Social impact investment is an emerging approach to tackling social challenges that brings together capital and expertise from across the public, private and not-for-profit sectors. What makes social impact investment unique is that it combines all four of the following attributes:
• Measuring and paying on outcomes
• Setting incentives and removing input controls for services
• Shifting spend away from high cost acute services to prevention
• Sharing of risks and benefits across the government and nongovernment sectors.
In 2013, the NSW Government pioneered Australia’s first two social benefit bonds, seeking to deliver better services and results for families at risk:
• The Newpin Social Benefit Bond funds the expansion of a UnitingCare Burnside program (Newpin) that works intensively with families to either safely return children in care to their families, or prevent children from entering care. With a principal of $7 million, the bond targets a financial return of 10–12% per annum for investors over its seven year term.
• The Benevolent Society Bond helps up to 400 families deal with issues such as domestic violence, substance misuse, mental health, unstable housing and family functioning. The bond raised $10 million in private capital.
This report outlines ten actions planned by the NSW government to deliver more social impact investment transactions and increase the size of the social impact investment market.