Transcript Standard EN Template - Saskatchewan Chamber

Saskatchewan Chamber
of Commerce P3 Summit
Social Finance Overview
September 9, 2014
What is social finance?
An investment approach that intentionally seeks to create both
financial return and positive social impact that is actively measured
Approach: Impact investing is an investment approach across asset classes (e.g.,
public and private equity, debt, etc.)
Source: From the Margins to the Mainstream: Assessment of the Impact Investment Sector and Opportunities to Engage Mainstream Investors; A World Economic Forum Report supported by Deloitte.
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Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
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Although estimates vary, there is general consensus that the impact
investment sector will grow significantly by 2020
Analysts project that the global market could grow as large as $1 trillion, up from
a current estimate of approximately $50 billion in committed capital.
JP Morgan/GIIN (2010)
Billions (US$)
Monitor Institute (2009)
Calvert Foundation (2012)
$1,000
$650
$500
$400
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Monitor Institute estimates the potential for
impact investing at 1 percent of total
managed assets, estimated at US$50 trillion
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JP Morgan estimates the impact investing market
through 2020 by sizing Base of the Pyramid
market opportunities across five sectors:
housing, rural water delivery, maternal health,
primary education, and financial services
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Calvert forms an estimate through a
representative survey of investment managers,
applying prospective adoption rates to a global
investment management industry of US$26
trillion
Sources: The Monitor Institute, Investing for Social and Environmental Impact, 2009; GIIN, JP Morgan, Impact Investments: An Emerging Asset Class, November 2010; Calvert Foundation, Gateways to Impact,
June 2012
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Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
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Estimates of growth are also high in the Canadian impact investing
market, with organizations already making significant commitments
Recent Canadian Initiatives
Market size, billions CDN
Potential Canadian Market Growth
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• Ontario released a Social Impact Bonds Call
for Ideas and a $4M Social Enterprise
Demonstration Fund.
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Source: MaRS Center for Impact Investing 2011
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• Ontario and BC have both recently released
strategies of promoting social enterprises.
31%
CAGR
2011
• 42 Canadian signatories across sectors, with
$215B in assets under management, to the
Principles of Responsible Investment (PRI).
2021
• The Government of Canada completed and
reported on a National Call for Concepts for
social finance, followed by a literacy and
essential skills pilot.
Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
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The developing impact investing market is opening a range of new
opportunities
Advancement of
Related Concepts
Environmental Context and
Enabling Trends
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Enabling
Trends
Public-Private Partnerships (PPP)
Corporate Social Responsibility (CSR)
Double / Triple Bottom Line
Social Return on Investment (SROI)
Social Innovation
Social Enterprise
Impact
Investing
Opportunity
Examples of impact investing applications:
•
Direct investment into social enterprises
• Community bonds
• Crowdfunding
• Microfinancing
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Social Impact Bonds (SIBs)
Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
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Spotlight on Social Impact
Bonds (SIBs)
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Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
How Social Impact Bonds (SIBs) are structured
4. Based on the degree to which the social
outcome is achieved (as determined by an
independent evaluator), government pays
investors as negotiated in contract
Government
Department
or Agency
1. A contract is negotiated where the government
agrees to pay a rate of return on invested capital
for improved social outcomes
Independent
Evaluator
Intermediary
3. The social service delivery
organization(s) receive(s) the
funds to address social issue
Service
Delivery
Organization(s)
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$$$
$$$
$$$
Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
2. Based on the contract, the intermediary
raises upfront investment from sociallyminded investors and foundations
Investors
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There are a variety of benefits for the different participants in a SIB
model
Social Impact bonds allow each participating organization to
bring their best expertise to the table to deliver social services with
more innovation and flexibility
Governments
• Develop new funding
stream, including for
preventative
measures
• Enable steady revenue
stream
• Participate in
payment for
outcomes (not
activity)
• Create and apply
innovative approaches to
complex problems
• Clearly demonstrate
results to citizens
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Service Delivery
Organization(s)
• Achieve longer planning
horizon
• Enhanced levels of
performance management
and measurement
Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
Investors
• Establish sociallyminded capital
deployment
• Gain the potential
for blended financial
and social returns
• Demonstrate
innovative
philanthropy
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Social impact bonds continue to gain momentum and are being rolled
out in over 20 countries as we speak
Canada
(Actively Considering SIBs)
United Kingdom
(11 SIBs in Design; 4 in
Implementation)
United States
(20 States with Pay
For Success Deals
in Progress)
France, Germany & Spain
(Actively Considering SIBs)
Israel
(3 SIBs in Design)
South Korea
(1+ SIB in Design)
India
Uganda
(1 SIB in Design)
(1 SIBs in Design)
Columbia (1 SIB in Design)
Rwanda
(1 SIB in Design)
Mozambique
(1 SIB in Design)
South Africa
(1 SIB in Design)
Swaziland
(1 SIB in Design)
Australia
(2 SIBs in Design; 1 in
Implementation)
Sources: http://payforsuccess.org/learn-out-loud/activity-map, http://www.instiglio.org/sibs-worldwide/ and input from Deloitte practitioners
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Canada’s First Social Impact Bond (SIB) was announced in May 2014
in Saskatchewan
SIB Overview
Saskatchewan SIB Model
“Sweet Dreams” SIB for a supported living
home for at-risk single mothers
TBD
House between 8 to11 adults and 8 to 15
children, for a period of 2 month to 2 years
$1 million investment between one private
investor and one credit union
Basic pay-for-performance contract where
government reimbursement occurs if social
outcome is met to keep children out of foster
care
Independent assessor measures success at
2nd, 4th and 5th years
“This program gives atrisk mothers and
children a chance at a
better life…”
- Government of SK
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“…[there is] value of
looking at old
problems in a new
and innovative way.”
- The Star Phoenix
Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
Reporting/
project
management
Saskatchewan
Ministry of
Social
Services
Independent
evaluation
Up to 5%
return
EGADZ’s
Saskatoon
Downtown Youth
Centre
$1M
Conexus Credit
Union; Wally &
Colleen Mah
5 year term
“… expected to result in
savings to the Government of
Saskatchewan of between
$540,000 and $1.5 million over
five years.” – Government of SK
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SIB Profiles: First major implementations in UK & US
HMP Peterborough, United Kingdom,
September 2010
Rikers Island Prison, New York City,
August 2012
UK Ministry of
Justice & Big
Lottery Fund
QinetiQ and the
University of
Leicester
Independent evaluation
Vera Institute of
Justice
Social impact bond
Social Finance
UK
Independent evaluation
£5M paid
upfront
Steady funding
over 6=year
term
St. Giles Trust &
Orminston
Children &
Families Trust
New York City
Department of
Correction
Up to 13% return
Steady funding
over 4=year
term
Coalition of
investors
(charities and
foundations)
Osborne
Association &
Friends of Island
Academy
Pay for Success bond
MDRC
US$9.6M loan
Up to 22% return
Goldman Sachs
US$7.2M loan guarantee from
Bloomberg Philanthropies
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Aim to reduce recidivism by 7.5% among short-term
male offenders.
“Through the gate” support to offenders for drug and
alcohol addiction, mental health, educational and job
skills training, and post-release accommodation.
Resettlement planning with families of offenders.
Formative evaluation released May 2011.
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Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
Aim to reduce recidivism by 10% among adolescent
offenders aged 16-18 years.
Adolescent Behavioral Learning Experience (ABLE)
Program interventions focused on developing
personal responsibility and decision-making skills
through in-class instruction, recreation, and
community building.
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Recent SIB Profile: Largest US Social Impact Bond
Massachusetts Juvenile Pay for Success Project, United States, February 2014
Commonwealth of
Massachusetts
Independent
Evaluator:
Sibalytics LLC/ PCG
Social Impact Bond
Intermediary: Third
Sector Capital
Partners Inc.
7 year term
(with potential
2 year
extension)
Service Provider:
Roca, Inc.
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Success
payments made
between years
2-7
US$27 million
investment
Senior Investor:
Goldman Sachs
A $27 million, 7 year social impact bond that targets at-risk young men in the Boston, Chelsea and Springfield areas
who are in the probation system or exiting the juvenile justice system.
The objective of the program is to reduce the number of days participating young men spend in prison, improve their
job readiness and increase their employment – the specific target is a 40% reduction to days of incarceration
Other investors include Kresge Foundation, Living Cities, Laura and John Arnold Foundation, New Profit, and Boston
Foundation – New Profit is also providing additional management support.
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Public Private Partnerships vs.
Social Finance: Social Impact
Bonds
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Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
Comparison of Market Characteristics
Public Private Partnerships vs. Social Finance: Social Impact Bonds
Market Characteristics
Public Private
Partnerships
Social Finance:
Social Impact Bonds
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High
Very Low
Performance based contract
Utilizes private finance / third party funding
Captures private sector innovation and focus
High order, transparent transaction processes
Supports government transformation agenda
Requires stakeholder management and education
processes in order for success to be achieved
Provides for an alternative method of service delivery
Level of market maturity
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Saskatchewan Chamber of Commerce P3 Summit - Social Finane Overview
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