Social Finance
Social Impact Bonds

“The hottest idea in social-service provision” – The New York Times

Social Impact Bonds

A Social Impact Bond is a financial mechanism in which investors pay for a set of interventions to improve a social outcome that is of social and/or financial interest to a government commissioner.

If the social outcome improves, the government commissioner repays the investors for their initial investment plus a return for the financial risks they took. If the social outcomes are not achieved, the investors stand to lose their investment.

Social Impact Bonds provide investment to address social problems and look to fund preventative interventions. As such, they present an opportunity to provide support to reduce the strain on acute services.

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Introduction to Social Impact Bonds

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Global Social Impact Bonds

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Social Impact Bonds: The Early Years

How can we help you?

UK Government Outcomes Funds

In 2016, the UK Government launched a series of funds for the development of Social Impact Bonds. The £80m Life Chances Fund is currently looking for Expressions of Interest for Social Impact Bonds for vulnerable youth and early years provision. The Department for Education has also launched an Care Leavers Social Impact Bond stream within its Innovation Programme.  If you would like to apply to these Funds,  we would be happy to discuss and support the development of your Social Impact Bond.

Social Finance has extensive experience and market-leading expertise in developing social Impact bonds. We have developed 11 Social Impact bonds  to date across England in areas ranging from children at risk of care entry, to older people experiencing loneliness and isolation, to employment support for people with severe and enduring mental health issues.

Social Finance’s development methodology includes:

– population analysis and as-is service analysis, building a detailed picture of the issue, the people who experience the issue, what characteristics they have, how they use services and the current costs to the system

– service identification and design, built on an understanding of what’s needed and what works

– cost and savings analysis, formed based on bespoke analysis of the existing costs to the system and the potential savings that could be generated by an effective intervention

– financial and operational modelling, building flexible and user-friendly models to show and test how service users could move through newly designed systems and services, and the costs and potential savings associated

– investment definition and capital raising, building on financial modelling to identify the investment requirement of specific projects and engage with investors to secure investment required

– performance management once launched, including management information system design, data collection and analysis, service improvement support and reporting to investors and commissioners.

Procurement and contracting

  • Develop SIB contract.
  • Government arrangements with SIB counterparty.
  • Marketing to investors and securing commitments for investment required to pay for services.
  • Service providers commissioned to deliver services to target group

Programme design

  • Detailed operating plan and due diligence on potential service providers for SIB-funded service.
  • Finalisation of outcomes measurement and payment framework.

Define outcome metrics and interventions

  • Research on desired outcomes for target population.
  • Assessment of measurement attribution options.
  • Needs assessment of target population.
  • Research on interventions to meet these needs.

Defining the social issue

  • Data analysis to understand population trends and cost pressures.
  • Stakeholder engagement to understand strategic objectives.

Assessing the service area

Social Impact Bonds provide investment to address social problems and look to fund preventative interventions. As such, they present an opportunity to provide support to reduce the strain on acute services.

It should be noted that social investment is one form of finance available to pay for programmes that generate positive social outcomes. In many cases, a SIB may not be relevant.

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Social Finance Ltd
131-151 Great Titchfield Street
London. W1W 5BB

T +44 (0) 207 667 6370

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Social Finance is authorised and regulated by the Financial Conduct Authority. FCA No: 497568