Two thought provoking articles from the UK which make for very interesting reading:
Bridging The Rhetoric & Reality Divide In Social Impact Investment
Dominic Llewellyn – Huffington Post
Three years ago I met a Belgian banker with a social soul. In a bar at St Pancras Station we drank coffee and talked about our different backgrounds, skills and passions and realised we shared the same vision to use finance as a tool to drive positive social change in the world. His name was Bertrand Beghin and together we decided to join together to set up Numbers for Good. Our goal remains the same today as it is now; to channel more finance to organisations seeking to have a positive social impact on the world.
Earlier this month Bertrand and I returned to the same St Pancras bar and this time instead of coffee we uncorked some champagne. This year we’ve successfully raised two tranches of investment from Key Fund – to open our Newcastle office – and from Big Society Capital to help them in their mission to help more social enterprises and charities use social investment. Closing an investment round was a proud moment for us and gave us a chance to look back at what we’ve achieved.
Since our initial coffee, Numbers for Good has turned from an idea to an organisation of 11 people. In the last three years we have helped channel nearly £10m to social enterprises and charities, created two social impact bonds and run a health-tech accelerator in partnership with UCL Business, Trafford Housing Trust, Johnson and Johnson and Cabinet Office. Along the way there have been many sleepless nights, late night negotiations and a lot more coffee!
The Don’ts and Do’s of Pay for Success/Social Impact Bonds
Jon Pratt & Ruth McCambridge – NPQ
“A Guide to Evaluating Pay for Success Programs and Social Impact Bonds” might well have borne the subtitle, “Reasons why you might not want to mess with these schemes and questions to make you think more critically before you go leaping in with all four feet.” Released on December 4th by a coalition of groups, including the American Federation of State, County and Municipal Employees, the Center for Effective Government, In the Public Interest, the Minnesota Council of Nonprofits, and the Oregon Center for Public Policy, the 10-page guide quickly runs through the problems these financing methods cause and then poses questions to be considered.
Social impact bonds depend upon private investors to take on the risk of social programs, with the government paying off those investments if and when outcome goals are met. Somehow, this is meant to improve the program’s outcomes—because, after all, the free market has its own ineffable magic to bring to bear to whip us all into shape around social programs. To make this complex setup work as conceived, independent evaluators are contracted, as are lawyers all around. Naturally, there are also costs associated with the loans. Everyone gets a little piece of the pie. McKinsey & Company, in some of its early advocacy, wrote, “SIBs are a more expensive way to finance the scaling up for preventive programs than if the government simply went to service providers and paid them to expand an intervention to more constituents.”