Welcome from the heart of Europe where we’re blithely ignoring the Pan European Day of Indolence to bring you SIB News.
Three good announcements overnight, one from BofA to look at innovative ways to fund better lives for the veterans who have fought for the USA while in Britain, news of 30 million Pounds of planned SIBs to help young people and last but by no means least, information on how the IADB is looking at funding SIBs in South America – exciting news all round!
Okay, back to work for us, alongside the barristas of Continental Europe! Happy reading:
Bank of America Examines Innovative Forms Of Social Finance To Expand Services For Military Veterans
Business Wire
Bank of America today announced plans to assess the use of innovative social financing, such as social impact bonds and other pay-for-success programs, to address critical shortfalls in the funding of effective reintegration and ongoing support services for military veterans.
There are more than 21 million veterans living in the U.S. today, many of whom face employment barriers, struggles with homelessness and chronic physical and psychological challenges associated with their service. As current military conflicts wind down, add to that total a proposed reduction of 2.5 million active service members, creating demand for veteran services unlike any since the end of World War II. Meeting this urgent need, and expanding services and support for existing veterans, requires additional resources and funding.
For this reason, Bank of America has commissioned a four-month feasibility study, to be conducted between May and August by Social Finance Inc., to examine this population along with key issue areas that could be addressed — such as workforce development, homelessness or overall wellness — and to review proven providers of these important services. The study will also assess how new financial instruments and programs could help, how they would be funded and their success measured. Based on the results of the study, the company will then evaluate the offering of interests in one or a series of social investment vehicles designed to have a positive impact on the lives of our veterans.
Last year, Bank of America introduced an innovative social impact partnership with New York State and Social Finance that resulted in a successful capital raise of $13.5 million to fund a new pay-for-success program focused on comprehensive reentry employment services for formerly incarcerated individuals. Preliminary research conducted by Social Finance indicates the potential for a $50 to $75 million initial capital raise opportunity for the funding of a veteran-focused pay-for-success program.
£30 Mln Boost To Improve The Lives Of Britain’s Most Vulnerable Young People
UK Deputy Prime Minister’s Office and Cabinet Office
Social impact bonds will lead to innovation to tackle NEET (not in education, employment or training) issue.
A new £30 million package to help improve the prospects of up to 20,000 vulnerable young people was announced today by Deputy Prime Minister Nick Clegg.
The funding will help disadvantaged young people improve their prospects and prevent them from falling into a situation where they are not in education, employment or training (NEET).
This investment is made up of 2 new cross-government programmes specifically targeting 14 to 24-year-olds, helping them to develop crucial skills to improve their educational achievement and employability:
– the Youth Engagement Fund aims to support up to 18,000 young people in over 100 schools in England to help them improve their skills and employability
– the Fair Chance Fund aims to move over 2,000 homeless young people into sustainable accommodation, as well as employment, education or training over 3 years
The funding will be delivered through social impact bonds (SIBs), an innovative way of solving complex social problems. SIBs are a payment by results system and will see investors fund innovative interventions to prevent young people from becoming NEET, with government only paying if the initiatives are successful and positive outcomes are achieved. Organisations, charities and their investors will bid for a share of the £30 million pot of government funding, giving a boost to the best programmes.
The types of programmes that will be funded through these bonds are likely to include those that will reduce the long term dependency of young people on benefits, decrease the likelihood of offending, or support a specific group of homeless young adults to help them gain sustainable accommodation.
Similar social impact bonds exist to support young people at risk of becoming NEET already – for example Tomorrow’s People provide intensive support for young people in Tower Hamlets. Their aim is to reach 600 young people at risk of being NEET over 3 years via a system of ‘super coaches’ who give intensive mentoring support to young people.
SIBs In Latin America: Reframing Social Development In The Region
Avnish Gungadurdoss – next billion
The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank Group, in March launched a $5.3 million fund to test a new social sector financing tool: Social Impact Bonds. This fund is a window to a promising new approach to social development in Latin America.
A Social Impact Bond is a new funding and fundraising tool bringing a powerful focus on results to the flow of money into development. First, through a pay-for-success contract, a government commits to pay an NGO for a program if and when it improves a social outcome of interest. For example, a ministry of education can pay an NGO for demonstrated improvements in test scores.
Against this conditional revenue stream, the NGO is then able to raise working capital from private investors. If the program works, success payments from the government provide a reasonable return on investment to the project investors. Governments pay only for what works. NGOs are rewarded for producing outcomes they care about, bringing integrity to their own missions. Finally, impact investors find the golden alignment of social and financial returns, which is a unique property of SIBs.