1. Social impact bonds Presentation to Human Services Partnership Forum Stuart Hocking Economic Analysis Department of the Premier and Cabinet 29 July 2014

2. Why social impact bonds? “A prudent Government needs to be sure that public funding for community services is used effectively, to achieve the best outcomes for individuals and the community. We also need to focus more attention on early intervention programs which can prevent expensive social problems emerging.”

3. Impact investment Commercial investment Impact investment Philanthropy

4. Social Impact Bonds: the basics Investors Government Service Provider Service Users 1 5 2 6 3 4 1.Government enters outcomes contract to pay on the basis of outcomes 2.Investors provide upfront capital to fund the provision of services 3.Service provider (charity / social enterprise) delivers service to service users 4.Service delivers improved outcomes and savings to government 5.Government pays if and when outcomes are achieved according to the outcomes contract 6.Outcomes payments provide investors with a return

5. Examples YearSIBLocationTarget ProblemOutcome measures 2010Peterborough (£5m)UKRecidivismReconvictions in 12 months following release 2012Essex (£3.1m) London (£2 m) DWP (£10m) Rikers Island ($9.6m) UK USA Out of home care Homelessness Disadvantaged youth Recidivism Days in OOHC post referral Reduction in rough sleeping Education & employment Days in jail after initial release 2013Its All About Me (£2m) NY State ($13.5m) Utah ($7m) Newpin ($7m) BenSoc ($10m) Buzinezzclub (€0.7m) UK USA Australia NED Adoption Recidivism & employment Early childhood education Out of home care Youth unemployment Placements for children in care Employment for at-risk formerly incarcerated individuals Reduced use of remedial services Family restorations Reduced entry, reports & assessments Education and employment 2014Manchester Massachusetts ($18m) Sweet Dreams ($1m) Duo for Job (€0.4m) UK USA Canada Belgium Out of home care Juvenile justice Out of home care Unemployment Placements for 11-14 yr olds in care of local authority Number of days incarcerated (at risk youth) Reduced entry into OOHC Employment for recent migrants aged 18-29.

6. How does a social impact bond work? Impact of SIB $ Payments by government

7. How does a social impact bond work?

8. Potential benefits Successful interventions deliver better individual and community outcomes Investment model imposes discipline of accountability for results Private sector injects up-front capital to allow NGO to make investments Helps to support the new field of impact investing

9. Challenges Understanding costs and establishing the counterfactual Tracing the benefits (costs reduced or avoided) and where they accrue Attributing outcomes to the intervention Choosing the right outcome measures Scale of intervention required to make a difference

10. Focus areas Preventing out-of-home care placements Reducing recidivism Preventing unnecessary RACF transfers to emergency departments Homelessness Others??

11. Progress to date in SA Social impact investment products advisory committee Discussion paper, Dec 2013 Building a stronger society: (over 50 submissions received) Stakeholder forum, Feb 2014 Refine focus areas and target cohorts Capacity building workshops, July-August 2014 Expect EOI later in 2014