The UK is well placed to be a key home for social markets although I suspect many kernels to be adopted throughout the world too.
At the same time with health care management and costs spiralling clearly massive reform is required and SIB funding will be pivotal.
More interesting discussions including the emerging markets world taking to DIBs/SiBs too…
The Information Daily
Speaking exclusively to the Information Daily, Julie McEver from Local Partnerships discusses social investment, financial return and the impact it can have on the future of healthcare.
“Social investment to me”, explains Julie McEver at the Fit for the Future conference in London, “is where investors are looking not only for a financial return but a social return.” The interesting question, she continues, which has sparked ongoing debate is “should you have a lower financial return if you’ve got social impact?”
Some say that the more social impact their investment has, the higher the financial gain should be, whereas some are happy with a higher social return and a lower financial impact.
“For me it’s not just about giving away money”, McEver says, “It’s about social investment”.
As the world cheers for halving its population living under $1.25 per day, it has already put “eradicating extreme poverty for good by 2030” at the top of its post-2015 agenda. However, accomplishing another global victory in the next 15 years doesn’t seem easy. While foreign aid played a role in alleviating global suffering in past decades, criticism has mounted over aid effectiveness, poor governance and transparency in aid recipient countries, and rising inequalities in the developing world.
Pay for quality social services – an international application of social impact bonds (SIBs)
In 2010, Social Finance, a UK-based non-profit organization, introduced the concept of SIBs into the social investment market. The SIBs model strives to attract more investors from private sector to invest in social services that are usually too expensive for the government to start, such as programs to reduce recidivism rates. The basic principle behind SIBs is “pay for success”. In other words, the investors get paid by the program funders (usually the home governments), if the programs implemented by the contracted civic organizations are successful. Program performance is measured based on metrics agreed by all parties. Therefore, instead of profiting from service outputs, the investors are expected to get returns based on outcomes.
In a speech at the Social Impact Investment Forum earlier this month, Prime Minister David Cameron outlined his intentions to transform London into the “home of social finance”.
Cameron unveiled a collection of initiatives aimed at “transforming our society by using the power of finance to tackle the most difficult social problems”.
He went on to highlight that social investment could help to eradicate issues such as drug abuse, youth unemployment, homelessness and even global poverty.