INTRODUCTION TO OUR SOCIAL IMPACT BOND WORK Jane Newman, International Director [email protected] NOVEMBER 2012 Emily Bolton, Director [email protected]

INTRODUCTION TO OUR SOCIAL IMPACT BOND WORK

Jane Newman, International [email protected]

NOVEMBER 2012

Emily Bolton, [email protected]

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©Social Finance 2012

SOCIAL FINANCE IS PASSIONATE ABOUT IDENTIFYING NEW WAYS OF TACKLING ENTRENCHED SOCIAL ISSUES –

IN SUSTAINABLE AND SCALABLE WAYS


Develop deep

understanding of

key social issues

Identify effective interventi

ons; analyse where

the costs of failure

rest

Develop new

revenue models which reward

effective social action

Build investor confidence in the financial

and social

value of these

models

Work hard to

make the models

deliver in practice

Build and share

evidence of what works

Change the way government seeks to tackle

problems

Help build and support growth of strong, effective

social enterprises

Expand the range of investors able to

participate in social investment

WHAT DO WE DO?

IN ORDER TO

AND THEREBY DELIVER SOCIAL CHANGE

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OUR ROLE IN THE MARKET

SOCIAL FINANCE DESIGNS FINANCIAL STRUCTURES THAT ENABLE MORE CAPITAL TO REACH THE SOCIAL SECTOR

Research & Development

Financial Structuring

Capital Raising

Social FinanceGovernment

Social Service Providers

Investors

Key social issues

Social Investor Market Growth

Supporting Effective

Organisations

Long-term Social Change

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THE STARTING POINT: CONSISTENT UNDER-INVESTMENT IN PREVENTION

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?

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SOCIAL IMPACT BONDS CATALYSE POSITIVE CYCLES OF GOVERNMENT SPENDING, IMPROVING SOCIAL OUTCOMES AND REDUCING COSTS

SOCIAL IMPACT BONDS CAN UNLOCK THIS

SOCIAL IMPACT BONDS

Money to invest in earlier

interventions

More early interventions

Better outcomes;

fewer individuals requiring

crisis interventions

Lower spending on crisis

interventions


FUNDING REHABILITATION AT PETERBOROUGH PRISON 7

Providing volunteer support post

intensive phase or with lower

risk/need clients pre and post

release

INVESTORS

£5 million

SOCIAL IMPACT PARTNERSHIP

St Giles TrustSupport in

prison, at the prison gates and in the community

Support to prisoners’

families while they are in

prison and post release

Other InterventionsSupport needed by

the prisoner, in prison and the community.

Funded as the need is identified eg. Lower level mental health

support

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

St. Giles Trust Ormiston Trust SOVA Other Interventions

Return depends on

success

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RECENT PROGRESS

Young people in or on the edge of care

• Announced 23 November 2012: Awarded contract by Essex County Council to deliver and finance multi-systemic-therapy to over 380 adolescents on edge of care system in Essex over next 8 years – outcomes financed by savings from reduction in care placements

• Advising Manchester City Council on options to raise social investment to fund multi-dimensional foster care working with vulnerable adolescents

Improving education and employment prospects for young people

• Announced 31 October 2012: Awarded two contracts by Department of Work and Pensions to work with specific groups of 14-16 year olds with outcome payments made at agreed milestones

Prisoner rehabilitation

• Advising two consortia on bids to participate in £20 million of outcomes payments pledged by the Ministry of Justice

Homelessness

• Announced 23 November 2012: Advising Greater London Authority on procuring interventions to address rough sleeping financed by £5 million outcomes budget

A RECENT NCVO REPORT IDENTIFIED 28 ACTIVE PAYMENT BY RESULTS INITIATIVES ACROSS UK PUBLIC SECTOR

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INTERNATIONAL CONTEXT

US

• Separate sister organisation launched

• Massachusetts started procuring two SIBs in youth justice and homelessness

• Connecticut, New York State and Minnesota developing SIB projects

• NYC and Goldman Sachs announced a Social Impact Bond in August 2012 for rehabilitation of offenders from Rikers Island

Canada

• Manifesto commitment from new government

• Exploring applications in criminal justice and worklessness

Ireland


• Presently exploring five areas

Scotland


• Spending review outlined plans for at least two areas

Israel

• Government interest

• Plan emerging around employment for ultra orthodox communities

Australia

• New South Wales has announced three co-development partners for applications around reoffending and out of home care

• Federal government interest

• Emerging intermediaries/large NGOs

International interest has surged in the past two years

Germany

• Bertelsmann Stiftung

• Social Venture Fund

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SOCIAL IMPACT BONDS ARE NOT A UNIVERSAL SOLUTION – THERE ARE KEY INGREDIENTS


WHAT IS REQUIRED FOR A SIB? 11

Robust outcome metric

Clearly defined target group

Issue area a priority for public sector

Evidence-based interventions

Issue area a priority for investors

Cost of intervention is small relative to

potential public sector value

Measurable attribution

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BUILDING THE INVESTOR BASE

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ENGAGING WITH KEY POOLS OF INVESTOR CAPITAL

INSTITUTIONS CORPORATESHIGH NET WORTH

INDIVIDUALS

MASS AFFLUENT

TRUSTS AND FOUNDATIONS

£70bn assets in UK

Fund Managers

Family Offices

Private Banks

IFA

Investor Advisory Services

Global Social Impact Fund of

Funds

Venture Capital Trust

NEAR TERM FOCUS MEDIUM TERM FOCUS

Investors

Intermediaries

Could philanthropy be an asset, not an expense in their balance sheets?

Enterprise Investment Scheme as a wrapper for SIBs

STRUCTURED FUNDS

ISAs £92bn£488 bn

Early signs of Local Authority Pension Funds

interest.

The Results Fund

BIG SOCIETY CAPITAL SEEDED FUNDSImpact Ventures UK FundNesta Impact Investment

Fund

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APPENDIX

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NEW PRODUCTS

Global Social Impact Fund

• $250m institutional quality fund of funds focusing on 15-20 private equity and debt funds across Africa, LatAm and SE Asia.

• Five key sectors: financial inclusion, agriculture, healthcare, micro-cap SME and community based energy.

• Working with fund management team with over fifty years combined experience.

• Targeted at family offices and private banks across the globe.

Social Impact Venture Capital Trust

• London listed regulated product supported by a strong independent board which IFAs comfortable to promote.

• Offers mass affluent investors a tax enhanced return on a portfolio of investments in social enterprises working with disadvantaged groups, improving community cohesion, providing better health and social care and ethical consumerism.

• Targeted for completion in 2012/13 tax year.

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THANK YOU!

Documents

INTRODUCTION TO OUR SOCIAL IMPACT BOND WORK Jane Newman, International Director [email protected] NOVEMBER 2012 Emily Bolton, Director [email protected]