Bates Wells advise on Social Impact Bonds

A common complaint about SIBs is that they are complicated. Often the appropriate response to this is, ‘of course they are’. The aim is to create new forms of service delivery, working with service users with multiple issues. They involve a range of stakeholders who share some common objectives (based around the intended social impact) but also have their own organisational imperatives. To extend the football analogy, this makes SIBs akin to embarking on a full season’s fixtures, rather than going on a cup run.

Social Finance

West London Zone is a charity that has refused to be daunted by the challenges it faced in completing a SIB. It is working with children in a variety of schools in West London, providing dedicated support and developing bespoke interventions drawn from a range of specialist providers. As well as multiple providers, it has a number of commissioners, including local authorities, academy trusts and central government. Funding comes not only from social investors, via the SIB, but a number of philanthropists. The moving parts are manifold but the intervention is one which potentially has life changing impact for underprivileged children and the WLZ team showed great tenacity and flexibility to navigate the demands of the various parties and become operational.

Another charity client, HCT, demonstrated that in some cases it is possible to keep SIBs (relatively) simple. Their concept was straightforward: to work intensively with special needs children to make them sufficiently confident they could travel to school on public transport. This teaches them independence, significantly improving their quality of life and saves local authorities huge sums on transport provision. Building on the simplicity of the concept, HCT developed simple metrics and a simple payment mechanism. They followed the Cabinet Office template contract for SIBs and avoided any complicated contracting and funding structures. They are now providing the service in one London borough and the model is eminently replicable elsewhere.

These projects show that despite the slow take up of SIBs and some widely voiced reservations, they can work. They require great resolution from all involved, but that resolution can prevail where the ultimate aim of the project remains front and centre in participants’ minds.

For any questions regarding the content of this article, or about SIBs in general, please contact David Hunter

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of February 23, 2017.