Social Impact Bonds a ‘Game Changer’ for Australia
Thursday, 27th September 2012 at 11:55 am
Prue Goward MP delivers her keynote speech at the Social Finance Forum in Sydney. Photo: Centre for Social Impact
The Centre for Social Impact’s inaugural Social Finance Forum has been told that Social Impact Bonds (SIBS) could be a ‘game changer’ in funding, benchmarking transparency and driving innovation in the Australian Not for Profit sector.
The New South Wales Minister for Family and Community Services, Pru Goward told Forum delegates “I think it is a wonderful concept we should be delighted to share and propose.”
A SIB is a multi-stakeholder partnership in which philanthropic funders and impact investors—not governments—take on the financial risk of expanding preventive programs that help poor and vulnerable people.
The Centre for Social Impact (CSI) says the way a SIB works is by a bond-issuing organisation raising capital from investors, based on a contract with government, to deliver improved social outcomes that generate future government costs savings. As well as repaying the principal, investors are paid a reward if the agreed outcomes are achieved.
“What could be more attractive than an ethical investment,” Pru Goward said in her keynote address.
More than 100 delegates attended the conference including international speakers to discuss the latest moves and developments in Social Impact Bonds in Australia and overseas.
Some of the key topics covered included proposing and project managing a Social Benefit Bond and the impact measurement challenges.
Minister Goward said that it was important for SIBs to be able to be measured and transparent if they are to be successful.
Using the example of Out of Home Care for vulnerable children in New South Wales, she said “we can absolutely measure benefits”.
Pro Bono Australia News reported in September 2011 that the SIB pilot program in New South Wales had been launched by the State government.
Prof Peter Shergold the Chair of the NSW Social Investment Expert Advisory Group said the scheme could be a "win-win-win for the state, with better outcomes, less risk for the government and more involvement by the private sector with community organisations”.
Alan Hargreaves, Chairman of the Newpin Advisory Group told to the conference that he had already decided he would be investing in the social bonds.
“I conceptually think this is a great move,” he said. “I do believe there is a return there.”
“Far too long I’ve been writing a cheque without getting any money back.”
He explained that in the case of SIB programs preventing children being removed from their parents there is the opportunity to return to a great deal of dignity to these people.
“It’s not bad families. It’s families struggling to come to terms with bad parenting structure,” he said.
“This is a sustainable model.”
The Chief Executive of UK company Social Finance, David Hutchinson, told the Sydney Forum about the success of the UK’s Social Impact Bond program.
“Investors are excited because for the first time financial investment can directly trigger social outcome,” he said.
In 2010 the first Social Impact Bond was signed with the UK Ministry of Justice to provide a program to work with inmates of the Peterborough Prison who were soon to be released. The social program worked with them to reduce the likelihood that they would reoffend and end up back in jail.
Hutchinson spoke about the benefit to the community after they were released from the prison.
“There was considerable value by introducing our clients into other (social) services in the area.”
David Hutchinson explained what was required for a SIB to be successful:
- Robust outcome measured
- Clearly defined target group
- Cost of intervention is small relative to potential public sector value
- Issue area a priority to the public sector
- Issue area a priority for investors
“There are issues on the table that I can’t see investors wanting to take,” Hutchinson said.