SOCIAL IMPACT BONDShigh risk youth to recidivism UK •30 Impact Bonds for issues ranging from...

SOCIAL IMPACT BONDS AND THE POTENTIAL FOR OUTCOMES BASED GOVERNMENT

Social Finance is authorised and regulated by the Financial Conduct Authority FSA No: 497568

SEPTEMBER 2016

Toby Eccles, [email protected]

Twitter: @tobyecc @socfinuk

©Social Finance 2016

THE SOCIAL IMPACT BOND WAS DEVELOPED TO ADDRESS A RECURRING

PROBLEM: CONSISTENT UNDER-INVESTMENT IN PREVENTION2

Higher level of spending on

crisis interventions

Poorer social outcomes, more

require crisis interventions

Fewer resources

available for early

interventions

CAN THE LONG TERM SAVINGS FROM AVERTING POOR OUTCOMES BE USED TO

INVEST IN PREVENTATIVE SERVICES?


CASE STUDY: RE-OFFENDING RATES IN THE UK 3

RECONVICTION RATE

WITHIN 1 YEAR

63%

AVERAGE NUMBER OF

PREVIOUS OFFENCES

43

AVERAGE NUMBER OF

PREVIOUS JAIL TERMS

7


THE SOCIAL IMPACT BOND LINKS FINANCIAL RETURNS DIRECTLY TO

THE DELIVERY OF A SOCIAL OUTCOME4

INVESTORS

SOCIAL IMPACT PARTNERSHIP

2,000 male prisoners sentenced to less than 12 months

Reduction in

re-offending

MINISTRY OF

JUSTICE/

BIG LOTTERY

FUND

Payment

based on

reduced

convictions

St. Giles Trust Innovation Fund

HMP

PETERBOROUGH

(SODEXO)

SOVA MIND Ormiston Trust John Laing Training

Return depends

on success£5 million


5

DATA COLLECTION & ANALYSIS

IMPACTBETTER PERFORMANCE MANAGEMENT &

RESULTS DELIVERY

OUTCOMES-BASED CONTRACT

& FLEXIBLE FINANCE

SOCIAL IMPACT BONDS FOCUS ON ADAPTIVE MANAGEMENT


6

A strong incentive to introduce the best evidenced approaches and capacity for effective delivery

The development of strong systems for monitoring key indicators of effective operational performance

Flexibility to refine and adapt approaches

HOW DO SOCIAL IMPACT BONDS SUPPORT DELIVERY

74%INITIAL

ASSESSMENT

COMPLETED

37%ENGAGED 1

MONTH POST-

RELEASE

2.6AVERAGE

ACTIVITIES 1

MTH POST-

RELEASE

50%NEEDS

ASSESSMENT

COMPLETED*

64%MET AT THE

GATE**

COHORT 1

55%ENGAGED 1

MONTH POST-

RELEASE

5.8AVERAGE

ACTIVITIES 1

MTH POST-

RELEASE

76%NEEDS

ASSESSMENT

COMPLETED*

86%MET AT THE

GATE**

COHORT 287%

INITIAL

ASSESSMENT

COMPLETED

* Recording of Needs assessment completion only became operational in Nov 11. The needs assessment figure is calculated from that date forward. Clients who did not have a needs

assessment and did not have an initial assessment are excluded from this metric.

** Meganexus only became fully operational in January 2011. Prior to this date, information was recorded on Excel. The met at the gate figure is calculated from Jan 11 onwards.

All data is rounded

Private and Confidential


FOCUS ON OUTCOMES ALLOWS A COMPLEX WEB OF

RELATIONSHIPS TO FORM

7

PARTNERS

COMMUNITY

SAFETY

PARTNERSHIPS

POLICE

JOB CENTRE PLUS

PROBATION

LOCAL AUTHORITY

TROUBLED FAMILIES

ADULT SOCIAL

CARE

HMP PETERBOROUGH

(SODEXO)

PARTNERS

CLINICAL

COMMISSIONING

GROUP

CRIMINAL JUSTICE

BOARD

COMMUNITY

PROVIDERS

HOUSING

PROVIDERS

HEALTH &

WELLBEING BOARD

JOB DEAL / WORK

PROG

SERVICE USERS

PROJECT GOVERNANCE

INVESTORS | BLF

ADVISORY BOARD

PROJECT DIRECTOR

ST GILES TRUST SOVAJOHN LAING

TRAINING MIND


1

8

6

4

9

25

313

7

10

EXAMPLES OF UK SOCIAL IMPACT BONDS

12

8

14

15

12

Managing long-term health conditions

Newcastle City Council

11

Improving complex adoption

Nationwide

Reducing young people Not in Education,

Employment or Training

Department of Work & Pensions (Perthshire and Kinross)

Ensuring troubled adolescence avoid

the need for Care

Essex County Council

Supporting those with mental health

conditions into employment

Haringey Council and NHS

Reducing Rough Sleeping

Greater London Authority

Developing Therapeutic Foster Care

Manchester City Council

Reducing Loneliness & Isolation

Worcestershire County Council & NHS


AND ARE GROWING ACROSS A NUMBER OF COUNTRIES 9

US

• 8 Impact Bonds, including highest value bond of $27m. Issues range from high risk youth to recidivism

UK

• 30 Impact Bonds for issues ranging from

recidivism, to child services, employing a range

of commissioning models

Australia

• 2 Impact Bonds on out-of-home care

Northern Europe

• Impact bonds in the Netherlands (2), Germany, Belgium and Switzerland, for migrant and youth unemployment.

Canada

• One Impact Bond for at-

risk single mothers

Portugal

• One Impact Bond for

education of primary

school children

Since Peterborough, 60 Social Impact Bonds raising $216m have been launched. There are at least 100 in development.

Latin America

• SF and IDB exploring project in Mexico, Brazil and Chile

• Impact Bonds also in development in Colombia (education) and Peru (agriculture)

N Africa and the Middle East

• Impact Bonds in development in Palestine for vocational training (WB) and diabetes prevention. SF Israel also developing a diabetes project to be implanted in Israel

Sub-Saharan Africa

• Impact Bonds in development for Sleeping Sickness in Uganda, ECD in South Africa, and maternal and child health in Cameroon

Impact Bonds launched Impact Bonds in development

Asia and SE Asia

• Exploring Impact Bond for ECD in China (early stages)

• Three pilots being developed in Japan

• Impact Bond being piloted in Rajasthan, India, for Girls’ Education


RECIDIVISM IMPROVING EARLY CHILDHOOD

HOMELESSNESS/ROUGH

SLEEPERS

CHILDREN ON THE EDGE OF

CARE

YOUTH ENGAGEMENT

WHAT KINDS OF SOCIAL ISSUES ARE USING THE MODEL?

LONELINESS AMONG THE

ELDERLY

10


11

RIGOUR

INNOVATIONCLIENT-CENTRED

HOW SIBS ADD VALUE

FLEXIBILITY

BREAKING SILOS

PARTNERSHIP


WHO ARE THE INVESTORS? 12

• Pioneered by charitable foundations seeking to use their endowments to help achieve their social mission in new ways and develop more sustainable services

• Investment has grown in parallel to growth of social enterprises and these enterprises need for capital

• Now characterised by a range of sources of investment: charitable foundations, unclaimed assets, individuals (including through new tax incentives), some institutional investors such as local authority pension funds, and an increasing number of specialist funds

• Alongside funds an important social investment ‘infrastructure’ is developing of expertise in fields such as financial analysis of socially focused business cases and impact measurement


WHAT ATTRACTS FOUNDATIONS TO SOCIAL IMPACT BONDS? 13

SELECTED SIB INVESTORS

Interest in

shifting funding

toward

prevention

Focus on improving

outcomes around a

particular social issue

Interest in scaling a particular

intervention or supporting a

specific community

Desire to invest in

effective social

programmes

Desire to promote

collaboration,

innovation and build

new markets

Desire to increase

government

efficiency


14IMPACT INVESTING MARKET SIZE ESTIMATED AT £12.7BN


WHAT ARE THE KEY RISKS? 15

• Failure to agree outcome metrics, value of outcomes (business case) and attribution

• Failure to negotiate procurement and contract in a timely and collaborative manner

• Referrals – investors develop service but public services fail to refer

• Delivery - culture shift for providers

• Benefits realisation – acute services are not decommissioned


WHAT WOULD MORE OUTCOMES BASED GOVERNMENT LOOK LIKE?16

Present Future?

• Process driven• Holding orgs to contract• Ensure things stay the same

• Over specified• Focus on competition• Track record built on price

• Bureaucratic and rule bound• One size fits all• Low trust of outside providers

• Data driven• Focus on learning• Ensure things improve

• Invest to achieve outcomes• Co-produce• Track record built on outcomes

• Focused on delivery• More adaptable• Tailored to needs of service users

Contract Management

Procurement

Culture

• Fiduciary focus• How much were they paid?

• Outcomes focus• How much impact did they have?Public

Accountability

Data

• Finance and impact separate• Data used for reporting not

insight

• Integrated data used to:• Understand cost of outcomes• Improve decision making


TRACK RECORD 17

The first Social Impact Bonds are now starting to report, with generally positive outcomes and evaluations.

Analysis of the first six years of SIBs available on Social Finance website

Alongside a database of all SIBs launched available at:

www.socialfinance.org.uk/database/


18

THANK YOU

SOCIAL IMPACT BONDShigh risk youth to recidivism UK •30 Impact Bonds for issues ranging from...

Documents

Transcript of SOCIAL IMPACT BONDShigh risk youth to recidivism UK •30 Impact Bonds for issues ranging from...