Social Investment

Investing for social impact

Since the publication of the Social Investment Task Force report  (SITF) in 2010 the concept and practice of sustainable social investment has gathered momentum and now sits high up on the political agenda in the UK and around the world.

Cross-party commitment and strong business support has seen the evolution of some innovative collaborations where government, private investors, charities and social enterprises have joined forces to identify and tackle some of the toughest social challenges of our time – including youth unemployment, homelessness and financial exclusion.

Back then the SITF recommended the creation of new tools to deliver social change through financial instruments such as the Social Impact Bond (SIB) – a form of social investment where charities are paid on the basis of their substantive impact and where returns to investors are directly linked to the positive social outcomes the charity secures.

In his speech on the ‘Smarter State’ ahead of the autumn spending review, the then prime minister, David Cameron  recognised the success of ThinkForward’s SIB, highlighting it as an example of the positive results that charities can achieve through this model of social investment.

ThinkForward’s Social Impact Bond

Fast forward five years since the SITF report and ThinkForward’s social impact bond is now one of the first in the world to successfully complete. By transforming the lives of over a thousand of the most disengaged young people in London, investors in ThinkForward’s programme have reaped a financial return.

ThinkForward’s three-year SIB was commissioned through the DWP’s innovation fund in 2012. The initial working capital to deliver the programme was provided by Impetus-PEF and Big Society Capital who equally invested £450,000.

ThinkForward has since launched the Social Investment Works project to compile its learnings and share them with others. A forthcoming practical toolkit will include advice, guidelines, and templates to support other youth-serving delivery organisations with applying to and delivering SIBs.

The infographic below demonstrates ThinkForward’s SIB in action and helps to explain how the SIB works.