Impact by Ronald Cohen

Author:Ronald Cohen [Cohen, Sir Ronald]
Language: eng
Format: epub
ISBN: 9781473583573
Publisher: Ebury Publishing

SIBs Take Off

The success of the Peterborough SIB was a decisive achievement that caused discussion about the future direction of philanthropy. The market for SIBs and DIBs has attracted over $400 million in investment,7 and more than $1 billion of commitments to pay for successful social outcomes involving children, youth, employment, social welfare, criminal justice, education and healthcare. SIBs are showing that they can deliver a better execution and expansion of social services. They are also proving something which many have long believed: that prevention is a lot cheaper and more effective than cure. Preventative interventions through SIBs are proving successful in addressing many social challenges, from recidivism and homelessness to teenage unemployment and diabetes.

SIBs and DIBs are spreading across the world. The UK is still a major center for SIB innovation, with its 67 SIBs representing nearly 40 per cent of the global total.8 The United States is also a major hub of activity, with 25 active SIBs. The Netherlands has eleven, followed by Australia with ten; France has six; Canada five; Japan, Israel, India, Germany and Belgium have three each; Finland, New Zealand and South Korea have two each; and Austria, Russia, Colombia, Peru, Sweden, Switzerland and Argentina have one each.9

As the SIB market expands, philanthropists, governments and investors are becoming more aware of its potential. SIB funds are appearing on the scene and starting to show what they can achieve. In the UK, Bridges Fund Management raised the first two social impact bond funds in the world, in 2013 and 2019. With a combined value of £60 million ($79.8 million),10 these funds, which include institutional investors and charitable foundations, have put together a diverse portfolio of 40 SIBs that support more than 90 social service providers in delivering better outcomes in children’s services, education and homelessness.11 The £25 million ($33.25 million) invested so far is due to deliver over £150 million worth of outcomes for government,12 with a projected net annual return of about 5 per cent to investors. In other words, impact bonds pay benefits to government, returns to investors and create better outcomes for society.

Local government is now often driving the growth of SIBs. This is particularly true in the UK, where government officials view SIBs as ‘social outcome contracts’. Unlike traditional contracts, where you pay along the way for services, in a social outcome contract you pay at the end, when results have been achieved. Local government officials are realizing that this represents a better way of delivering social services. This is because the SIB brings discipline in delivering results, generates data on how best to deliver those results, and provides transparency about the effectiveness of a program – all of which is highly valuable to governments, as well as philanthropists and social service providers.

Success stories abound. In the UK, the Bridges Ways to Wellness SIB, for example, was commissioned by the National Health Service in 2014. The aim was to help adults with multiple long-term health conditions, such as diabetes, and heart problems, change their lifestyle through a ‘social prescribing’ service and thus improve their health.

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