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NEW MODELS OF DELIVERING PUBLIC SERVICES: SOCIAL IMPACT BOND (SIB) MASTER-CLASS Social Finance is authorised and regulated by the Financial Conduct Authority.

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Presentation on theme: "NEW MODELS OF DELIVERING PUBLIC SERVICES: SOCIAL IMPACT BOND (SIB) MASTER-CLASS Social Finance is authorised and regulated by the Financial Conduct Authority."— Presentation transcript:

1 NEW MODELS OF DELIVERING PUBLIC SERVICES: SOCIAL IMPACT BOND (SIB) MASTER-CLASS Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: TH NOVEMBER 2013 Yvonne Campbell, Essex SIB Director

2 ©Social Finance 2013 ABOUT SOCIAL FINANCE 2 SOCIAL ORGANISATIONS Social Issues LONG TERM SOCIAL GAIN SOCIAL INVESTOR MARKET GROWTH VOLUNTARY SECTOR DEVELOPMENT INVESTORS GOVERNMENT ONE AREA OF OUR WORK HAS BEEN TO DEVELOP OUTCOME-FOCUSED FINANCE – SOCIAL IMPACT BONDS OUR MISSION IS TO IDENTIFY SUSTAINABLE AND SCALABLE FUNDING MODELS TO TACKLE ENTRENCHED SOCIAL PROBLEMS

3 INTRODUCTION TO SOCIAL IMPACT BONDS (SIB’S) Social Finance is authorised and regulated by the Financial Conduct Authority FCA No:

4 ©Social Finance 2012 INTRODUCTION TO SOCIAL IMPACT BONDS 4 The Social Impact Bond is a means of investing in intensive prevention services where improved social outcomes are likely but not certain. Social Impact Bonds are contracts with public sector commissioners under which government commits to pay for improved social outcomes. On the back of this contract, investment is raised from non-governmental investors. This investment is used to pay upfront for a range of interventions to improve social outcomes. Investors are repaid only if successful outcomes are achieved. Investors stand to lose some or all of their capital if positive outcomes are not achieved. The investor takes the risk that the interventions do not deliver the desired outcomes. The greater the improvement, the greater the financial return to investors. SOCIAL IMPACT BONDS BRING NEW INVESTMENT TO BEAR ON SOCIAL ISSUES, AND ALIGN ALL PARTIES AROUND A COMMON GOAL.

5 ©Social Finance 2013 RATIONALE FOR A SIB 5 A SIB is…A SIB is not… A way of tackling social problems that require a range of interventions Up front funding for service delivery Only going to achieve returns for investors if social impact is achieved An attempt to make more non- governmental money available to the social sector Payments for failure – if no social impact is achieved investors lose their money Debt or grant funding for service providers A new form of PFI – investor returns are contingent on achieving socially beneficial outcomes Social Impact Bonds provide up front funding to pay for additional services to help improve outcomes for service users, with investors risking their money based on the outcomes that will be achieved

6 ©Social Finance SIBs work when the cost of achieving the target outcome are substantially less than the resulting public sector saving. Status QuoSIB Cost to Government Cost of Interventions Impact of SIB Investor return Savings retained by Govt. Cost Saving Public Sector Saving £ THE VALUE FOR MONEY CASE FOR A SOCIAL IMPACT BOND Net Cost to Government

7 ESSEX SOCIAL IMPACT BOND FOR CHILDREN ON THE EDGE OF CARE Social Finance is authorised and regulated by the Financial Conduct Authority FCA No:

8 ©Social Finance 2013 ESSEX SOCIAL IMPACT BOND – CORE INTERVENTION 8 Multi-Systemic Therapy (MST) Objective Reduce anti-social behaviour and prevent out-of-home placement – care or custody How it works Combines parenting support with practical assistance and a therapeutic approach to rebuilding relationships between the young person, the family and the networks around them. Delivered by a team of family therapists, each of whom work with around 10 families per year in the home or community, providing 24/7 support. Eligibility Criteria Adolescents aged 11-17, displaying anti-social or offending behaviour or other conduct disorders At risk of an out-of-home placement Evidence Base Good evidence from the US for MST on crucial factors relevant to the edge of care population, e.g. improved parental supervision and management, reduction in child conduct problems. 10 years running in the UK, with initial indications of positive impact on care outcomes. 1 Multisystemic Therapy (MST) forms the core intervention in the SIB. It is one of the most promising interventions for the adolescent edge of care and custody population. Source:

9 ©Social Finance 2013 ESSEX SIB STRUCTURE Action for Children Evolution Fund Services Service Users (380 young people) Outcomes Contract SIB Co £££ Investors Local Authorities Ongoing operating funds Social Finance Service Contracts Board of Directors SIB Co and LAs enter Outcomes Contract Investors fund SIB Co Funds released to service providers according to Service Provider Agreement LAs return a % of savings from reduced cost of care placements Essex SIB Investors

10 ©Social Finance GOVERNANCE STRUCTURE CSSL (3 Investors, 1 MST Expert, 1 Social Finance Rep, AfC invited once per quarter) MST Project Board (Key ECC Strategic and Operational leads, including finance, procurement, Lead Member for Children, AfC Operations Director, Social Finance Director) MST Operational Group (Service leads from the range of services that interact with MST, 2 MST Supervisors, 1 MST expert from another team, AfC Operations Director) MST Oversight Committee (MST Services senior staff from clinical and research, MST UK lead, Social Finance Director) MST Problem Solving (MST UK Lead, MST Consultant, AfC Operations Director) SIB DIRECTOR (CONTRACT AND PERFORMANCE MANAGEMENT)

11 ©Social Finance 2013 PRIMARY OUTCOME METRIC THAT TRIGGER PAYEMNT: CARE DAYS SAVED What would have happened anyway? What happened as a result of the MST intervention? What do Essex pay for? % of aggregated care days as per the historical control group % of aggregated care days of those who received MST Difference between A & B A B C

12 ©Social Finance 2013 SECONDARY OUTCOME METRIC THAT DO NOT TRIGGER PAYMENT: Youth Offending Convictions Types and severity of offences Sentences Education Attendance Attainment Wellbeing Strengths and Difficulties Questionnair e Family Star

13 ©Social Finance 2013 Need: high numbers, high cost, poor outcomes Services: shift towards prevention, building family strengths and resilience, reducing future dependence and demand Innovation: new funding mechanism, services new to Essex Investment: upfront, off the balance sheet Savings: unlocking acute spend, efficiencies and re-investment Risk: risk of failure deferred to investor Performance: Enhanced by PbR approach System change: sustainable and outcomes driven, outcomes-led commissioning, council transformation WHY ESSEX TOOK THIS APPROACH

14 ©Social Finance 2013 KEY CHALLENGES TO DATE 14 Relationships Understanding individual roles and their part within the structure – not a typical contracting relationship Increasing awareness of SIB service(s) to improve engagement and flow of referrals Referral Pathway Stakeholder buy-in and continual communication at all levels Shared understanding of the eligibility criteria terminology Fit within the wider services landscape Ensuring the effectiveness of the referral pathway Right cases at the right time Parts of the process and responsibilities at which stage, Ensuring no delays in families getting the help they need due to process

15 ©Social Finance 2013 KEY CHALLENGES TO DATE 15 Data Access to data and governance issues Data collection resource Quality of data entry Technical issues Staff Specialist skills required, which required multiple rounds of recruitment Staff burn-out and turn over Enhanced engagement skills Investor’s Journey Engaging them in the challenges Providing opportunities for them to develop their own understanding of the issues relating to the service users

16 ©Social Finance 2013 INGREDIENTS FOR A SUCCESSFUL SIB Buy-in and strong relationships across the partnership A SUCCESSFUL SIB Effective referral pathway that facilitates the required volumes and identified target population Robust data collection agreements and system Strong delivery provider, willing to try doing things a different way Robust intervention quality assurance Considered investor journey Realistic Expectations Identified fit within broader services landscape


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