Social Impact Investing (SII) represents a developing and innovative approach to investment where private and philanthropic resources are used to achieve a public or social good. It is an approach that aims to achieve an intentional social objective alongside a financial return – and to measure the achievement of both. 

Since 2017, the Department of Social Services has committed $52.7 million across four trials in Social Impact Investing (SII), which have focused on testing innovative financial models for funding for-purpose organisations and building capacity within the broader SII sector. An evaluation was conducted to review and record what has been achieved and learned through the trial projects, and to identify how the Australian Government can best engage and support the SII sector in future. 

The evaluation comprised a document review of key program documents, a series of stakeholder interviews and a workshop with the SII unit.

Key findings fall into three domains.

1. Commissioning outcomes

• Outcomes-based contracting is not possible or effective without high quality data.
• Innovation is often a goal of SII. To unlock innovation, performance targets need to allow for service level flexibility and appropriately address failure to deliver results.

2. Building the market

• Intermediaries are an important part of building the SII market.
• Government can mobilise or unlock private resources to address societal issues through market building actions already tested in other markets

3. The role of government

• The trials exposed inflexibility within existing government infrastructure and systems, which were not designed to accommodate different ways of using government capital to achieve social impact
• There are constitutional constraints on the policy areas in which Australian Government agencies are able to work; this makes development of truly ‘sector-agnostic’ interventions more challenging.