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Social Benefit Bonds
What are Social Benefit Bonds?
A social benefit bond (SBB) is a financial instrument that pays a return based on the achievement of agreed social outcomes. Under a SBB, investors fund the delivery of services targeted at improving a particular social outcome. Achievement of this outcome should reduce the need for, and therefore government spending on, acute services. Part of the resultant public sector savings are then used to repay investors’ principal and make additional reward payments (the return on investment), the level of which is dependent on the degree of outcome improvement achieved.
Social Benefit Bonds in New South Wales
In 2013, the NSW Government implemented two Social Benefit Bonds, the first in partnership with UnitingCare Burnside and the second with The Benevolent Society. These bonds are the first of their kind in Australia.
Both bonds have raised private capital to fund intensive services which support children in care to be restored safely to their families, or prevent those at risk from entering care.
Why use Social Benefit Bonds?
Social Benefit Bonds are an exciting new way of building innovative partnerships with the non-government sector and investors to deliver measurable and outcomes-based services. It is new, additional funding for important early intervention and prevention services that otherwise might not receive funding due to limited government resources.
The Newpin and Benevolent Society Social Benefit Bonds are aiming to:
- improve services and lives for vulnerable children and young people
- free taxpayers’ money to help even more families
- increase funding for prevention and early intervention programs
- improve the evidence base for, and focus on, measuring the outcomes of services
- harness the innovation capacity of both investors and service providers to improve lives
- assist with developing the social finance sector in Australia.
When UnitingCare Burnside and The Benevolent Society achieve agreed social outcomes, such as safely restoring children with their families or preventing entry into care, this generates significant social and economic benefits. These benefits mean the government needs to spend less on acute services and is able to spend taxpayers’ money helping families in other ways. Part of the savings delivered by successful outcomes are used to pay back the investors’ up-front funding as well as provide a return to investors.
For more information about The Benevolent Society Social Benefit Bond visit The Benevolent Society