Building a SIB market: learnings from the Portuguese experience | Big Society Capital

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Building a SIB market: learnings from the Portuguese experience

In the past three years, Portugal watched its very own social investment market go from birth to taking its first steps.

Portuguese policy makers and market champions such as Calouste Gulbenkian Foundation have embraced social innovation as a priority area, actions have been taken, the talk has been walked.

Discussing the top 3 milestones of Portugal’s young social investment ecosystem, my colleagues and I at the Social Investment Lab can’t help but smile – we never expected things to develop so quickly in Europe’s most western country. 


As we eagerly await Portugal Inovação Social’s (PT only) call for applications to the first tranche of their €15M SIB fund, we think back fondly to 2014 and the uphill battles that had to be fought in order to launch our country’s first social impact bond and unlock capital that will help tackle our most challenging social problems.

The biggest SIB challenges so far:

  • Introducing top stakeholders to an outcome-based mindset.
  • Lack of legal track record.
  • Skepticism towards a new way to approach rooted social problems

3 lessons from Portugal's first social impact bond 

With up to 30.5% retention rates in basic education and each student costing approximately €4,000 to the Municipality of Lisbon for every school year, structuring Lisbon’s first SIB towards school performance was a natural decision. Capital was raised from Calouste Gulbenkian Foundation to fund Academia de Códigoo, a project that aims to improve logical thinking and the shortage of programmers in the Portuguese labour market through fun and interactive programming classes (find out more about AdC through this teaser). 

  • SIBs can embed different value propositions, and public savings are only one of them. Contrarily to what we have seen in other countries, the early stage of the Portuguese social investment market and the risk-aversion of key decision markers means Social Impact Bonds will be mostly used to create the missing evidence amongst social organisations with high-potential interventions.
  • Early stage markets need quick wins - launching a small scale pilot is crucial to create momentum and convince stakeholders about the potential of SIBs, even if that pilot is not economically viable for all or fails to generate intended outcomes.
  • Intermediaries are the glue that adds value during both planning and implementation. Capable of representing the missing stakeholders in every meeting and break down emerging traps, engaged intermediaries can then support service providers through performance management, maximizing the probability of success for any given intervention. Once again, Calouste Gulbenkian Foundation played a key role by ensuring core funding to intermediation activities.

Two weeks after the conclusion of this first pilot, we are now looking forward to the project’s final results (to be announced in September) and understanding how the next social impact bonds in the pipeline will impact this small yet growing market. 

The biggest challenges for the next waves of SIBs

  • Identifying SIB-suitable interventions in a sector without appropriate impact measurement.
  • Bringing the value of outcome-based commissioning to public sector agencies.
  • Growing the supply side and achieving economies of scale in a small country whose social sector relies on a small number of key foundations.
  • Communicating the added value of intermediaries and convincing players to budget accordingly for their services in a budget-constrained economy.

Just three years ago, whenever we thought about our first goals for the Lab, aiming high meant managing to structure Portugal’s first social impact bond within a five year period. Thirty-six months have passed, and aiming high today means taking the results of that same SIB we dreamed of and using them to replicate the same intervention nation-wide.

But it also means developing market-building tools such as an outcomes academy and a social accelerator, to make sure that the capital being unlocked is delivered to teams that are properly equipped and eagerly waiting for their chance to map our social innovation landscape. And I think I can speak for everyone at the Lab when I say that it’ll be a pleasure to tag along their entrepreneurial journeys.


Last updated | 
30 June 2016


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