Social Finance is a

not for profit A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...

consultancy A consultant (from la, consultare "to deliberate") is a professional (also known as ''expert'', ''specialist'', see variations of meaning below) who provides advice and other purposeful activities in an area of specialization. Consulting servic ...

organisation that partners with governments, service providers, the voluntary sector and the financial community to find better ways of tackling social problems in the UK and globally. Founded in 2007, they have helped pioneer a series of programmes to improve outcomes for individuals with complex needs. Their innovations include the

Social Impact Bonds A social impact bond, also known as pay-for-success financing, pay-for-success bond, social benefit bond or simply a social bond, is one form of outcomes-based contracting. Although there is no single agreed definition of social impact bonds, mo ...

(SIB) model which has mobilised more than £500 million globally in areas such as offender rehabilitation, children and family,

homelessness Homelessness or houselessness – also known as a state of being unhoused or unsheltered – is the condition of lacking stable, safe, and adequate housing. People can be categorized as homeless if they are: * living on the streets, also kn ...

and housing, young people at risk of becoming

NEET NEET, an acronym for "Not in Education, Employment, or Training", refers to a person who is unemployed and not receiving an education or vocational training. The classification originated in the United Kingdom in the late 1990s, and its use has ...

mental health Mental health encompasses emotional, psychological, and social well-being, influencing cognition, perception, and behavior. It likewise determines how an individual handles stress, interpersonal relationships, and decision-making. Mental health ...

and employment, loneliness and social isolation, and

domestic violence Domestic violence (also known as domestic abuse or family violence) is violence or other abuse that occurs in a domestic setting, such as in a marriage or cohabitation. ''Domestic violence'' is often used as a synonym for ''intimate partner ...

History

Social Finance's initial team supported the work of the Commission on Unclaimed Assets, which recommended the establishment of a Social Investment Bank in March 2007 and in turn developed the blueprint for what is now named

Big Society Capital Big Society Capital Limited (BSC) is an independent social investment institution in the United Kingdom, which provides finance to organizations that support front-line social sector entities to help them grow. Synopsis Social investment is about ...

. Initially financed by a group of philanthropists, later financial support included charitable trusts and foundations including:

Esmée Fairbairn Foundation The Esmée Fairbairn Foundation is a registered charity founded in England in 1961. It is one of the larger independent grant-making foundations based in the UK, funding organisations which aim to improve the quality of life for people and communit ...

Rockefeller Foundation The Rockefeller Foundation is an American private foundation and philanthropic medical research and arts funding organization based at 420 Fifth Avenue, New York City. The second-oldest major philanthropic institution in America, after the Carneg ...

and the

Big Lottery Fund The National Lottery Community Fund, legally named the Big Lottery Fund, is a non-departmental public body responsible for distributing funds raised by the National Lottery for "good causes". Since 2004 it has awarded over £9 billion to ...

. Social Finance helped develop the first Social Impact Bond project in the world in the UK in 2010, a six-year social impact bond pilot scheme run by Social Finance to see around 3,000 short-term prisoners from

Peterborough prison HM Prison Peterborough is a Category B private prison for men, and a closed prison for women and female young offenders, located in Peterborough, Cambridgeshire, England. The prison is operated by Sodexo Justice Services, and is the only dual p ...

, serving less than 12 months, receiving intensive interventions both in prison and in the community. Funding from investors outside government was initially used to pay for the services, which were delivered by Third Sector providers with a proven track record of working with offenders. If re-offending is not reduced by at least 7.5% through all tranches, the investors will receive no recompense. In August 2014, the first set of results were released, showing that the Social Impact Bond reduced reoffending by 8.4 per cent. This was not high enough to trigger any repayments to investors at this point (10% reduction would have been necessary for payments to investors by August 2014) but was on track for payments to investors in the next tranche – as an 8.4% reduction is in line with the overall reduction rate needed. In January 2011, Social Finance US was launched to bring social impact bonds to the US market. Today the "Social Finance Global Network" includes Social Finance UK, Social Finance US, Social Finance Israel, Social Finance India, and Social Finance Netherlands.

Social impact bonds

There are a range of interpretations of what the term ‘social impact bond’ means. Broadly speaking, social impact bonds are a type of

bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemica ...

, but not the most common type. While they operate over a fixed period of time, they do not offer a fixed rate of return. Repayment to investors is contingent upon specified social outcomes being achieved. Therefore, in terms of investment risk, social impact bonds are more similar to that of a

structured product A structured product, also known as a market-linked investment, is a pre-packaged structured finance investment strategy based on a single Security (finance), security, a basket of securities, Option (finance), options, Index (economics), indices, ...

or an

equity investment A stock trader or equity trader or share trader, also called a stock investor, is a person or company involved in trading equity securities and attempting to profit from the purchase and sale of those securities. Stock traders may be an invest ...

.http://www.socialfinance.org.uk/downloads/SIB_report_web.pdf Social Finance UK describes social impact bonds as "a public-private partnership which funds effective social services through a performance-based contract."Social Finance (2016) Social Impact Bonds: The early years

References

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External links

Social Finance
Social enterprises 2007 establishments in the United Kingdom Organizations established in 2007 Organisations based in London Social finance