Brief Overview of Social Impact Bonds

Concept – Strategic Analysis
concept_info@bezeqint.net
August 2017
A Glance At:
Social Impact Bonds

The social sector
Seeks ways to increase impact
The social impact field has been enriched by new ideas and
approaches, allowing it to do more with limited resources
These new ideas include:
• Double impact organizations
• Adopting business practices
• New financing models
This presentation glances at one of the new financing
models: social impact bonds

Social
Impact Bonds
(SiBs)
• Financial investment in
social issues
• The initiative was
launched in 2010 in
the UK and spread
from there
• ROI depends upon
measurable success
POC
• 60 SiBs have been
launched across the
globe between
2010-2016
• $200M+ have been
invested
• 90,000 + lives have
been affected
The Scale
Challenge
• Increasing the number
of stakeholders
involved, across
sectors as well as
countries
• Duplicating successful
models
• Promoting further
innovation
The social impact bonds
aid in financing responses to social problems
A brief overview

This method strives to harness additional financing resources
for an ever growing need
Israel as an example
Social services’ budget, including education, social security, health, welfare etc.
9.96B ILS
Israel’s 3rd sector
budget2
1. 2016-2015 Budget highlights – social services, Ministry of Finance
2. The 3rd sector in Israel is a lot smaller than you thought, Calcalist,
16/03/16
The social bonds model tries to achieve more with current financial resources,
using the “paying for success” approach,
and bridging the gap for failures
with financial investment resources, a field with inherent risk
142.1B ILS
Israel’s government budget for
social services- 20161
These resources are still insufficient

2010
2013 2016
2014
• The social bond
concept is being
invented in England
• The propose of the
first bond: help
rehabilitate convicts
• G8 taskforce regarding social
investment is established
• Social Finance Israel is
founded by Sir Ronald Cohen,
in order to assist financing of
social activities, with capital
market financial instruments
• 26 social bonds
have been issued
across the globe
• Social Finance Israel
creates and issues
two social bonds in
Israel
• ~60 social bonds
have been issued
across the globe
The SiB’s reach
extends
over time

Act
Implementing
social
intervention plan
and measuring
Impact
Cost
Measuring
social issues
costs Invest
Financial
investment
in the bond
ROI
according to
social performance
on predefined metrics
The process is straightforward
Plan
Constructing a
social impact
bond

Change Agents
Mediators and Oversight*
Investors
• Public
sector
• Social
service
enterprises
• Business
sector
• Philanthropy
• Private sector
Intermediaries
such as a
social finance
investment
enterprise
*Optional
Social
enterprisers
Acting
to bring
about
social
change
Creating,
managing
and
measuring
impact of
social
investment
financial
tools
Investing
for
financial
and
social
ROI
Savings
from
reduced rate
of social
problems
costs are
directed
towards ROI
The model involves stakeholders
from various sectors
Beneficiaries
Bond’s social
issues target
audience
Multiple sources and integration

The model matches relevant wins
to the different stakeholders
Investors
• Financial gains
• Financial portfolio
diversification
• Social
responsibility
Potential financial
gain, which is not
correlated to the
capital market,
helping to diversify
the financial portfolio
while doing good
Beneficiaries
• Intervention plan
Access to a well
defined,
comprehensive and
funded intervention
plan
Public sector
• Paying for success
• Social innovation
• Awareness to
social issues
Funds are being
efficiently
allocated, as
“payment” for
proven results.
In addition, new
sources of capital
are being drawn to
tackle social
issues, as well as
greater awareness
Social
Impact
Social sector
• Reliable, long- term
funding to enable
planning and
implementation
• Streamline work
practices and
process

The need spans diverse fields
Source: 17 goals to transform our world, sustainable
development goals, The United Nations

Investors profile
Increasing private finance’s share represents a challenge
US
and
Australia
Rest
of the
world
Private
finance
Philanthropy
funds
Social impact
investors
• Generally speaking, in these
countries, investors were recruited
from both the private and social
sector
• Many of the deals with the private
sector have been underwritten
either by guarantees or by tiered
investment structures
• Most funds have been secured
from social sector entities
• Some social impact investors have
set up specific SiB funds.
An example is Bridges Ventures,
whose SiB fund has invested in 11
SiBs in the UK.
Source: Social Impact Bonds: state of play & lessons
learnt, OECD, 2016

And what do they think?
Charities report high levels of satisfaction,
since they are:
• Provided for longer periods of time
• Can focus on results
• Are allowed more flexibility in the
delivery model
Who provides
the
actual Service?
Type Size
Mostly 3rd sector
organizations
Medium (50-250)
to large
(250+ employees)
Charities
Social
enterprises
Source: Social Impact Bonds: state of play & lessons
learnt, OECD, 2016

$200M +
15
countries
60
Social
Impact
bonds
90,000+
lives
Where do we stand?
2010-2016
The amount
invested
in social
investment
bonds
Investing in
employment,
social care,
recidivism
and more
Including
the UK,
USA,
Israel
and
Australia
Source: Social Impact Bonds – The early years, the Social
Finance global network, 2016
Effected by
intervention
plans funded
by social
bonds

Brief Overview of Social Impact Bonds

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