From the furthest outreaches of Western Australia to ongoing rumbles about UK tax reliefs, SIBs are coming to the end of the year on a roll…
Social Impact Bonds: A Good New Idea
What’s new in public finance you ask? Social impact bonds, that’s what. This is the leading edge of the social finance revolution. It just might make a big difference to Indigenous and remote Australia, and, curiously, arts and cultural funding is mixed up in this.
I recently had the honour of speaking at a meeting in Broome that was hosted by two local non-profits – the Kimberley Institute and Goolarri Media Enterprises – on the subject of SIBs, which are a new and still experimental public-private model to finance the delivery of social services.
The motivation for this interest in SIBs is crisis and opportunity. Paul Lane, Director of the Kimberley Institute, said during the meeting that the Western Australian government is facing spending something like 20 percent of its health budget in the Kimberley, where just two percent of its people (including the Yawuru) live. Similar statistics run across public housing and prisons. In the face of sustained effort and vast spending on inputs, the far North-West is home to chronically failed social service outcomes.
Tax Boost For Social Investment Will Unlock £500m
Investors will handed tax relief from next April if they invest in social enterprises or social impact bonds. The measure was announced by George Osborne in his Autumn Statement on Thursday and it is hoped the move will encourage people to invest £500m in charities and social enterprises in the next five years.
Nick O’Donohoe, chief executive of Big Society Capital – which manages cash in dormant savings accounts on behalf of the Government – said: “The social investment tax relief could be transformative for the UK.
“Until now, social investment has been dominated by charitable foundations, the Government and Big Society Capital, but these plans could open it up to thousands of individual investors.”
The relief – the first of its kind in Europe – will be available when you invest in equities and bonds linked to charities, community-interest companies and community- benefit societies.
Marianne Fallon, head of corporate affairs at the accountants KPMG, said: “This is a welcome shot in the arm for social enterprises. Unlike businesses and charities, they have not had their own tax-relief scheme.
“By attracting more investment, social enterprises will be able to extend the reach and impact of their work.”
More details of other options to encourage individual investors to back social enterprises will be published next month by the Government in the form of a “road map” for social investment.
It will consider options such as seeking state-aid clearance for a larger tax-relief scheme, supporting indirect investment and making changes to the regulations for community-interest companies to make them more attractive to investors.
Israel on Thursday made a rare official appearance at a G8 forum, a group representing the world’s eight largest economies, as the leaders of an Israeli social finance group presented an innovative blueprint for tackling type-2 diabetes to the G8 Taskforce on Social Impact Investment.
The group, Social Finance Israel, developed an outline for preventing the disease using Social Impact Bonds, investment instruments that seek to produce socially favorable outcomes while providing investors a return. In doing so, they hope to attract private funds to a social sphere normally dominated by philanthropic dollars.