SOCIAL IMPACT BONDS

SOCIAL IMPACT BONDS

SOCIAL IMPACT BONDS

HANS

SIBs: What is it? - Kurt Peleman, EVPA

A social impact bond is a financial instrument which aligns at least three distinct parties around the delivery of social outcomes:

• government

• service provider / non-profit and

• Investor(s)

The investor(s) supplies capital upfront to cover the costs of the intervention.

Investor returns are contingent on the successful delivery of outcomes.

SIB visually - Kurt Peleman, EVPA (graph: Social Finance)

In a nutshell- Kurt Peleman, EVPA

• The Social Impact Bond is a means of investing in intensive prevention services where improved social outcomes are likely but not certain.

• Social Impact Bonds are contracts with public sector commissioners under which government commits to pay for improved social outcomes.

• On the back of this contract, investment is raised from non-governmental investors.

• This investment is used to pay upfront for a range of interventions to improve social outcomes.

• Investors are repaid only if successful outcomes are achieved. Investors stand to lose some or all of their capital if positive outcomes are not achieved.

• The investor takes the risk that the interventions do not deliver the desired outcomes. The greater the improvement, the greater the financial return to investors.

SIBs: Advantages - Kurt Peleman, EVPA

• For the Government

• To fund outcomes, and not activities /services

• To increase transparency

• Cost-reduction & attracting new resources in the sector

• To allow innovation without taking the risk

• For the non-profit

• New funds with focus on outcomes

• Innovation & Scaling-up

• For the investor:

• Match financial returns with social outcomes

• Catalyse innovation

• Partnership

SIBs: When? - Kurt Peleman, EVPA

• Essential conditions:

• Ability to define & measure social impact

• Measurable & real financial benefits or cost savings for the government

• Pitfalls:

• Focus on few, selected non-profits

• Money flowing in issue where the essential conditions can be applied

• Transaction costs

• Often still role for ‘philanthropy’ to mitigate costs & risk

SIBs: lessons learned? Jan Vander Elst, KBF

SIBs in Flanders? Evelien De Ras, Dept WSE

SIBs in Flanders? Hans Rymenams, Dept WSE

Let’s talk about SIB !