Social impact bonds: more than just a money saving measure
"You will hear hardly any mention of Social Impact Bonds in the media today. I intend to talk about them frequently in the weeks and months ahead." This was the message minister for civil society Rob Wilson delivered at an event in London last week.
Jenny North from Impetus-PEF explains why she welcomes the enthusiasm for this financial mechanism that has both its supporters and critics.
A common misconception about Social Impact Bonds (SIBs) is that money is the driving factor, with the main benefit being that a new type of funding model attracts a new group, investors, close to the delivery of public services.
As a leading practitioner of social investment as well as venture philanthropy, Impetus-PEF has a different view. For us, the most interesting and exciting aspect (and the reason we should have more of them) is the tight specification of a target population which needs support, and the incentivisation of outcomes which are harder to reach, more significant, and more enduring than what has been achieved before. Achieving these requires a step change for delivery organisations, including charities.
So it was great to see Rob Wilson MP, the minister for civil society, recognise this in his speech at Lloyds’ of London last week: "Most importantly, [SIBs] focus on delivering meaningful outcomes for real people. For example, supporting a child out of residential care into an adoptive home, a young person into their first job, or a rough sleeper into supported accommodation."
Impetus-PEF partners with charities across the education and youth employment sectors to support their performance and scale. As part of this we have invested in or managed three SIBs, two with youth charity Teens and Toddlers. And we know they are a powerful tool for accelerating performance within charities, and for freeing up more resource to focus on frontline delivery.
Our partnership with Teens and Toddlers has been one of the longest-standing of the Impetus-PEF charity portfolio, with over £1.5m worth of support committed, comprising of philanthropic funding, management advice and pro bono services since 2009. During that time, we have helped Teens and Toddlers become a viable and attractive option for delivering successful SIBs. As a result, it has gone on to be one of only a handful of charities to win and successfully deliver two SIBs set up by the Department for Work and Pensions.
These funds have gone a long way to contributing to the rapid expansion of projects in North West areas with higher than average of rates of young people out of education, employment or training. We hope that many more young people will now be able to benefit from programmes like this.
Through the process of its SIB, we’ve seen Teens and Toddlers place far greater emphasis on performance management, identifying which elements of its programme led to young people dropping out or not progressing as the team would like them to be, then redesigning the programme in response. This ability to make data-driven decisions significantly improves an organisation’s ability to make meaningful impact for individuals.
We know that SIBs and other outcomes-based commissioning are neither a panacea nor a guarantee – a new form of contract does not magically produce the dogged, determined, adaptive delivery that we know is a prerequisite for creating transformational change in a young person’s life. But, when done well, outcomes-based programmes instil an understanding that we must aim high for young people, and both incentivise and reward those innovative organisations which can get them where they need to be: in education and employment.