PLY: Since we began this daily digest of Social Impact Bonds, I think today is the most exciting day yet for SIB News. We have a panoply of stories from around the world with taskforces on either side of the Atlantic (involving I am delighted to say SIBNews reader at the epicentre!). Moreover, news that in the US SIBs are increasingly seen (quite rightly!) as a bipartisan tool is wonderful.
This is a great day for SIBs and SIB News too – tell your friends!
Simplify Social Impact Bonds And Cut Red Tape Around Social Investment, Says G8 Taskforce
David Ainsworth – Civil Society
World governments must simplify social impact bonds and strip away red tape around social investments, according to a report published today by an international task force set up by David Cameron.
The Taskforce on Social Impact Investment, chaired by Sir Ronald Cohen, the private equity entrepreneur and first chair of social investment wholesaler Big Society Capital, was set up during the UK presidency of the G8 group of wealthy countries. It includes sector and government representatives from seven countries and the EU, and makes a number of recommendations for governments and other organisations around the world.
Its report, Impact Investment: The Invisible Heart of Markets, makes a series of recommendations for governments around the world, several of which have already been introduced in the UK, such as Social Investment Tax Relief, and a wholesaler such as Big Society Capital to lend money to build the market.
But it also says that the government must make more use of social impact bonds and streamline commissioning to focus more on outcomes, in order to ensure that social organisations are rewarded more accurately for the level of social value they produce.
Want To Fund Global Development? Tap Into The ‘Heart’ Of Markets
Adva Saldinger – devex
Tapping into the “heart” of markets is expected to become an increasingly important development finance strategy in the post-2015 agenda to leverage more impact investing.
A new report published Monday by the Social Impact Investment Taskforce asserts that international development finance will be one of the fastest-growing elements of the global impact investing market — 70 percent of which is in developing countries.
The report, titled “The Invisible Heart of Markets — Harnessing the Power of Entrepreneurship, Innovation and Capital for Public Good,” tackles the challenge of what can be done to help unlock $1 trillion in social impact capital and offers a set of six broad tips to achieve this goal, including a potential fund for development impact bonds among other suggestions.
We’re proud to join the Social Impact Investment Taskforce to announce the release of their report, The Invisible Heart of Markets: How Impact Investing is Harnessing Innovation and Capital for Public Good. An electronic copy is embedded in the previous link.
The Social Impact Investment Taskforce was created under the UK Presidency of the G8 (www.socialimpactinvestment.org) in June 2013 to catalyze a global market for impact investing. The final report was launched today in London at 11 Downing Street.
In addition, the taskforce released five Working Group reports (Measuring Impact; Allocating for Impact; Profit-with-Purpose Businesses; International Development and Explanatory Note: Policy Levers and Objectives). All reports are available at www.socialimpactinvestment.org.
As you know, the US National Advisory Board (NAB) (www.nabimpactinvesting.org) on Impact Investing released its report of policy recommendations to mainstream impact investing within the United States in June 2014. The report, Private Capital, Public Good: How Smart Federal Policy Can Galvanize Impact Investing — and Why It’s Urgent, was incorporated into the work of the Social Impact Taskforce.
This represents the most comprehensive initiative to date to define what is needed to create a national and global policy framework to accelerate impact investing worldwide. But the work continues. We join with you to continue the effort to catalyze a global market for impact investing and realize its tremendous potential to improve society and the environment.
We invite you to comment and share the report within your community via email, word of mouth and social media, using #ImpInv, #ImpactInvestment and @ImpactInvestUS.
Matt Bannick Co-chair, National Advisory Board
Managing Partner, Omidyar Network
Tracy Palandjian Co-chair, National Advisory Board
Chief Executive Officer and Co-founder, Social Finance
Social Impact Bonds Are Going Mainstream
Jon Hartley – Forbes
Now making waves in public finance circles are social impact bonds (SIBs). The bipartisan funding concept is a type of “Pay For Success” model where private investors invest capital and manage public projects, usually aimed at improving social outcomes for at-risk individuals, with the goal of reducing government spending in the long-term.
Some social impact bonds seek to reduce the prison population through funding rehabilitation and employment programs for first-time offenders with the ultimate goal of reducing recidivism rates. Other SIBs seek to reduce the number of children in foster care.
The catch is that private investors front all the costs and will be paid back a financial return by the government if and only if social outcomes are improved based on some standard measurement. The profit-motivating component comes from the fact that some of the savings from reduced costs for the government can be used to pay back the investor contingent upon their success.
Now, Congress is considering the bipartisan Social Impact Bond Act, legislation that will enable the U.S. federal government to allocate $300 million to SIBs. A House Committee on Ways and Means hearing discussing the merits of social impact bonds led by the two co-sponsors of the bill, Rep. Todd Young (R-IN) and Rep. John Delaney (D-MD), was held last week.
UK Advocate of Social Impact Bonds Declares Them “Clunky”
Rick Cohen – NPQ
The last time we heard Nick Hurd speak in the U.S., it was at the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal in a dialogue with the inestimable Bill Schambra. At that time, Hurd was the charities minister in the government of Prime Minister David Cameron and was in the U.S. giving a detailed discussion of the upside of Social Impact Bonds, the financial innovation first tried in the U.K. in the Peterborough Prison project aimed at reducing recidivism.
Although Hurd offered a number of cautions about the limitations of SIBs, he nonetheless lauded investors interested in a “double bottom line” and concluded that in the UK and in the U.S., “there is, again, a lot of momentum around Social Impact Bonds, and there is a healthy set of issue areas where we think Social Finance can really advance social good, and also draw in capital from impact investors.”
Now out of the Cameron cabinet and functioning as a Conservative Party Member of Parliament, Hurd recently voiced a somewhat different take on SIBs. At a Westminster Hall debate on social economy, Hurd declared that Social Impact bonds were “clunky, take too long, and are too expensive to set up.” It isn’t that Hurd has abandoned innovation in social finance. To the contrary, he described SIBs as a kind of instrument that it intended to create “space for social innovation in a system that is risk-averse,” but that SIBs “are at the bottom of the S-curve of the development of that instrument.”
Impact Investing Carves New Path In Matching Positive Social Outcomes With Financial Returns
Rosemary Addis – Canberra Times
Growing our economy is often the primary focus for our political leaders, so much so that it can take on a life of its own. The real question is to what end?
We are still failing to meet the needs of millions of people worldwide and in our own backyard. From global challenges of poverty and sustainable development, to local issues such as ageing populations, rising demand for health services and Indigenous disadvantage, countries including Australia face growing gaps between what society needs and what governments can afford.
Governments and philanthropy cannot provide all the funding, or all the answers. At the same, there is increasing pressure to achieve meaningful progress in tackling social problems. Solutions that are working face obstacles to achieving scale.
Fortunately there is a revolution under way with potential to change all that: impact investing.