Two fascinating articles to end the week, particularly the speech from the UK charities minister which will appall the entrenched British NGO through which stubbornly refuses to believe the magic money tree is fiction approach to charity and broadly abhor any form of responsibility. Great news! I hope the government pushes the envelope and delivers a consistent, sustainable and responsible sector instead of the current farago of grossly inefficient EU-funded sock puppets with little or no incentive to actually deliver services. Optimism continues in the US too but then God Bless America, it’s good at optimism and personal responsibility in the charitable sector to start with.
Have a great weekend…
Social Impact Bonds ‘Will Become The Norm’ For Government Funding, Says Charities Minister
David Ainsworth – Civil Society
Social impact bonds will shortly be the most talked about method of public funding, said Rob Wilson, the minister for civil society.
Wilson gave a speech in London to the Social Investment Academy, an organisation which is designed to encourage investors to focus on social returns. He told delegates that social impact bonds were a “no-brainer” and that “the time for social investment has arrived”.
A social impact bond is a type of payment-by-results contract where a charity is backed by an investor to deliver a service to government, with agreed targets, such as decreasing obesity among a target population or reducing reoffending in particular area. The government only pays if the charity hits its targets, and the investor share the risk.
“Social impact bonds are barely mentioned in the media today,” Wilson said. “In a few years’ time they will be the most talked about funding mechanism for government social projects. I will be talking about them a lot.
“Social investment is growing. It will play an increasing role in how the sector will be funded and there is a role for all of us in achieving this. Social investment can accelerate the growth of new businesses, transform the impact of our public services and support stronger communities to tackle the social challenges that they face.”
Wilson also said he had embarked on a programme to reform the charity sector to make it work better.
“I’m pleased to inform you today that this government has embarked on a somewhat overdue and ambitious reform programme for charities and social enterprises,” Wilson said.
Will 2016 Be a Social Impact Bond Growth Year?
Esha Chhabra – Next City
In the first 50 days of 2016, we’ve seen three new pay-for-success programs announced — in Connecticut, South Carolina and Denver. Nearly $50 million is being pumped into the three initiatives, with South Carolina’s the largest at $30 million.
Pay-for-success (PFS) programs rely on social impact bonds, which allow government entities to take on loans from private investors. The money is repaid (or not) based on the “success,” or results, of the program. Here’s a chart that breaks down how the deals are structured.