A brilliant day of stories with the Economist blogging furiously fascinating topics on adoption (a hideously complex system most of the world over, with no particularly clear results improvement by dint of the complexity) and more childcare from Manchester too.

Finally, a good article we lifted from the Crowdfunding aspect of our sister newsletter Exchange Invest discussing how fundraising can now incorporate crowdfunding too…

Baby Steps

The Economist (blog)

“THERE is a market failure in adoption” is how Jim Clifford puts it. Children in Britain who are not placed by their local authorities go on to a national adoption register.

In the view of Mr Clifford, who is father to nine adopted children and is a partner at Baker Tilly, an accountancy firm, too much market power belongs to the prospective parent and not enough to the child.

His solution involves a new financial instrument that is increasingly popular in Britain and abroad: the social-impact bond (SIB). SIBs are designed to transfer the risk of social programmes from the public sector to the private sector. Investors fund interventions in all sorts of areas, from prisoner rehabilitation to getting homeless people off the streets. If the programmes succeed, the state pays the investors and saves money as well.

On July 17th the latest addition to the SIB stable was announced. Developed by the Consortium of Voluntary Adoption Agencies and Baker Tilly, the adoption SIB is expected to raise £2m ($3m) from Bridges Ventures and Big Society Capital, two big pools of social-investment capital. The money is going into a fund called “It’s All About Me”, which is designed to invert the market so that the child seeks out parents, not the other way round.

Childcare and the Social Impact Bond

People-Centered Economic Development

Last year, Manchester City Council gave the green light to a scheme which will fund the transition of a small group of children from residential to foster care. It will be funded by a Social Impact Bond, which is a vehicle for private investment into public services.

Another such scheme is planned in Essex

The yield of the bond will be determined by the reduction in cost achieved in this transition, less the profit margin for the financier.

How Crowdfunding Is Changing the Way Local Causes Raise Money

Street Fight

The fundraising tools that local nonprofits have traditionally had at their disposal are typically events like galas, walk-a-thons, and other types of community volunteer events. These sorts of offline events will always be powerful for bonding donors to the cause, but they are resource intensive, often costly to produce, and generally don’t have much reach beyond the locality.

Crowdfunding is the new mediaspeak for the practice of online project fundraising made popular by sites like Kickstarter. It adds personality to the “donate” box.