The Chancellor has announced an additional £80m over the next four years to be invested in social impact bonds. In his speech to the Commons, George Osborne said the government would provide “£20m a year of new support for social impact bonds”.
The money will be used to help tackle issues including homelessness, mental health and youth unemployment, the Cabinet Office says.
Social impact bonds require investors pay up front for projects that help tackle social problems, and then receive payments based on the results achieved.
At Economic Change CIC, we can help you prepare for social impact bond projects, and help you to access funding through Big Potential https://www.bigpotential.org.uk/ to help assess and/or develop your readiness and capacity.
Social Impact Bonds are a complicated and costly tender process as you need to tender twice – firstly to social investors, and secondly to the commissioners. It is therefore extremely worthwhile to do some preparation in advance, to make sure you have effectively assessed your suitability to SIB contracts and can be ready to apply when the opportunities arise – this requires internal capacity and operational readiness in order to succeed. We would strongly suggest applying for some grant funding to enable you to undertake some of the steps below..
In order to ensure you are ready, it is important to spend time on some of the following areas:
- Review the current SIB projects, outcomes and organisations, and assess if you are likely to meet the required expectations as either a prime contractor or sub-contractor.
- Review your Theory of Change model and start to collect and analyse your monitoring data to make sure it is aligned and can demonstrate hard evidence against achieving likely outcomes expected in SIB tenders.
- SIBs have previously looked for innovative projects that fill a gap so it’s important to understand and evidence the market need and demand for your service and show how your services are effectively meeting a gap in the market and providing an innovative solution that is achieving results.
- Build you internal contract readiness capacity, through implementing a robust Client Management System (CRM) that meets data compliance requirements for storing client data and also provides a robust monitoring system of outputs and outcomes, so your stats are readily available. We specialise in implementing Salesforce CRM for organisations who hold commissioned contracts. Contact us to find out more
- Start to build partnerships with credible organisations who might complement your provision to build a holistic service that will enable clients to achieve A to Z of their journey to enable you to track outcomes effectively. You might be the prime contractor or the sub-contractor within this arrangement.
- SIBs are often focussed on expanding and scaling up a services, so is the proposition and delivery structure scalable to support a larger number of people across a specific area.
- Understand the full cost recovery of your service and the minimum cost per beneficiary that moves through your service at different stages. SIB projects will provide a price per outcome achieved, but previously they have scored bids based on the discount provided per outcome. It is therefore important to have a fully fledged detailed financial model worked up, to make sure your service is viable and competitive under this funding. It is also important to bear in mind that a social investor may be looking at a typical 9% margin on top of this cost price, alongside the costs of setting up special purpose vehicle for managing the project, which also entails annual costs.
- Can you leverage any match funding, local contributions, sponsorship – again has been area scored on within previous SIB bids.
- When you are ready to pursue social impact bonds, we would suggest liaising with social investors, providing them with a briefing note to your project and begin to understand their approach and model. If these relationships are already underway when new SIB rounds are announced, then this will save some time.
If you want to talk to us about what support we can offer in regards to social impact measurement, Salesforce CRM and social investment and the Big Potential grant available, then please contact us now.
To see a recent example of a SIB project we worked on click here. The project was successful in securing financial interest from both Big Issue Invest and Bridge Ventures.
‘Economic change was a strong addition to the Hastings into Work Partnership SIB Consortium bid and with her experience and expertise she drove the development of the YEF SIB project effectively. The team was a pleasure to work with and Economic Change is a positive addition to the Big Potential provider list.’ Mila Lukic, Investment Manager, Bridges Ventures.