An introduction to social impact bonds

1. An introduction to social impact bonds Social Finance is authorised and regulated by the Financial Service Authority FSA No: 497568 May 2013 Ben Jupp, Director ben.jupp@socialfinance.org.uk

2. Social investors are developing New structures to create social & financial value The Peterborough Social Impact Bond exemplifies a new contracting model, a new delivery model and a new social investment model INVESTORS Return depends on success £5 million MINISTRY OF JUSTICE/ BIG LOTTERY FUND Payment based on reduced convictions HMP PETERBOROUGH SOCIAL IMPACT PARTNERSHIP St. Giles Trust Providing specialised support pre- and post- release to high/medium risk clients Providing volunteer support pre- and post- release to low risk clients SOVA MIND Low level mental support to prisoners while they are in prison and post release Support needed by the prisoner, in prison and the community. Funded as the need is identified Other Interventions Support to prisoners’ families while they are in prison and post release Ormiston Trust 3,000 male prisoners sentenced to less than 12 months

3. A number of social impact bonds have been launched or are in development Reducing NEETS (x5) - DWP Intensive Fostering - Manchester Adoption Reducing NEETS (x4) - DWP Drugs Recovery Peterborough reducing re-offending - MoJ Reducing rough sleeping - GLA Edge of Care - Essex Shared Lives Health & Care HMG Social Outcomes Fund Big Lottery Support Wider set of contractual developments – e.g. PBR, risk sharing, - and developments in social investment

4. Different models are appropriate in different circumstances 1. Developing Edge of Care Services 2. Developing Shared Lives Schemes Social Investor Social investors 1) Investors capitalisecompany 1) Investors capitaliseincubator SIB Company • SHARED LIVES INCUBATOR • Investment • - Business support • Professional standards • Back-office 2) Incubator a partnership between national charity, investment intermediary and investors 3) MST service contract 2) Outcomes basedcontract with ECC, based on fewer young people needing care 3) Incubator provides organisational development, professional standards, performance management & back-office functions Action for Children SL Scheme SL Scheme Young people & families 4) Schemes develop medium term contracts with LAs to expand placements & improve outcomes Essex County Council Local authority Local authority

5. Lessons • Social investment can help support the development of a range of social enterprises: • Service developments – scaling, franchising • Buildings/assets • Credit Unions/CDFIs • Social Impact Bonds can be a powerful way to develop new services and help transfer risks for commissioners: • Combining social and financial rigour and a focus on outcomes • Working with socially motivated investors is valuable, at least for early deals • Working through a detailed understanding of social needs, financial flows and contractual and delivery structures is important before deciding on the most appropriate investment approach: • Value of feasibility studies • Pros and cons between internal and social investment Value social ventures and commissioners understanding the social needs, financial flows and investment options before deciding on an approach