Social Impact Bonds and the Role of Government
15 July 2015 at 10:32 am
The conversation around Social Impact Bonds is gathering pace at the national level, writes Social Ventures Australia CEO, Rob Koczkar.
In an address to the recent ACOSS Conference Minister for Social Services Scott Morrison spoke about the need for more private investment in social services – and he mentioned social impact bonds (SIBs) as one example of how private investment could work.
Having worked on Australia’s first SIB, and closely followed SIB developments overseas; Social Ventures Australia is pleased to see this conversation gathering pace at the national level.
Government must invest in driving innovation and outcomes at a number of levels.
SIBs are a tool for attracting new funding for social purpose, and for helping government funding be better directed. However, it’s important to be clear about where SIBs can sit in the social services and social innovation landscape.
At the macro level, SIBs help address the challenge of scaling innovation in the social purpose sector. They are a mechanism through which private investment can be used to bring new funding to this task, with private investors carrying the financial risk, and program outcomes being closely tracked.
If programs that are a party to a SIB show they are achieving strong social outcomes, government would then be faced with a strong social and financial case to fund the broad adoption of the program. They would have greater assurance that they were funding ‘what works’ – making real progress on the social challenges that threaten our collective prosperity and wellbeing.
SIBs are just one tool though. While they have the potential to provide significant benefits to governments, service providers and investors alike, the reality is that they are a suitable instrument for some but not all social programs, as we shared in a recent article in the SVA Consulting Quarterly.
Grants for early stage social purpose initiatives are also an important piece of the puzzle. Government can play a greater role here; an area where philanthropy has traditionally done the heavy lifting. Government can also play a critical role in sector capacity building by, for example, providing access to more and better data on social outcomes and liabilities.
As the single largest influencer in the social services system government has a responsibility to walk alongside social purpose organisations to foster innovation and realise the opportunities that pay for success models represent – acknowledging that government will always play a crucial role in creating a society that supports people in need.
About the author: Rob Koczkar is CEO of Social Ventures Australia which is a Not for Profit organisation established in 2002 by The Benevolent Society, The Smith Family, WorkVentures and AMP Foundation. In its first 12 years it generated over $50 million of investment from philanthropists, trust and foundations and Government into the social sector.