Social Finance is a
not for profit
A not-for-profit or non-for-profit organization (NFPO) is a legal entity that does not distribute surplus funds to its members and is formed to fulfill specific objectives.
While not-for-profit organizations and non-profit organizations (NP ...
consultancy
A consultant (from "to deliberate") is a professional (also known as ''expert'', ''specialist'', see variations of meaning below) who provides advice or services in an area of specialization (generally to medium or large-size corporations). Con ...
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 (SIB) model which has mobilised more than £500 million globally in areas such as
offender rehabilitation, children and family,
homelessness
Homelessness, also known as houselessness or being unhoused or unsheltered, is the condition of lacking stable, safe, and functional housing. It includes living on the streets, moving between temporary accommodation with family or friends, liv ...
and housing, young people at risk of becoming
NEET
A NEET, an acronym for "Not in Education, Employment, or Training", is a person who is Unemployment, unemployed and not receiving an education or Vocational education, vocational training. The classification originated in the United Kingdom in ...
,
mental health
Mental health is often mistakenly equated with the absence of mental illness. However, mental health refers to a person's overall emotional, psychological, and social well-being. It influences how individuals think, feel, and behave, and how t ...
and employment, loneliness and social isolation, and
domestic violence
Domestic violence is violence that occurs in a domestic setting, such as in a marriage
Marriage, also called matrimony or wedlock, is a culturally and often legally recognised union between people called spouses. It establishes r ...
.
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.
Initially financed by a group of philanthropists, later financial support included charitable trusts and foundations including:
Esmée Fairbairn Foundation,
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 foundation was created by Standard Oil magnate John D. Rockefeller (" ...
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".
It is the largest community funder in the UK and ...
.
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, 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, 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, a basket of securities, options, indices, commodities, debt issuance or foreign currencies, an ...
or an investment in a company's
shares
In financial markets, a share (sometimes referred to as stock or equity) is a unit of equity ownership in the capital stock of a corporation. It can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Sha ...
.
[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
{{Reflist
External links
Social Finance
Social enterprises
2007 establishments in the United Kingdom
Organizations established in 2007
Organisations based in London
Social finance