It seems to be feast or famine in the SIB world – after last week’s paucity of new information, three fascinating stories this week including a Threadneedle Investments fund for the product which ought to really ramp up investor attention, great news!
Threadneedle To Launch UK Social Bond Fund
Threadneedle Investments is to launch the Threadneedle UK Social Bond fund, in partnership with Big Issue Invest, the social investment arm of The Big Issue.
Launching in January 2014, the fund will invest in fixed income securities of organisations involved in socially beneficial actives and economic development.
Threadneedle credit fund manager, Simon Bond, will manage the new fund which is being seeded with £10m from Big Society Capital, the world’s first social investment bank, and £5m from Threadneedle.
Open to both institutional and retail investors, the fund will have a minimum investment of £2,000 when accessed via UK platforms and have an AMC of 0.30 per cent with no performance fee. This AMC will be split between Threadneedle and Big Issue Invest.
The social outcome of the fund will be monitored and verified by a Social Advisory Committee, which will include Big Issue Invest chief executive Nigel Kershaw, Threadneedle head of governance and responsible investment Iain Richards and former manager of investment affairs at the Association of British Insurers John Hale.
Social Finance Warns Of Rehabilitation Reforms Bias
Toby Eccles, development director at Social Finance, has warned MPs that the government’s rehabilitation reforms have an “inherent incumbency bias”, and that the process is happening too quickly to allow charities to take part.
Eccles was speaking to the Justice Select Committee which is examining the government’s Transforming Rehabilitation programme.
The government plans to contract probation services out of the public sector as part of its Transforming Rehabilitation programme. The scheme will see contracts split across 20 regions for England and one for Wales with responsibility for supervising and rehabilitating 225,000 low and medium-risk offenders each year.
Some 700 organisations, including 399 voluntary sector organisations, are competing to take part in the scheme, which is due to start next April.
Eccles’ concerns are especially pertinent considering that Secretary of State for Justice Chris Grayling told the Justice Select Committee earlier this year that the rehabilitation reforms would be a major opportunity for the social investment sector. He held up the social impact bond scheme in Peterborough as a good model for private and voluntary sector partnership in prisoner rehabilitation.
But Eccles – one of the architects of social impact bonds – told the Committee that the timetable for the rehabilitation reforms do not allow for access to finance on time. “Social investment is still emerging,” he said. “And it’s taking longer than expected to work, though we are pushing it along.”
Social Impact Bonds: A Public-Private Partnership That Benefits All?
A reduction in recidivism rates among adolescent offenders has commonly been the aim of social programs across the country, but a new take on the process may save money–and even return a profit–while helping out the public good. A recent investment by Goldman Sachs, in partnership with the City of New York, Bloomberg Philanthropies, and MDRC, hopes to use the new tool, Social Impact Bonds, to fight this problem.
In 2012 the New York City Department of Corrections asked for private corporate investors, so Goldman Sachs decided to invest $9.6 million in the Adolescent Behavioral Learning Experience (ABLE) program, which seeks to reduce the number of youth offenders going back to prison.
The ABLE program is a type of Social Impact Bond, which is a new private-public investment in social reform. Through the use of private financing of a non-profit program that provides services the government would otherwise fund, money can be saved based on the level of success achieved.
With the national debt surpassing $17 trillion and social programs reaching their limit, private involvement in public preventive programs may be the wave of the future. It’s too early to tell just yet, but in just a few short years several projects will have their results thoroughly tested to see how they stack up against their contracts’ outlined objectives.