Social Finance
Publications

Publications

Publication

Final report on the Energise and Teens & Toddlers Social Impact Bonds

Publication date: 24 January 2017

Author: Social Finance
Final report on the Energise and Teens & Toddlers Social Impact Bonds

In 2012, the Department for Work and Pensions (DWP) launched the £30 million Innovation Fund in order to support vulnerable young people at risk of becoming Not in Education, Training or Employment (NEET). The Fund marked a commitment to helping some of the most vulnerable young people in society overcome long term structural barriers preventing them from gaining qualifications and starting a career, and focussed specifically on payment by results programmes targeting 14–16 year olds most at risk.

The Energise programme and the Teens and Toddlers programme were two of the 10 Social Impact Bond projects delivered over the three years to Autumn 2015 to meet the Innovation Fund’s objectives. Both projects were aimed at supporting young people aged 14 to 16 who are at risk of becoming NEET over a three and a half year period. The Teens and Toddlers programme combined an 18-week intensive intervention with regular support through to GCSEs, while Energise comprised a combination of mentoring, structured activity days and residential courses in order to equip young people with the skills that would allow them to remain on track to age 18.

The projects marked a shift in governmental approach to at-risk youth: by intervening as early as age 14, the Innovation Fund was structured to prevent the likelihood of young people becoming NEET rather than support these individuals once they had already fallen out of employment, education or training. Following on from our previous ‘Year in Review’ publication, this document is intended to share our learnings and reflect on the successes of Energise and Teens and
Toddlers programmes now that they have completed.

Publication

Power to Change report 2016 launched

Publication date: 30 November 2016

Author: Social Finance
Power to Change report 2016 launched

The growth of community businesses is driven by attempts to rescue libraries, pubs and other local assets under threat from closure, according to research released by the independent trust Power to Change and the non-profit Social Finance.

The report found that the number of community businesses in England has grown by 5% in the last year, outstripping growth by both charities (1%) and small businesses (2.3%).

Community businesses are charities and other organisations run for and by local communities, which re-invest all surplus back into the local area.

The report found:

  • 300 local libraries are now run as community businesses (20% growth on 2015)
  • 1,100 sports and leisure facilities are now run as community businesses (10%)
  • 40 local pubs are now run as community businesses (14%)
  • 330 local shops are now run as community businesses (3%)

 

Publication

Building the case for social investment in credit unions

Publication date: 27 September 2016

Author: Social Finance
Building the case for social investment in credit unions

 

Written in conjunction with Big Society Capital and the Association for British Credit Unions, Building the case for social investment in credit unions  looks at the potential for social investment to help grow the credit union sector. The report explores the opportunity within the landscape for social investment, how credit unions can make themselves more appealing to social investors and the benefits of investing in these organisations.

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Investing to Save Lives: An Impact Investment Case for Preventing Road Trauma

Publication date: 22 September 2016

Author: Social Finance
Investing to Save Lives: An Impact Investment Case for Preventing Road Trauma

Governments, insurers and service providers all stand to benefit from savings in future health costs if spending is directed to prevention of road trauma. New analysis shows that investing early to prevent injury can deliver real financial dividends as well as saving lives. In addition to the direct savings to be made there are significant additional social and economic benefits of prevention. This paves the way forward for a fresh assessment of the benefits of stronger road safety measures and budgeting for road safety implementation and enforcement.

‘Investing to Save Lives: An impact investment case for preventing road trauma’, make a compelling case for strategic investment in preventative road safety measures. The case studies are drawn from road safety programmes in Australia and Cambodia. They detail astronomical health costs resulting from road trauma in high income countries, and the hidden costs borne by families in low income countries with limited access to health services, insurance protection or welfare.

Publication

Evaluating Impact Bonds – Balancing Evidence And Risk

Publication date: 14 September 2016

Author: Social Finance
Evaluating Impact Bonds – Balancing Evidence And Risk

Written in partnership with the Children’s Investment Fund Foundation, this paper explores the concept of evaluation in relation to Impact Bonds.  The paper describes three levels of evaluation that may take place within an Impact Bond, but focuses on considerations around ‘Contractual Outcomes Metrics’ – the metrics against which Impact Bond payments are or aren’t made that carry with them both financial and reputational risk for outcomes funders and investors.

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Using Results-based Funding to Drive Health Equity

Publication date: 09 September 2016

Author: Rita Perakis, Social Finance
Using Results-based Funding to Drive Health Equity

new report from Social Finance and ACTION  presents results-based funding (RBF) as an important tool for development funders to consider adopting in order to create equitable health systems. RBF is a relatively new approach to development funding, but it has been widely tested in global health, with overall positive results. The funder transfers funds in exchange for specific results agreed to by both parties. When implemented well, RBF can increase the results focus, rigor, and recipient autonomy and flexibility of development programs.

Publication

New Insights Into Improving Outcomes for At Risk Youth: The Newcastle Experience

Publication date: 12 July 2016

Author: Social Finance
New Insights Into Improving Outcomes for At Risk Youth: The Newcastle Experience

 

How will the UK make progress on improving the life chances of its most vulnerable young people?  The answer depends on knowing – based on solid evidence – who the most vulnerable are.

To that end, Social Finance, Newcastle City Council, and Impetus-PEF have launched  New Insights Into Improving Outcomes for At Risk Youth: The Newcastle Experience, a rigorous analysis of 8000 17-19 year olds in Newcastle which identifies the risk factors that best predict becoming NEET and a range of other poor outcomes.

The wider implication of this analysis is that government can clearly identify which school pupils are most likely to become NEET as young adults, and can effectively target scarce resources to them. Several new government programmes offer strong opportunities to make use of these insights.

Click below to download the report.

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Social Impact Bonds: The Early Years

Publication date: 05 July 2016

Author: Social Finance
Social Impact Bonds: The Early Years

The Social Finance global network has launched its first white paper on the state of the Social Impact Bond market.

The paper looks back to the launch of the first Social Impact Bond in Peterborough in 2010 and charts the development and take up of the model across different countries and different social issues.

The paper reflects the shared lessons from the three Social Finance organizations in the UK, US and Israel – which, together, represent the largest pool of Social Impact Bond expertise globally, across multiple jurisdictions.

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Power to Change report launched

Publication date: 02 March 2016

Author: Social Finance
Power to Change report launched

A new report written by Social Finance for Power to Change has been launched today, to examine how community businesses have fared under ongoing government austerity and uncertain economic conditions.

The report shows how community businesses are thriving despite local challenges and highlights the role of these organisations in creating better places and a sense of community pride. The research also found that community businesses are important to the economy, generating £900 million income on £1.4 billion of assets and engaging with 170,000 volunteers.

Other key findings (as at the end of 2015) include:

  • Three sectors account for around 3,000 community businesses – transport, food and farming, and leisure.
  • Areas with potential for growth include health and social care, and digital.
  • Community energy schemes increased by 40% as organisations took advantage of tax benefits, but now face challenges in the coming year as government schemes come to an end.
  • While survey respondents expressed high levels of satisfaction with support provided, 73% of community businesses said there were some gaps in support available to them. Power to Change aims to provide business and technical support to help organisations like these improve their sustainability.

Publication

The Power of Impact Investment to Improve Vision

Publication date: 30 October 2015

Author: Social Finance
The Power of Impact Investment to Improve Vision

The Power of Impact Investment to Improve Vision report provides an insight into how reducing the prominent causes of avoidable blindness, such as cataracts, uncorrected refractive error and trachoma, is particularly well suited to the social investment model. Treating these causes achieves a significant social impact that is easily measurable, for a relatively low cost.

The following report, published by Social Finance and The Fred Hollows Foundation identifies several features of eye care services provision that are well suited to impact investment, in particular the clearly measurable and attributable social outcomes and the fact that in each case there is a real prospect for financial return. With more than 10 million people in developing countries estimated to be blind due to cataract, the potential social and economic impact of this model is huge.
 

Publication

New Local Outcomes Fund proposed as part of 2015 Spending Review

Publication date: 09 September 2015

Author: Social Finance
New Local Outcomes Fund proposed as part of 2015 Spending Review

Social Finance has joined leading charities, sector leaders and social investors in identifying the 2015 Spending Review as a key opportunity to focus public finances more sharply on achieving better outcomes for a range of disadvantaged groups that have suffered consistently poor outcomes.

We support the idea that the Spending Review should establish a significant ‘Local Outcomes Fund’ of £1.0-£1.5bn that can work towards improved outcomes for four key groups:

  • Over 700,000 young people in need of apprenticeships or at risk of being Not in Education, Employment or Training (NEET)
  • Over 50,000 households who are statutorily homeless and tens of thousands more on the border of homelessness
  • Over 1.2m people in contact with mental health services
  • Over 68,000 Looked After Children, children on the edge of care and children at risk of going into care.

We believe that the creation of a Local Outcomes Fund could lead to significant improvements in outcomes for these groups as well as value-for-money for the taxpayer. The report below is a summary of this proposal.

 

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Commissioning for outcomes across Children’s Services and Health and Social Care

Publication date: 18 August 2015

Author: Social Finance
Commissioning for outcomes across Children’s Services and Health and Social Care

 

In 2013 Social Finance was appointed by the Big Lottery Fund to provide technical support to commissioners developing Social Impact Bonds and applying to their Commissioning Better Outcomes Fund. Throughout this we worked with over 100 commissioners and Voluntary, Community and Social Enterprise organisations (VCSE) across a range of social issues, as well as hosting workshops and roundtables across the UK.

The majority of our work focused on the health and social care, and children’s services sectors. These are areas with a high level of spend on acute care, and therefore with the greatest potential to embed a preventative approach and reduce demand on the most critical, and often most expensive, services. The report below is a summary of discussions with children and health commissioners about the challenges they face and the value of outcomes based commissioning.

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Breaking the deadlock: A social impact investment lens on reducing costs of road trauma and unlocking capital for road safety

Publication date: 16 July 2015

Author: Social Finance
Breaking the deadlock: A social impact investment lens on reducing costs of road trauma and unlocking capital for road safety

 

More than three thousand preventable deaths and many thousands of serious injuries from road trauma occur every day. More than 1.2 million people currently die on the world’s roads each year, with an estimated cost of 2-3% of global GDP. Road fatalities are projected to increase to almost two million by 2020 unless substantial efforts to improve road safety are implemented. The toll is highest in developing countries, where new motorisation is rapid and more than ninety percent of fatalities occur. The social and economic consequences are so significant that road safety has been recognised in the United Nations (UN) sponsored Decade of Action for Road Safety and the draft Sustainable Development Goals (SDGs) as a priority public health issue. If unaddressed, it threatens to impede sustainable development and hinder progress. The actions needed to improve road safety are well understood: build safer roads, improve vehicle safety, reduce speeds and encourage safe road user behaviour. Significant analysis has gone into attributing economic value to the effect these ‘safe system’ interventions can have on reducing crashes and the severity of their consequences. Still, there are major gaps in capacity to deliver the elements for safety in many countries and, critically, in the evidence base that can unlock those elements at scale.

The focus of this paper is to set those foundations for how funding and finance can be directed more consistently to creating safe systems. There are three key sections: The need and imperative for action on road safety; the potential of social impact investment; and how these can be brought together to build the case for investment in road safety and map a way forward.

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Portuguese Social Investment Taskforce: A blueprint for Portugal’s emerging social investment market

Publication date: 29 June 2015

Portuguese Social Investment Taskforce: A blueprint for Portugal’s emerging social investment market

 

We are living in times of increasing social challenges. Portugal also faces many of these challenges: whether it’s the 17.4% of young people who are dropping out of school, the 34.5% of youth who are unemployed or the 46.9% of Portuguese citizens who are at risk of poverty before social transfers.

At the heart of Portugal’s response to these challenges is the work of social organisations. There are over 55,000 social organisations operating throughout the country, accounting for 2.8% of Gross Value Added and 5.5% of all paid employment. They are the backbone of social service provision and new entities are forming every day to tackle the issues the country faces. Organisations like Fruta Feia and ColorADD are leading the movement in Portugal to rethink
and reshape how to approach solving social problems.

Interest in developing a Portuguese social investment market is growing: social organisations are demanding access to adequate financing, investors increasingly have an appetite for investing in social impact and regulators and government are taking steps to promote this new source of funding.

Recognising the need to harness momentum, the Calouste Gulbenkian Foundation convened the Taskforce in July 2014, funded by the European Commission, to support the development of and provide leadership to Portugal’s emerging social investment market. In the course of its work, the Taskforce sought to understand how the different parts of a market encompassing social organisations, government commissioners, intermediaries and investors, work together to create a successful environment in which the needs of the different stakeholders are addressed and better outcomes are achieved for vulnerable people.

The publication of this report is timely: it coincides with the launch of Portugal Inovação Social, a new institution endowed over the next five years with an allocation of €150 million from the European Structural Funds. Portugal Inovação Social will undoubtedly become an accelerating force for the development of the Portuguese market as well as provide a context in which the recommendations set out in this report can be realised. Moreover, as highlighted  throughout this report, there are already concrete examples of social investment initiatives and social innovation that is taking place, most recently the announcement of Portugal’s first Social Impact Bond in Lisbon to improve childhood education and achievement.

In light of these achievements, and the recommendations of the Taskforce, Portugal is now at an inflexion point. The market is poised to grow and is ready to share its experiences with other European and international partners as part of a global social investment market, helping to address some of society’s most pressing social challenges.

Publication

Investing to tackle loneliness: a discussion paper

Publication date: 24 June 2015

Author: Social Finance
Investing to tackle loneliness: a discussion paper

 

Increasing awareness of the effects of loneliness on older people has catalysed new ways of thinking about loneliness and social isolation as central health issues. However, challenges remain in assessing the costs of loneliness to the public sector and in designing and commissioning new services to tackle this issue.

The following paper details work undertaken with Age UK Herefordshire & Worcestershire to design a service that addresses loneliness, particularly among older people. The report introduces potential costs of loneliness to the public sector and sets out our initial findings based on available evidence. It describes one model of commissioning services through a Social Impact Bond, which offers value to both commissioners and service providers. A Social Impact Bond (SIB) is a contract in which commissioners commit to pay investors for an improvement in social outcomes (in this case to reduce loneliness). Investors receive returns if, and only if, these social outcomes are achieved.

We are grateful for the support of the Centre for Social Action Innovation Fund and the Calouste Gulbenkian Foundation (UK Branch), whose grant funding has enabled us to publish this paper.

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Technical Guide: Designing outcome metrics

Publication date: 10 February 2015

Author: Social Finance
Technical Guide: Designing outcome metrics

 

The concept of commissioning by outcomes is becoming central to efforts to make radical improvements to public services in an era of enormous social and economic change.

Social Impact Bonds (SIBs) are one of a range of mechanisms to enable public commissioners to focus service delivery on achieving specific outcomes.
At its most fundamental, a SIB is an outcomes-based contract between a public sector commissioner and an investor/group of investors. Success within SIBs is measured by changes in social outcomes. A crucial stage in the development of SIBs is the selection of outcomes and the measurement and metrics used
to evaluate success. It is at this point that turning the theory into practice can present a range of technical challenges. This guide has been produced to help organisations considering outcomesbased commissioning to overcome these technical challenges.

This guide is part of a series of SIB Technical Guides produced by Social Finance. These are intended to accompany the journey an organisation may take when developing a SIB; and it is important to note that outcomes selection and measurement is not usually the first step in this process. To find out more about the Social Impact Bonds and how they work, please refer to our previous Technical Guide ‘Developing Social Impact Bonds’.

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What if we ran it ourselves? Getting the measure of Britain’s emerging community business sector

Publication date: 22 January 2015

Author: Social Finance
What if we ran it ourselves? Getting the measure of Britain’s emerging community business sector

 

Community business is a familiar idea, but one that has only recently gained traction. A constellation of factors have helped engineer this, including new community rights, the growth of community entrepreneurs and increases in Council asset transfers in the context of an unprecedented fiscal squeeze. With the launch of the Power to Change, a community business-focused grant funder, this is an opportune moment to bring coherence to a highly diverse set of organisations. It is in that context that this report assesses the nature, scale, scope, impact, and financing and support needs of the community business sector.

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Social Impact Bonds: Supporting adolescents on the edge of care

Publication date: 13 November 2014

Author: Social Finance
Social Impact Bonds: Supporting adolescents on the edge of care

 

The Essex Edge of Care Social Impact Bond (SIB) was contracted by Essex County Council (ECC) to provide therapeutic support and improve outcomes for adolescents at risk of going into care.

Eight investors provided a total commitment of £3.1m to fund for five and a half years an intervention which would support 11–17 year olds who are at risk of entering care or custody. The financial return for these investors is linked to the success of the programme in helping children remain out of care and safely at home with their families.

The national children’s charity Action for Children was selected to deliver the funded intervention, Multi-Systemic Therapy (MST), an intensive evidence-based family therapy. The service aims to work with 380 young people over five and a half years. We hope to divert approximately 100 young people from entering care, with investor returns determined by the reduction in days spent in care amongst the service users compared to a historical baseline. Essex County Council repays investors if these outcomes are achieved. Investor capital is entirely at risk.

As with other Social Impact Bonds, this service places emphasis on outcomes measurement and using performance management to drive continual improvement. Rather than taking a snapshot of the outcomes for the young person immediately after the conclusion of the intervention, progress of the child is tracked for a total of 30 months from the point of engagement with MST.

Focusing on the number of care days saved as opposed to a binary measure of whether a young person has gone into care or not means that the service is incentivised to work with even the most challenging of cases. Wider outcomes such as the rate of offending, educational outcomes and emotional wellbeing are also being monitored in order to understand the broader impact of the service.

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Housing First Social Impact Bond feasibility study

Publication date: 23 October 2014

Author: Social Finance
Housing First Social Impact Bond feasibility study

 

This feasibility study suggests that a Social Impact Bond (SIB) could be used to fund a Housing First (HF) intervention that aims to improve the lives of homeless individuals with mental illness.

Homelessness is a major issue in Canada, affecting 200,000 people every year and costing $7 billion to the economy. The prevalence of mental illness within the homeless population is higher than in the general population: 50% of homeless individuals have some form of mental illness, compared to 20% of Canadians. Homelessness and mental illness are closely linked and around 120,000 Canadians are simultaneously affected by both conditions. If we include people who are vulnerably housed (unstable, poor quality housing, couch surfing) as many as 520,000 Canadians lack safe, affordable and supportive housing.

Encouraging developments in addressing the homeless population have taken place in Canada over recent years. Nevertheless, many of the available responses to homelessness remain focused on emergency services and crisis management, which lack attention to preventative measures and breaking the negative cycle. HF is a model that has demonstrated positive housing stability outcomes by providing immediate access to housing coupled with wraparound support services.

The At Home/Chez Soi (AHCS) pilot is an evidenced-based HF intervention holding promise to significantly improve the lives of homeless individuals with mental illness. Backed by the largest randomized controlled trial for an HF intervention, the rich data and related research from the AHCS pilot has allowed us to confidently assess the costs
and projected outcomes for the program.

AHCS data reveals that HF results in public sector cost offsets, specifically from a reduction in public sector usage across the shelter, health and justice systems. For members of the population who are high users of public services, HF results in substantial net cost savings.

Funding broader implementation of HF using a SIB would share the implementation risk associated with replication, scaling and modification from governments with investors, and would establish a rigorous performance measurement framework focused on outcomes.

Publication

Supporting homelessness prevention and alleviation through investment in the private rental sector

Publication date: 10 October 2014

Author: Social Finance
Supporting homelessness prevention and alleviation through investment in the private rental sector

 

 

DCLG commissioned Social Finance to explore ways of using institutional investment to increase the supply of long term, well managed, Private Rented Sector Accommodation for homeless households at Local Housing Allowance level rents. This includes both the purchase of existing property and new build. A seminar was held on November 4 2013 with representatives from around 25 local authorities and provided an important opportunity to canvas a wider range of opinion and perspectives.

The project has also benefited from the advice and guidance provided by an expert advisory group including representations from a range of organisations, which met regularly throughout this project to review progress. Meetings were conducted with a number of additional private sector organisations during this project including potential investors, tenant and asset managers, and registered providers, who have also provided constructive challenge and feedback. In addition to this report, a technical guide for local authorities as well as a financial model to assess viability have been developed which are available for use. The structures and financial model have been developed with consideration of the acquisition of a portfolio of street property. This reflects the desire by local authorities to consider activities which can be completed immediately to help address homelessness numbers, and the time lags of introducing new build developments. However it is not viewed that the inclusion of new build developments would have a material impact on the analysis presented, and both the financial model and structures can be easily adapted.

The technical guide can be downloaded here and for a copy of the financial model please email info@socialfinance.org.uk.

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Social Impact Bonds: Supporting vulnerable 14-16 year olds

Publication date: 13 May 2014

Social Impact Bonds: Supporting vulnerable 14-16 year olds

 

In October 2012 Social Finance was awarded two Social Impact Bond(SIB) contracts from the Department of Work and Pensions Innovation Fund. The DWP contracts were awarded to Social Investment Partnerships, established by Social Finance and chaired by Richard Johnson, formerly of SERCO with broad experience in the complex area of outsourced welfare to work.

DWP have traditionally intervened with young people who are NEET (not in education, employment or training) once they reach the age of 18. The Innovation Fund contracts see a shift in this focus. Providers will start intervening with young people at the age of 14 with the objective of preventing them from being NEET at 18. The contracts are structured to incentivise providers to support young people in addressing the two main issue areas most commonly associated with NEET young people: lack of qualifications and exclusion from school.

The DWP has identified a number of outcomes against which the contracts will be measured including improved behaviour, school attendance, educational qualifications and employment opportunities. Outcomes payments from the Innovation Fund will be paid over three and half years. Unlike typical social service delivery, the funding is provided at risk by social investors, including Bridges Ventures, Big Society Capital, Barrow Cadbury Trust and the Impetus Trust, whose financial return is aligned to the positive social impact of meeting preagreed educational, training and employment outcomes.

This report will share our experiences to date, and look forward to how we plan to implement the lessons learned during the next year of service delivery.

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Technical Guide: Building a business case for prevention

Publication date: 01 May 2014

Author: Social Finance
Technical Guide: Building a business case for prevention

 

Building a business case for prevention may at first seem difficult. We believe that if the process of constructing a business case for prevention can be made easier then more commissioners will choose to invest resources in tackling problems upstream. The aim of this guide is to demystify the activities required to make a decision to invest in prevention; and to make that decision rooted in robust, reliable data.

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Final Policy Paper: Exploration of Social Impact Bonds for SME development

Publication date: 13 April 2014

Final Policy Paper: Exploration of Social Impact Bonds for SME development

 

In September 2013, The Bertha Centre (located within University of Cape Town’s Graduate School of Business), Genesis Analytics and Social Finance formed a research coalition and were awarded a grant to explore the applicability of Social Impact Bonds (SIBs) as a financing instrument in South Africa. In particular, the initial scoping study sought to assess issues relating to the design of, and gauge the level of interest of key stakeholders in, a SIB providing business development services (BDS) to small and medium enterprises (SMEs) so as to generate economic growth and job creation.

During the course of the research, the coalition held discussions, interviews and workshops with (i) local business development service providers; (ii) national, regional and local authorities; (iii) community groups and NGOs interested in facilitating SME growth; (iv) potential investors; and (v) potential outcomes funders. Additionally, the coalition brought together a broader group of stakeholders in an African Social Impact Bond (ASIB) Advisory Group with representation from: (i) provincial and national government departments; (ii) the financial sector; (iii) business organisations and/or; (iv) international funders. Workshops and interviews with these stakeholders and the Advisory Group comprised a significant portion of the project and their feedback is incorporated throughout this document.

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Investing in Social Outcomes: Development Impact Bonds

Publication date: 01 October 2013

Author: Social Finance
Investing in Social Outcomes: Development Impact Bonds

 

There is a revolution in development finance. Private financial flows are growing, and developing countries are increasingly financing their own public services with domestic revenues. Finance from abroad is becoming more diverse, with new development partners, development finance institutions, philanthropic organisations and private investors working alongside traditional donor agencies. These new sources of finance and expertise increasingly complement the offerings of traditional development cooperation. This creates opportunities for new forms of partnership which can leverage the best that each has to offer.

Impact investing – that is, investment intended to create a positive social impact as well as a financial return – has already begun to channel private sector capital and expertise into generating social benefit in richer countries. But it is early days for this kind of investment, particularly as a contribution to development finance.

This report explains how Development Impact Bonds (DIBs) can enable more impact investment in development, by providing a shared platform for governments, donors, investors, firms and civil society to work together, achieving more in partnership than any of them could achieve separately. It provides a number of case studies to illustrate how DIBs may be applied to tackle social issues.

 

 

 

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Building Homes for Generation Rent: Can institutional investment meet the challenge?

Publication date: 01 October 2013

Author: Social Finance
Building Homes for Generation Rent: Can institutional investment meet the challenge?

There is an urgent need to increase the supply of housing in the UK to address the growing affordability problems faced by low to middle income families. We need to increase the supply of all types of housing in view of the scale of the challenge. But given that large numbers of low to middle income families are shut out of home ownership for the medium to long term and do not qualify for social housing, addressing supply must include a focus on market rent homes. Market rent is no substitute for an adequate supply of social and affordable housing, but it could play a greater and more positive role in addressing the UK’s acute housing needs.

In doing so, we must also offer a better deal to ‘generation rent’ based on purpose-built properties, more professional management, more affordable and transparent rents and greater security of tenure. The UK’s private rented sector remains characterised by individual landlords, older properties, short term tenancies and variable quality. Changing the offer is particularly important for families with children, who now make up a third of the 3.8 million households living in the private rented sector. A purpose-built rented sector managed by professional landlords and financed by institutional investors such as pension funds and life companies offers the potential to deliver a greater supply of market rent properties alongside a better deal for tenants. Institutional investment underpins the build to rent sector in the US and in several other European countries but despite a number of attempts in the last decade to secure investor backing to kick start the sector in the UK, it has so far failed to take off.

A central question underpinning its slow development is the extent to which a better deal for tenants is compatible with investor expectations. And, if build to rent represents a viable proposition for investors, can it meet the affordability needs of low, modest and middle income families in different parts of the country or is it only a solution for higher income tenants in London?

The analysis presented in this report attempts to take the debate over build to rent to the next stage by using real data from actual or planned developments and examining where and how build to rent might work, what the improvements for tenants could be, what the returns for investors might look like and where the key challenges lie.

This analysis demonstrates that build to rent can deliver an affordable, more secure rental product for modest and middle income tenants in different parts of the country at the same time as delivering a competitive return for institutional investors at relatively low risk. From an investor perspective, the return from build to rent set out here offers a degree of inflation hedging, with rents expected to rise in line with CPI over the long run, and the build to rent asset class also offers significant opportunities for diversification within an overall investment portfolio. Despite these clear opportunities, build to rent has been slow to take off because, while it does not require public subsidy or significant policy change, it does depend on effective partnerships between housing providers and investors to address historic concerns around scale and the risks associated with residential investment, as well as careful site selection and the efficient delivery of schemes. To date, these necessary ingredients have rarely come together.

 

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Rebuilding the relationship between affordable housing and philanthropy

Publication date: 01 September 2013

Rebuilding the relationship between affordable housing and philanthropy

 

Nick Salisbury, Director at Social Finance contributed a chapter to this report; “Is Social Investment Relevant”.

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Investing in Shared Lives

Publication date: 22 July 2013

Investing in Shared Lives

 

 Shared Lives is a little known, but important, alternative to home care and care homes for people in need of support. Shared Lives offers personalised, quality care where carers share their lives and often their homes with those they support. In 2010, England’s care inspectors, the Care Quality Commission, gave 38% of Shared Lives schemes the top rating of excellent (three star): double the percentages for other forms of regulated care.

There are now around 15,000 people supported through Shared Lives schemes, but the scope for expansion is significant. Over the last six months, with the support of the Cabinet Office, Social Finance, Shared Lives Plus and Community Catalysts have been working closely with four local authorities – Lambeth, Leeds, Manchester and Newham – to explore a model for expanding Shared Lives with social investment.

A central element of the work has been identifying which groups of people would most benefit from Shared Lives, and for whom support in Shared Lives would be more cost-effective than other forms of care. Although the primary reason for expanding Shared Lives is the social benefit, the conclusions drawn from this work also indicate that expanding Shared Lives could provide significantly greater value for money than many other forms of care.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The challenges of build to rent for UK housing providers

Publication date: 25 June 2013

Author: Social Finance and the Resolution Foundation
The challenges of build to rent for UK housing providers

 

Britain’s housing crisis is well documented. Supply has failed to keep up with demand for many years, keeping prices historically high despite a prolonged downturn. This has become particularly pronounced in the private rented sector which in many parts of the country is now more expensive than owning a home with a mortgage given that interest rates remain low. However, difficulties accessing mortgage finance and raising a deposit coupled with a decline in the stock of social housing have left many low and middle income households with few options except the private rented sector.

Kick starting the development of purpose built rental accommodation in the UK to increase the supply of private rented homes for those who are shut out of home ownership must now be a priority. As well as growing supply, build to rent could bring to market a new rental offer for tenants: purpose built accommodation, greater security of tenure, more transparent rental increases and more consistent management quality, with a new breed of lettings agents and asset managers.

This briefing note looks at the challenges that build to rent poses for housing providers. It is based on a six month project conducted by the Resolution Foundation and Social Finance to develop a financing model for institutional investment in a build to rent portfolio of 778 rental units nationwide aimed at middle income households.

Publication

A Technical Guide to developing Social Impact Bonds

Publication date: 13 January 2013

A Technical Guide to developing Social Impact Bonds

 

The thoughts included in this guide represent Social Finance’s experience to date in developing SIBs. We will learn more and refine this process on future projects. We hope to learn from others’ approaches. This is a new and changing market and we hope this guide provides a useful template for developing approaches to shift more resource into prevention work. While this report focuses on Children Services, we believe there is potential for SIBs to offer solutions in other local authority services areas where there is potential for significant social impact.

Social Finance is committed to providing a range of support for those interested in developing SIB proposals. This could range from full engagement through a detailed feasibility study of a particular intervention or issue area to help with specific parts of the SIB development process (see below for further details of this process). We are aiming to provide a set of tools to help minimise the costs of developing these products and we hope that this guide – which is intended to be freely available – is a useful start point.

Publication

Payment by Results in the Youth Sector

Publication date: 14 October 2012

Author: Social Finance
Payment by Results in the Youth Sector

 

This guide has been produced by Social Finance on behalf of the Catalyst consortium, a NCVYS coordinated partnership, and is intended to complement the Payment by Results and Social Investment briefing published by NCVYS last year. Catalyst is a consortium of four organisations working with the Department for Education to deliver three key objectives as their strategic partner for young people. This is part of the Department’s wider transition programme for the sector and involves strengthening the youth sector market; equipping the sector to work in partnership with Government; and coordinating a skills development strategy for the youth sector’s workforce.

Publication

Microfinance, Impact Investing and Pension Fund Investment Policy Survey

Publication date: 14 October 2012

Author: Social Finance and Finethic
Microfinance, Impact Investing and Pension Fund Investment Policy Survey

 

We are delighted to present the findings of a pension fund survey carried out by Finethic and Social Finance. The survey is the most comprehensive canvass (to date) of opinion leaders in the UK pension fund industry about their attitudes towards Impact Investment.

The Impact Investment market requires innovation, commitment and significant pools of capital to enable social businesses to grow and deliver at scale. It offers products that deliver financial returns alongside measurable social impact. Its success will be judged in part on the size of the capital flows it attracts from institutional investors (e.g. pension funds). Unlike some of their peers in the Netherlands, Scandinavia, Switzerland, and the USA, pension funds in the UK have been slow to consider Impact Investment in their portfolios. The survey was an attempt to understand why.

We wanted to assess the level of Impact Investment undertaken today by UK pension funds, the appetite for future Impact Investment, and the level of awareness of Impact Investment, as well as to raise awareness within the Industry of the Impact Investment “asset class” and some of the investment opportunities on the market.

In this report you will find the results of 47 organisations who took part in the survey. Together they hold £143bn AUM and serve 4 ½ million pension holders
.

Publication

Enabling Long Term Recovery from Addiction

Publication date: 14 October 2012

Author: Social Finance
Enabling Long Term Recovery from Addiction

 

This report presents our hypothesis on how a Social Impact Bond (SIB) could help improve outcomes for those suffering from drug and alcohol addiction. Social Finance worked with Dr Samantha Gross and Professor John Strang from the National Addiction Centre to understand how recovery from addiction could be measured as part of a social investment contract. This report sets out ways of measuring successful recovery from substance addiction. Each measure of success needs to reflect the end goal of sustained recovery over the long term.

A Social Impact Bond is a contract in which government commits to
pay investors if there is an improvement in social outcomes (such as
a reduction in offending rates). Investors receive returns if, and only
if, these social outcomes are achieved. Investors’ money is used to pay for a range of services to help people recover from their addiction. If outcomes are improved and more people recover, investors receive
payments from government.

For success to be paid for, it must first be defined and measured. This report offers thoughts on what those measures of success should be. It aims to provide the starting point for a discussion of potential outcome metrics to structure an investment proposition.

Publication

A Technical Guide to Financing New Employee Mutuals

Publication date: 14 May 2012

A Technical Guide to Financing New Employee Mutuals

 

Public service mutuals represent a significant and very exciting opportunity for improving public service delivery. Usually structured as social enterprises that adhere to the values of employee-ownership, mutuals have a unique potential to combine the social ethos of public services with an organisational structure that enables them to embrace social challenges in more flexible and entrepreneurial ways.

However, should mutuals fail to adjust quickly to the new commercial environment which they face once they have ‘spun-out’ of the public sector, they may find that they lose contracts to public or private sector competitors – competitors who are often able to fund new developments or absorb losses for the sake of building market share. Spinning out of the public sector with few assets, external funding is therefore vital for most mutuals that are seeking to consolidate their role and develop their services.

Written by Ben Jupp, Dan Gregory and Ben Williams, this paper highlights the nature of the opportunities and challenges mutuals will face in securing the investment they require, regardless of their size or the stage of spinning-out at which they are at
.

Publication

A New Tool for Scaling Impact: How Social Impact Bonds can Mobilize Private Capital to Advance Social Good

Publication date: 01 February 2012

Author: Social Finance US
A New Tool for Scaling Impact: How Social Impact Bonds can Mobilize Private Capital to Advance Social Good

 

In September 2010, our sister organization, Social Finance, Ltd., launched the world’s first Social Impact Bond in the United Kingdom. Targeted at reducing prison recidivism, the Peterborough pilot generated world-wide interest in the potential of this innovative financial instrument. We established Social Finance, Inc. in January 2011, to bring the Social Impact Bond to the United States. Since our founding, we have been collaborating with government, investors, nonprofit organizations, and thought leaders on how Social Impact Bonds might realign incentives for delivering social outcomes and augment public funding and philanthropy to support our collective efforts to improve the lives of individuals and communities in need.

At its core, the Social Impact Bond is about partnership. We are grateful to the Rockefeller Foundation and our other founding partners who share our commitment to mobilizing investment capital to drive social change. The momentum that Social Impact Bonds have brought to the larger impact investing industry has been inspiring; yet there is much work to be done. Successful collaboration with a broad range of constituents, thoughtful design of an innovative and complex instrument, and diligent execution of transactions will be critical to realizing the promise of Social Impact Bonds.

The purpose of this publication is to provide an overview for a broad audience of both the promise and challenges of developing and implementing Social Impact Bonds in the United States. Despite the many complexities, multi-stakeholder interactions, and varying dimensions of risks, Social Impact Bonds represent a potentially valuable new tool for scaling social impact
.

Publication

Cost-benefit analysis and Social Impact Bond feasibility analysis for the Birmingham Be Active scheme

Publication date: 13 December 2011

Author: Social Finance
Cost-benefit analysis and Social Impact Bond feasibility analysis for the Birmingham Be Active scheme

 

Be Active is a scheme provided free of charge to all Birmingham residents who live within the Birmingham City Council. The aim of the scheme is to tackle health inequality and associated deprivation levels, by offering access to free physical activity sessions for all 1.1 million citizens of the city. Participants can take part in free swimming, exercise classes or the gym at any Council-run leisure centre during off-peak hours, which vary according to each centre and some community based activities.

The current economic climate means that demonstrating that Be Active represents value for money is an imperative if it is to continue to be funded. The purpose of this research was to provide answers to the following questions:

  • Does Be Active represent value for money?
  • Would it be economically feasible to fund Be Active by means of a social impact bond (SIB)?

Publication

Understanding the financial needs of families with disabled children

Publication date: 12 December 2011

Author: Social Finance
Understanding the financial needs of families with disabled children

69% of families with disabled children are worried about their financial situation and 61% struggle to pay their monthly bills. Nearly three quarters believe that the high costs of caring for a disabled child are the cause of their financial situation. 82% of families with disabled children currently have less than £1,000 in savings; more than half have no savings at all.

Financial difficulties exacerbate other social problems such as unemployment, social exclusion and long-term illness. Families with disabled children represent a group with specific financial needs that differ from those of the UK population as a whole and which mainstream services are not currently meeting. Addressing this gap requires positive action from both Government and financial services providers.

 

Publication

A Technical Guide to commissioning Social Impact Bonds

Publication date: 25 November 2011

Author: Social Finance
A Technical Guide to commissioning Social Impact Bonds

 

Social Impact Bonds are a form of financing that aligns investor returns with social outcomes: investors only receive a return if the social outcome is achieved. Since Social Finance launched the first Social Impact Bond in September 2010 to reduce re-offending among short sentenced prisoners leaving Peterborough Prison, the concept has attracted considerable interest. There is, however, a long way to go before they are commonly used. Like any new approach, it will take a while for people to understand when and how to establish Social Impact Bonds. The purpose of this paper is to help commissioners consider how best to develop and procure Social Impact Bonds.

Publication

Social Impact Bonds: The One Service. One year on

Publication date: 24 November 2011

Author: Social Finance
Social Impact Bonds: The One Service. One year on

 

The launch of the first Social Impact Bond (SIB) in Peterborough in September 2010 generated an overwhelming public response. The six year Peterborough project has now come to the end of its first year. The most pressing question – have we reduced reoffending sufficiently to generate a return to our investors – will only be answered in Year 4. We are measured against a very clear metric. The number of reconviction events of our cohort compared to a similar group of short sentenced male prisoners across the UK drawn from the Police National Computer. Against this objective measure, investors will either gain a return or lose their investment. What can we report after one year? We have over 500 individuals on our watch in the community. While engagement in the One* Service is purely voluntary, the proportion we are working with pre and post release is encouragingly high. There is clear evidence of an unmet need. The enthusiasm for this project from criminal justice experts and practitioners harbours well for its success. Peterborough Prison has aligned some of its services for male prisoners with our programme and has moved to adopt some of our interventions for its female prisoners. The value of a programme which is funded for over six years is tangible both for our service delivery partners and other stakeholders. It enables them to plan and build around it. We are hopeful that not only will this project succeed but that it will encourage others to be bolder in their approach to reducing reoffending in their communities.

Publication

A new way to invest in better healthcare

Publication date: 17 September 2011

Author: Professor Paul Corrigan
A new way to invest in better healthcare

 

This report is about the potential applicability of Social Impact Bonds (SIBs) in the health field. The SIB is a financial mechanism where investor returns are aligned with social outcomes. The SIB is based on a contract with government in which the government commits to pay for an improvement in social outcomes for a defined population. Investors fund a range of preventative interventions with the goal of improving the contracted outcomes. If and as the outcomes improve, investors receive payments from government.

To widespread interest, the first SIB was launched in September 2010. Its aim is to reduce reoffending among short sentence male prisoners leaving Peterborough prison.

Social Finance believes that the reach of the Social Impact Bond
model is wider than Criminal Justice. We asked Professor Paul Corrigan, a leading health adviser, to assess the suitability of the SIB model for the NHS. This report presents his thoughts. We hope that his report provokes a thoughtful debate on how, or alternatively if, financial mechanisms such as Social Impact Bonds, might fund new interventions, improve people’s well-being and ultimately lead to a real change in the health system.

Publication

A new approach to banking: extending the use of jam jar accounts in the UK

Publication date: 25 April 2011

Author: Social Finance
A new approach to banking: extending the use of jam jar accounts in the UK
Social Finance’s research for the Financial Inclusion Taskforce at HM Treasury assesses the commercial viability of new banking products (Jam Jar accounts) that actively support consumers to manage their money, reducing the risk of debt and bill payment arrears while enabling access to lower cost products and services through automated bill payments and online shopping.

Publication

A technical guide to developing a social impact bond: vulnerable children and young people

Publication date: 04 March 2011

Author: Social Finance
A technical guide to developing a social impact bond: vulnerable children and young people

 

This guide aims to set out the steps that are required to assess the feasibility of a Social Impact Bond (SIB) idea. It starts with the identification of a social issue where a SIB might be applicable and examines each factor that must be considered if a SIB is to be effective. The guide is written to assist those developing SIBs to reach a stage where it would be possible to establish a contract between a public sector commissioner and investors. This guide is one in a series of technical guides. Each document focuses on how a SIB can be developed to address the root causes of a specific social issue.

Publication

Social Impact Bonds: unlocking new investment in rehabilitation

Publication date: 25 September 2010

Author: Social Finance
Social Impact Bonds: unlocking new investment in rehabilitation

 

An overview of the potential applications of Social Impact Bonds to reduce crime and offending.

Publication

Towards a new social economy

Publication date: 24 March 2010

Author: Social Finance
Towards a new social economy

 

This paper explores why a new social economy is needed and the role that Social Impact Bonds could play in stimulating its creation. It draws on Social Finance’s work developing Social Impact Bond pilots to explore practical considerations around their use and application.

Publication

Charity mergers: tackling the issues in practice

Publication date: 25 October 2009

Author: Social Finance
Charity mergers: tackling the issues in practice

 

Social Finance, working closely with KPMG, has produced a report on practical issues and concerns for charities considering merger. From research with charities that have themselves merged or considered merging, the report details the issues they faced and how they were resolved.

Publication

Social Impact Bonds: rethinking finance for social outcomes

Publication date: 25 August 2009

Author: Social Finance
Social Impact Bonds: rethinking finance for social outcomes

 

We believe that Social Impact Bonds have the potential to transform the way that a wide range of social outcomes are achieved. We have been working with a number of government departments to develop a pilot.

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