Yesterday I found myself at NCVO listening (and responding) to draft recommendations from their Funding Commission, which is looking at funding in the sector for the next 10 years. I won't dwell too much on that, but would recommend reading the Emerging Recommendations paper to inform your thinking for the short and long-term.
Social investment and bringing private / commercial / new sources of money into the sector both feature amongst its pages, and the Social Impact Bond (SIB) is also named as one of the financial models that might helpe achieve this. It is an ingenious model, that encourages private and social investment (through social AND financial return), mitigates risk (and upfront investment) for government, and provides that crucial upfront money for the providers in question. And it focuses the sector, quite rightly in my view, on measurement and proving their impact: delivering outcomes they say they will.
Today is the official start of the first pilot, which will tackle reoffending in Peterborough which has been widely covered in the media this morning: nice to hear the sector on Radio, TV and in the mainstream press. And one hopes it is a great success.
At NCVO, I happened to find myself opposite Toby Eccles from Social Finance the organisation behind the bond pilot. So I took the opportunity to ask my main question on SIBs, which I previously raised in our Big Society recommendations paper (pdf), which is "what about the less-easily monetisable outcomes, particularly those (such as social capital, trust, confidence etc) which are crucial to the Big Society agenda?" The risk being that this new money focuses on the easily quantifiable / monetisable stuff (for returns etc), at a time when funding and investment is shrinking across the board.
Toby rightly pointed out that they had to prove the concept, and do it with a fairly chunk-able, solid area (reoffending is such an area where costs, savings etc are easy to quantify) before moving on to other more complex and nuanced areas in a few years. And that SIBs are only one part of the piece. Which makes a lot of sense to me, and I hope that SSE and others can engage and participate in helping forge + create new SIBs (and other financial models) in other relevant areas of social policy.
The challenge, as I see it, is two-fold.
One is that "in a few years" might be a timescale that doesn't stack up in the current climate for a whole range of organisations, if government puts emphasis on this particular model (which is so attractive in the current economic circumstances). Particularly if the Big Society Bank, as the NCVO recommendations currently say, is primarily used to help underwrite these new models. Because, as the recommendations also make clear, there are also other crucial areas that need investment or attention: financial literacy (including investment readiness), early-stage grants (a la Communities First etc), impact-first investment of other types, increasing entrepreneurialism, skills for scaling/trading, attracting philanthropy and corporate support in other ways, and so on and so forth.
Secondly, therefore, how do we ensure that the various funding initiatives and funders (Big Society Bank, Big Local Trust + other Big Lottery programmes, Communities First, Social Impact Bonds, Venturesome, UnLtd, venture philanthropy, trusts + foundations etc etc) are complementary and meeting as many of those needs as possible, in the toughest climate in years? And in the years to come.
From the recommendations, and those thoughts, I take a few things away: as practitioners, social entrepreneurs and social enterprises, we can: measure impact better (more robustly, transparently, quantifiably as possible), improve our understanding of different types of donors (and the quality of asking + relationship management), increase our knowledge and understanding of finance (and of those we work with), and engage in the conversation about new financial models.
Which should be enough to keep me going for now…..