NEW MODELS OF DELIVERING PUBLIC SERVICES:
SOCIAL IMPACT BOND (SIB) MASTER-CLASS
20TH NOVEMBER 2013
Yvonne Campbell, Essex SIB Director
Yvonne.campbell@socialfinance.org.uk
Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: 497568
ABOUT SOCIAL FINANCE
2
OUR MISSION IS TO IDENTIFY SUSTAINABLE AND SCALABLE FUNDING
MODELS TO TACKLE ENTRENCHED SOCIAL PROBLEMS
GOVERNMENT
SOCIAL
ORGANISATIONS
INVESTORS
Social Issues
LONG TERM SOCIAL
GAIN
SOCIAL INVESTOR
MARKET GROWTH
VOLUNTARY SECTOR
DEVELOPMENT
ONE AREA OF OUR WORK HAS BEEN TO DEVELOP OUTCOME-FOCUSED
FINANCE – SOCIAL IMPACT BONDS
©Social Finance 2013
INTRODUCTION TO SOCIAL IMPACT BONDS (SIB’S)
Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: 497568
INTRODUCTION TO SOCIAL IMPACT BONDS
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• 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 Finance 2012
SOCIAL IMPACT
BONDS BRING NEW
INVESTMENT TO
BEAR ON SOCIAL
ISSUES, AND ALIGN
ALL PARTIES
AROUND A
COMMON GOAL.
RATIONALE FOR A SIB
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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
A SIB is…
A SIB is not…
• A way of tackling social problems that
require a range of interventions
• Payments for failure – if no social impact
is achieved investors lose their money
• Up front funding for service delivery
• Debt or grant funding for service
providers
• Only going to achieve returns for
investors if social impact is achieved
• An attempt to make more nongovernmental money available to the
social sector
©Social Finance 2013
• A new form of PFI – investor returns
are contingent on achieving socially
beneficial outcomes
THE VALUE FOR MONEY CASE FOR A SOCIAL IMPACT BOND
SIBs work when the cost of achieving the target outcome are substantially less
than the resulting public sector saving.
Public Sector Saving
£
Impact
of SIB
Savings
retained by
Govt.
Investor return
Cost to
Government
Net Cost to
Government
Cost of
Interventions
Status Quo
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SIB
Cost Saving
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ESSEX SOCIAL IMPACT BOND FOR CHILDREN ON
THE EDGE OF CARE
Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: 497568
ESSEX SOCIAL IMPACT BOND – CORE INTERVENTION
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.
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
Source: www.mstservices.com/outcomestudies.pdf
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ESSEX SIB STRUCTURE
Investors
1
2
£££
1
Board of Directors
Social
Finance
SIB Co
2
Outcomes
Contract
4
Service
Contracts
Action for
Children
3
Ongoing operating
funds
Evolution
Fund
Services
Service Users
(380 young people)
©Social Finance 2013
Local
Authorities
SIB Co and LAs enter
Outcomes Contract
Investors fund SIB Co
3 Funds released to service
providers according to
Service Provider
Agreement
4 LAs return a % of savings
from reduced cost of care
placements
Essex SIB Investors
GOVERNANCE STRUCTURE
SIB DIRECTOR
(CONTRACT AND PERFORMANCE MANAGEMENT)
MST Project Board
MST Oversight
Committee
CSSL
(3 Investors, 1 MST Expert,
1 Social Finance Rep, AfC
invited once per quarter)
(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)
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(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)
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PRIMARY OUTCOME METRIC THAT TRIGGER PAYEMNT:
CARE DAYS SAVED
A
What would have
happened anyway?
% of aggregated care days as per the historical control
group
B
What happened as a
result of the MST
intervention?
% of aggregated care days of those
who received MST
C
What do Essex pay
for?
©Social Finance 2013
Difference
between A & B
SECONDARY OUTCOME METRIC THAT DO NOT TRIGGER
PAYMENT:
Youth Offending
• Convictions
• Types and
severity of
offences
• Sentences
©Social Finance 2013
Education
• Attendance
• Attainment
Wellbeing
• Strengths and
Difficulties
Questionnaire
• Family Star
WHY ESSEX TOOK THIS APPROACH
•
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
©Social Finance 2013
KEY CHALLENGES TO DATE
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
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KEY CHALLENGES TO DATE
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
©Social Finance 2013
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INGREDIENTS FOR A SUCCESSFUL SIB
Effective referral
pathway that
facilitates the
required
volumes and
identified target
population
Buy-in and
strong
relationships
across the
partnership
Robust
intervention
quality
assurance
Identified fit
within
broader
services
landscape
Strong delivery
provider,
willing to try
doing things a
different way
Realistic
Expectations
A SUCCESSFUL SIB
©Social Finance 2013
Robust data
collection
agreements
and system
Considered
investor
journey