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A guide setting out the steps to assessing the feasibility of a Social Impact Bond.

Social Finance is a not for profit organisation that brings together finance, social and governmental expertise to redesign public services. Where necessary we help to bring in social investors who can provide finance and take on delivery risks to enable the implementation of innovative new models.

Since late 2007 when we started to develop the Social Impact Bond (SIB) idea, we have worked with HM Treasury, Ministry of Justice, the Department for Communities and Local Government, Home Office, Department for Work and Pensions, Cabinet Office and a variety of local authorities to assess and create models in different issue areas.

This guide draws on our experience to date in exploring the feasibility of SIBs, particularly in the area of Children’s Services. Social Finance worked with Essex County Council to develop and launch the first local authority-commissioned SIB in November 2012. The Essex SIB focuses on vulnerable adolescents at the edge of care or custody and funds intensive intervention in order to reduce the time they spend in care or custody and enable them to stay “safely” at home with their families if possible.

We use our work developing the Essex SIB as a case study. The guide aims to set out one approach to taking a SIB from proposal to the launch of a service funded through social investment. This guide is written to assist those developing SIBs to reach a stage where it would be possible to establish a contract between a public sector commissioner and investors, which in turn would offer a foundation on which to raise investment.

The thoughts included here represent Social Finance’s experience to date in developing SIBs. We will learn more and refine this process on future projects. We hope to learn from others’ approaches. This is a new and changing market and we hope this guide provides a useful template for developing approaches to shift more resource into prevention work. While this report focuses on Children Services, we believe there is potential for SIBs to offer solutions in other local authority services areas where there is potential for significant social impact.

Social Finance is committed to providing a range of support for those interested in developing SIB proposals. This could range from full engagement through a detailed feasibility study of a particular intervention or issue area to help with specific parts of the SIB development process (see below for further details of this process). We are aiming to provide a set of tools to help minimise the costs of developing these products and we hope that this guide – which is intended to be freely available – is a useful start point.

Last updated | 
3 March 2011