manager of the Peterborough SIB to better direct resources in order to achieve outcomes among short-sentence prisoners. 13 The data dashboards developed in cooperation with providers has informed the changes in service provision: 1. Informed commissioning of additional services • Performance management highlighted the high proportion of prisoners with mental health needs and a gap in the current service provision. • In Year 2, the One Service Partnership commissioned MIND, a mental health charity, to be part of its service offering. 2. Better use of existing service providers • Analysis illustrated low numbers of prisoners accessing the family support intervention despite having identified need. • In Year 2, the service offering was adjusted and a new, in prison “Maintaining Family Ties” course was commissioned. 3. Improved case worker ownership of services • Case workers are able to understand the impact of their service offerings. • There are indications of improved satisfaction among service providers when they are part of the decision making mechanism for improved delivery.
    • ©Social Finance 2013 PETERBOROUGH: AN EARLY GLIMPSE 14 90 95 100 105 110 115 120 125 130 Sep06-Mar08 Sep07-Mar09 Sep08-Mar10 Sep10-Mar12 Rebased reoffending data Peterborough binary Peterborough frequency -1.7% -0.3% 4.7% -11.8% 6.7% -2.5% 2.0% -23.0%-25.0% -15.0% -5.0% 5.0% 15.0% 25.0% Change in Peterborough reoffending relative to national levels Binary Frequency Sept 06-Mar 08 Sept 07-Mar 09 Sept 08-Mar 10 Sept 10-Mar 12 *This should be interpreted with care since re-offending is measured over a shorter period of time than will be used when calculating payments on the bond and the national comparator group will be compiled on a different basis. On 13 June 2013, the Ministry of Justice published data on the Peterborough pilot. This gives the first early sense of how the Social Impact Bond is doing. Peterborough has shown a 23% relative decline to the national data.
    • ©Social Finance 2013 OTHER APPLICATIONS 15 Peterborough reducing re- offending - MoJ Reducing NEETS (x5) - DWP Reducing rough sleeping - GLA Reducing NEETS (x4) - DWP Intensive Fostering - Manchester Edge of Care - Essex Edge of Care Adoption Social isolation & long term conditions Drugs Recovery HMG Social Outcomes Fund Big Lottery Support Wider set of contractual developments – e.g. PBR, risk sharing, - and developments in social investment
    • ©Social Finance 2013 Initial SIB model 2nd stage implementation Scaling EXAMPLE OF IMPACT DELIVERED SO FAR 16 Peterborough SIB Essex, Manchester and Liverpool feasibility studies Further PbR pilots -Doncaster -Local Government Incentive models Essex children at the edge of care MST SIB launched Procurement support in Manchester Announcement of large-scale PbR focused on recidivism and including short-sentenced prisoners Work on additional four SIB models in Essex, including drugs and social isolation Feasibility studies started in five other local authorities on children in care Criminal Justice Adolescents in or on edge of care Social Impact Bonds are demonstrating an ability to create systemic change.
    • ©Social Finance 2013 BUILDING MARKET INFRASTRUCTURE 17 Outcomes Funding Capacitybuilding Investors £20m Social Outcomes Fund (Nov 2012) (Cabinet Office) £40m Co-Commissioning Fund (Big Lottery) • Single EOI process • ‘Top-up’ contribution to outcomes-based commissions (PbR or SIBs) - aggregate savings that accrue across multiple budgets • Aim of catalysing innovation Market building • Social Finance • Big Lottery Support Funds • £15m Bridges Social Impact Bond Fund In development • Thematic funds Investor base • Social investment tax relief? (Treasury Consultation launched June 2013) • Investing4Growth Resources • Centre for Social Impact Bonds • Template contracts • ‘Knowledge Box’ • http://data.gov.uk/sib_kn owledge_box/knowledg e-box
    • ©Social Finance 2013 18 INTERNATIONAL DEVELOPMENTS
    • ©Social Finance 2013 GLOBAL PERSPECTIVE 19 In Delivery In Development (??) Uganda 0 1 Mozambique 0 1 Swaziland 0 1 Kenya 0 1 SIBs* DIBs* 0 5 10 15 20 25 UK Australia US Europe Israel South Africa Canada Columbia Demonstration SIB In Development Launched *indicative Source: Social Finance UK
    • ©Social Finance 2013 DEVELOPMENT IMPACT BONDS 20 Working Group case studies • HIV prevention in Swaziland • Elimination of sleeping sickness in Uganda • Business development services for SMEs • Energy efficient buildings • Low cost private schools in Pakistan • Access to secondary education in Uganda • Girls’ access to education in Kenya Social Finance and the Center for Global Development Working Group to explore how development funders could improve aid outcomes. Draft Report launched 6 June 2013.
    • ©Social Finance 2013 INTHE SPOTLIGHT 21 • G8 Social Impact Investment Forum June 2013 • G8 Taskforce • OECD • EU o Commission communiqué February 2013 o Social investment funds – EUSEF • Global Learning Forum • Etc Social investment is increasingly attracting the attention of Government…..
    • ©Social Finance 2013 22 GROWING THE INVESTOR BASE
    • ©Social Finance 2013 23MAPPING OUR ENGAGEMENTWITHTHE INVESTOR UNIVERSE Trusts and Foundations Corporates Local funds e.g. Regional Growth Funds, local authorities, housing associations, Investing 4 Growth Professional social investors e.g. Bridges, Deutsche, Nesta, Big Issue Invest, Social Venture Fund, LGT/Berenberg Blue chip asset managers e.g. Pensions Corp, Rathbone High net worth individuals and family officesPrivate banks Mass affluent investors IFAs / IFPs Deal-specific engagement Co-development Deal-specific engagement Corporate finance relationships Corporate finance relationships, sub- adviser relationships EIGHT NEW INVESTORS IN SOCIAL FINANCE PROJECTS THISYEAR; £12.6M TOTAL RAISED TO DATE Tailored products, e.g. VCT, GSIF Social Finance and social care and wellbeing fund Fund seeding
    • ©Social Finance 2013 24 THANKYOU