NSW Social Benefits Bonds Trial Success
Thursday, 13th February 2014 at 9:51 am
An assessment by KPMG of the NSW Social Benefit Bonds trial has given the scheme a tick of approval.
The Evaluation of the Joint Development Phase of the NSW Social Benefit Bonds Trial has declared the scheme to be viable in NSW having produced positive outcomes.
Social benefit bonds are a form of ‘payment by results’ (PBR) scheme in which private investors provide up-front funding to service providers to deliver improved social outcomes, with the rate of return to investors dependent on program outcomes.
The Trial has resulted in the development of two Social Benefit Bonds in early intervention:
i. The Newpin Bond – A $7 million bond over seven years is funding UnitingCare Burnside’s (UCB) Newpin program, which provides support for families to facilitate their child’s return from foster care. Principal repayment and financial returns are paid to investors dependent on the restoration rate of children to their families.
ii. The Benevolent Society Bond – A $10 million bond over five years is funding the Resilient Families service, which provides intensive work with up to 400 families and children for 12 months, including up to nine months post-crisis support. There are two tranches of investment, with principal repayment and financial returns to investors differing and dependent on the performance of the service.
The KPMG evaluation of the planning and development of the bonds found that social benefit bonds are viable in New South Wales (NSW).
It says the two bonds that have been successfully developed, showed that the financial instrument can be used in the Australian context but added a proviso.
The evaluation said that although the bonds are viable it is recommended that other ‘payment by results’ contracting schemes and impact investment options are also explored.
The evaluation said that the development of the bonds has produced positive outcomes.
“There have been positive gains for both NGOs and government from involvement in the
bonds including an improved understanding of what the bonds can offer. In particular, there has been increased attention and understanding of program outcomes and measurement of them,” it said.
“If future bonds are to be developed, capacity building is vital – Capacity needs to be developed within government, in NGOs and within financial intermediaries, to develop future bonds, improve data and contracting capacity, and develop and catalyse the social impact market.
The evaluation said that central government could develop a social benefit bond unit to capitalise on the experience of the Trial, drive future bonds, and develop resources.
“The Trial has led to an improved understanding of research and evidence but improved capacity for data capture and analysis in both government and NGOs is vital for future bonds,” it said.
The evaluation can be found HERE