PLY: As you may be aware, our ‘day job’ is in the world of exchanges and financial markets infrastructure (I’ve been an exchange CEO amongst other positions). We also produce a much larger daily newsletter “Exchange Invest” which is the benchmark read by bourses the world over. Anyway, in that context, we always set CFTC notices to the end, as, while important to be aware of, they are somewhat dull parish notices.
Today we lead SIBNews with precisely one of these notices as it has massive implications for American SIB structures and as such the good folks of Social Finance have done the entire US industry a great service – even before their excellent bonds / advisory products are taken into account.
So, the ‘no action’ letter means the SIB arena has been effectively carved out of US regulation giving the entire sector much much less onerous responsibilities (NB Not “NO” responsibility – just less onerous requirements than a traditional broker dealer) and that could be a huge catalyst to developing the SIB business in the US and indeed across the world – presuming other national regulators take similarly enlightened approaches.
We follow with several interesting Australian stories but that “no action” update stands out – well done once again to the good folks of Social Finance for clearing through the thicket of regulation.
No-Action Relief For Social Impact Financing Finder
Lexology
SEC issued a no-action letter on November 13, 2014 to Social Finance, Inc., indicating that it would not recommend enforcement action against Social Finance for its conduct as an intermediary in social impact bond (SIB) projects.
SBB Makes Sense For Both Families And The Government
James Dunn – AFR
One of Australia’s first social impact investments was the social benefit bond (SBB), launched in March 2013 by the NSW Department of Families and Community Services and Uniting Care, to fund the latter’s Newpin programs to support at-risk children in the state’s out-of-home care system to return safely to their parents.
The charity runs the project, which saves the government money in the long term: the government pays the investors for each successful outcome that is attained.
In the first 12 months of SBB funding, the Newpin program restored 28 children under six years of age to their families, and prevented children at risk in another ten families from entering the child protection system. Those outcomes qualified the investors to receive a 7.5 per cent return for year one of the program – against a targeted financial return of 10 to 12 per cent a year over the seven-year term of the bond, based on the expected success of the program in restoring children to their families.
Ian Learmonth, executive director of impact investing at Social Ventures Australia, which structured the Newpin bond, says the idea was to strike a “three-way balance” between the government, the service provider, and investors.
What Are You Getting For Your Social Investment?
James Dunn – AFR
Structuring social impact investments is still an inexact science, because the asset class ranges from straight loans to social benefit bonds with relatively well-defined cash flows to equity investments. But it also has to do with the fact there are different investors in the space, who require different things from their investment.
“There are what’s known as ‘finance-first’ investors, who are very much pursuing the financial returns, and the social return is there but it’s not their main focus; and then there are ‘impact-first’ investors, who are looking for a financial return, but they’ll accept a trade-off between the financial return and a social return,” Ben Gales, CEO of Social Enterprise Finance Australia (SEFA), says.
Measurement And Collaboration A Must – Speech
Pro Bono Australia
Social Ventures Australia CEO Rob Koczkar has focused on the role collaboration and measurement could play in increasing impact in the social purpose sector in a keynote speech at a NSW Department of Families and Community Services (FaCS) Forum.
The theme of the Forum was ‘creating impact through innovation.’