Social Investment

Social Impact Bonds and all that Jazz

A Social Impact Bond (SIB) is a financial mechanism in which investors pay for a set of interventions to improve a social outcome that is of social and/or financial interest to a government commissioner.

If the social outcome improves, the government commissioner repays the investors for their initial investment plus a return for the financial risks they took. If the social outcomes are not achieved, the investors stand to lose their investment.

Social Impact Bonds provide investment to address social problems and look to fund preventative interventions. As such, they present an opportunity to provide support to reduce the strain on acute services.

Social Finance is the market leader for SIBs and other forms of social investment in the UK; they provide a helpful introduction to how SIBS work.

This section contains a number of other resources on social investment, including both research studies and guides/manuals.

Research/Reports/Opinion

• Useful post from Making Every Adult Matter (MEAM) on the £40 million DCLG programme to prevent homelessness, £10 million of which is in Social Impact Bonds to help long-term rough sleepers with the most complex needs (4 November 2016)
• Dan Corry, Chief Executive of New Philanthropy Capital, has written an overview of the current state of Social Impact Bonds and argues that they seem to be here to stay. (9 August 2016).
• According to Third Sector, Big Society Capital lost £6.8m in 2015, including £3.6m investment losses. However, this was expected: “the company will be loss-making while it builds the market and makes early-stage investments. In later years, as the portfolio matures, the investments are forecast to make returns to cover the operational and market-championing costs and generate a financial return.” (7 July 2016)
• Social Finance have launched a report on the international take up of Social Impact Bonds (5 July 2016), with an accompanying international database of all SIBs.
• Excellent lengthy interview with Cliff Prior, new boss of Big Society Capital, in Alliance, covering BSC and social investment in the UK generally (5 April 2016)
• Thoughtful and knowledgeable article: What is the truth about social investment? by Craig Dearden-Philips (24 March 2016)
• The Mayor’s Office for Policing and Crime (MOPAC) has received £100,000 from the Big Lottery Fund to develop a bid for a SIB to fund the London gang exit programme (27 November 2015)
• Interesting article from Knowledge@Wharton on why a recent US government decision may result in a massive increase in the number of Social Impact Bonds (27 November 2015)
• Interim findings from an evaluation of the Multi-Systemic Therapy SIB in Essex by Chih Hoong Sin and Lauren Roberts of OPM
• Interesting report from the Brookings Institute examined the 10 most common claims made for 38 different Social Impact Bonds (September 2015). My summary here.
• The Big Lottery Funded published “Social Impact Bonds – the State of Play” on 28 November 2014.
• The DCLG published its Qualitative Evaluation of the London Homelessness Social Impact Bond (first interim report) on 2 September 2014
• KPMG (2014) Evaluation of the joint development phase of the NSW Social Benefit Bonds trial. Sydney: Government Advisory Service
• The Charities Aid Foundation: Using social investment to support payment by results (September 2012)
• The Centre for Social Impact (2011) New South Wales Government Social Impact Bond Pilot.

Social investment guides

The Cabinet Office has published a unit cost database on its Centre for Social Impact Bonds website to enable people to construct Social Impact Bonds based on accurate costs. (13 February 2014)

Great interactive map of all the Social Impact Bonds across the globe from Instiglio (31 October 2013)

Provider’s viewpoint on developing a Social Impact Bond from the Children’s Society (January 2013)

New guide from Social Finance advising councils on how to develop a Social Impact Bond (15 January 2013)

Great set of resources around Social Impact Bonds in the US from Non Profit Finance Fund

Big Society Capital collates research on social investment on its website

The Center for American Progress now has a section of its website dedicated to Social Impact Bonds.

Social Investment Manual from the Schwab Foundation for Social Entrepreneurship (in English). This manual provides social investors with a comprehensive yet easy to use guidebook on how to develop successful relationships with social investors.

A guide to social investment for charities. New Philanthropy Capital sets out the risks and opportunities of social investment.

There are five other sections to this payment by results resource pack:

1. Research
2. Information about current PbR Schemes
3. PbR Jargon
4. New PbR Interactive Tool
5. Comment and further information