PLY: The City of London has a proud noble mercantile tradition (although of course there have been periodic episodes where the lunatics take over the asylum and crazed bubbles result). In his speech at Mansion House Sir Ronald Cohen outlined how SIBs can help government and society.
Elsewhere on the web, the Snohomish Times discusses SIBs too.
Finally, I might add that it has been terrific to hear so many kind words about SIB News after one week in live email form! Thank you for your kind words. We’re not just publishing of course but also looking at ways we can add our professional expertise in all manner of financial markets to make the DIB/SIB community and marketplace bigger and better. Likewise, all “parish” news will always be welcome as we build up this daily brief.
Moreover, this newsletter is intended to be as open and inclusive as possible, so all are welcome, either fill in the form or just send me an email and we can add your colleagues to this list (which remains private and not shared with any third party). All are welcome to share news of Social Impact Bonds!
Exploring Social Impact Bonds
As budget writers continue to face growing demands for increased spending with limited resources, alternative ways of delivering services are being explored.
One potential option worthy of consideration are “Social Impact Bonds,” or pay-for-performance contracts with non-profits/private businesses to help deliver certain social programs.
This relatively new method of service delivery is now getting attention in Washington with the introduction of HB 2337: Concerning public-private financing for prevention-focused social services and health care services.
The sector is on the brink of a “new social entrepreneurial revolution”, according to Sir Ronald Cohen, chair of the G8 Social Impact Investment Taskforce.
Cohen, who was the first chair of Big Society Capital, said he was privileged to have been involved in the entrepreneurial revolution that saw start-up companies including Apple and Microsoft rise to become among the largest in the world.
Their success was achieved through technological breakthrough, but also a “novel form of financing – the venture capital industry”, he said.
“When we look around us today, some of us can feel, as I do, that we are on the brink of a new entrepreneurial revolution, a social revolution,” Cohen said.
“I see a rising wave of social entrepreneurship to follow the wave of business entrepreneurs.”
He said the need for a novel financing response to social entrepreneurs had led to the development of the first social impact bond, signed in March 2010 with the Ministry of Justice to reduce repeat offending among prisoners at HMP Peterborough.
“Welfare states around the world are throwing up their hands, feeling they have neither the resources nor the skills to tackle social issues effectively,” he said.
“Social issues seem to be extending outwards, handed unresolved from generation to generation.”
Cohen said there was £100bn on the balance sheets of UK foundations and trusts, but the common characteristic of charitable social service providers was that they were small and had no money.
THE CITY has always been a crucible for debate, innovation and philanthropy. All three are crucial as we strive to rise to the complex challenges posed by the “new normal” – a fast-developing globalised world where resources are increasingly scarce and in demand.
I am particularly keen to draw upon the City’s energy, expertise and experience to ensure that charitable giving continues to evolve and adapt to the needs of society. This has been one of the pillars of my mayoralty, and has led to my hosting two lectures on Revolutionising Philanthropy, as part of a thought-leadership programme entitled The City’s Giving within the Lord Mayor’s Appeal.
Philanthropy has a proud tradition in the City going back centuries, to the famous legacy of Dick Whittington – whose bequests supported developments ranging from libraries, drinking fountains and public toilets. Today, the City of London Corporation’s charity City Bridge Trust makes grants of more than £20m annually to charitable projects supporting communities across London, and has established a £20m Social Impact Fund.
We must tap into the nexus between the philanthropic impulse to meet need and the business impulse to identify impacts, outcomes and deliver a return. It is crucial to consider how we can give more and how to make what we give go further. Giving can also be an investment, bringing to bear the expertise of the donor and the charity or social enterprise to create a return on that investment and, crucially a social impact – a social outcome for investor, charity and beneficiary alike. This has the potential to bring financial rewards, as money works hard but it also transforms lives, helps communities and strengthens society.