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SOCIAL IMPACT BONDS
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SOCIAL IMPACT BONDS
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SOCIAL IMPACT BONDS
HANS
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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.
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SIB visually - Kurt Peleman, EVPA (graph: Social Finance)
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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.
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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
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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
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SIBs: lessons learned? Jan Vander Elst, KBF
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SIBs in Flanders? Evelien De Ras, Dept WSE
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SIBs in Flanders? Hans Rymenams, Dept WSE
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Let’s talk about SIB !