Social impact investment
Social impact investment enables government, non-government organisations and private investors to work together to address some of the biggest challenges that face our community.
In 2013, the NSW Government pioneered Australia’s first two social impact bonds, seeking to deliver better services and results for families at risk. Building on the successful launch of the initial bonds, the NSW Government is committed to finding other opportunities to use social impact investment to deliver better services and results.
Social impact investments bring together capital and expertise from the public, private and not-for-profit sectors to achieve targeted social outcomes. Investments can be made into companies, organisations or funds, whether they be not-for-profit or for-profit (Source: https://www.osii.nsw.gov.au/initiatives/sii/)
What are social benefit bonds?
A social benefit bond (SBB) also known as a social impact bond, 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 targeting an improvement in a particular social outcome. Achievement of this outcome should reduce the need for, and therefore government spending on, acute services. Part of the resulting public sector savings are used to repay investors’ principal and also make additional reward payments. The level of the return on investment is dependent on the degree of outcome improvement achieved.
Social benefit bonds in NSW
In 2013, the NSW Government implemented two social benefit bonds, the first in partnership with Uniting and the second with The Benevolent Society. These bonds were the first of their kind in Australia.
Both bonds raised private capital to fund intensive services to either support children in care so they can be restored safely to their families, or to prevent those at risk from entering care.
Following the successful implementation of the first two bonds, the NSW Government, through the Department of Communities and Justice (DCJ), has also partnered in two further social impact investments with the announcement of the Foyer social benefit bond in September 2017, working with Uniting and SGCH, and the Home and Healthy Social Impact Investment with Mission Australia.
Why use social benefit bonds?
Social benefit bonds are an exciting way of building innovative partnerships with both the non-government sector and investors to deliver measurable, outcomes-based services. The bonds provide funding for important early intervention and prevention services that otherwise might not receive funding due to limited government resources.
Foyer Central social impact bond
The Foyer Central social impact bond was announced in September 2017 and officially launched on 8 February 2021.
Uniting, SGCH and Social Ventures Australia, have partnered with the NSW Government to provide services aiming to reduce rates of youth homelessness and youth unemployment.
Foyer Central is a purpose-built centre located in central Sydney, offering young out-of-home-care leavers a safe and affordable place to live while they engage in education, training and employment. City of Sydney also contributed $3 million towards the development.
Students have the opportunity to spend 18 months living in this bespoke facility. It is modelled off a globally successful program and delivered at a critical development age (18-22 years), giving those who participate a chance to lead an independent future.
Foyer Central services have commenced, with referrals being taken for eligible young people from services supporting young care leavers, non-government services and NSW Government services, or through self-referrals.
Home and Healthy social impact investment
The Home and Healthy social impact investment is a performance based contract between Mission Australia and the NSW Government that commenced in July 2019.
The Home and Healthy Program supports homeless people and those at risk of homelessness who are leaving hospital or health facilities, by offering holistic support and case management to participants with the goal of achieving sustained housing, increased workforce capacity and improved wellbeing.
Referrals are made by participating local health districts (LHDs), who are engaged with potential participants accessing health services and who may be homeless or at risk of homelessness. Referrals are made to the Home and Healthy team at Mission Australia and support is provided over 12-18 months to achieve participant’s goals.
The performance based contract uses a rate card approach with outcomes reported to include achievement of housing, employment and participation in other structured activities. The contract will run over 6 years and is anticipated to reach over 1200 participants with the first phase of referrals commencing in the Sydney and South Eastern Sydney LHDs and then scaling up to include South Western Sydney and Western Sydney LHDs.
Newpin social benefit bond
The Newpin social benefit bond provides funding to Uniting to deliver its Newpin program that supports children in out-of-home care so they can be restored to their families, and also helps prevent at-risk children from entering care. Newpin is a long-term, centre-based, intensive support program that works with families to improve parenting so children can live safely at home. Parents and their pre-school children attend a centre between 2 to 4 times a week for approximately 18 months. The program includes a combination of therapy, parenting courses and parent/child relationship building.
The $7 million bond, which began operating in July 2013, initially ran for 7 years. The bond funded 4 existing Newpin centres in Western Sydney and later expanded the program to 4 additional locations around NSW, including South West Sydney, Central Coast, Central/Eastern Sydney and Illawarra Shoalhaven.
Newpin has a solid evidence base and track record of delivering successful family restorations. The restoration rate of children who enter the program is the key performance indicator determining the interest rate and the repayment obligations of the bond. All family restorations are independently decided by the NSW Children’s Court. Neither Uniting nor investors make these decisions.
To participate in the program, families must have at least 1 child younger than 6-years-old who has been in statutory care for at least 3 months, or who is at risk of entering care. Families can be referred by OOHC agencies, other government agencies, community organisations or they can self-refer but the referral must be approved by DCJ.
View the Newpin Agreement
For referral enquiries contact:
Social benefit bond contract manager, DCJ
The Benevolent Society social benefit bond
The Benevolent Society social benefit bond (TBS bond) was jointly developed by the NSW Government in partnership with The Benevolent Society, the Commonwealth Bank of Australia and Westpac Institutional Bank. The $10 million bond began operating in October 2013.
The bond funded The Benevolent Society’s Resilient Families service, which is an intensive therapeutic program that helps families deal with issues such as domestic violence and substance misuse, mental health and unstable housing, and aims to improve family functioning and relationships. The Benevolent Society has a successful track record in working with vulnerable children in NSW.
The TBS bond was the first bond in Australia to reach maturity concluding its 5 year term in October 2018, with over 350 families referred to the program across 5 years.
The final report on the positive outcomes achieved is available on The Benevolent Society’s website and shows the Resilient Families program achieved an 86% preservation rate for families referred to the program. The overall weighted average performance percentage (used to measure investor returns) achieved across the full 5 years of the TBS bond was 16%.
Following the end of the bond arrangement the Resilient Families service has subsequently been extended under a performance based contract and continues to support families from across Central and Eastern Sydney and South West Sydney.
To participate in this program, families must have at least 1 child under 6 years old, or be expecting a baby, and must have been recently reported to DCJ. DCJ will have investigated and confirmed that the child is at risk of significant harm, but can remain safely with his or her family if identified problems are addressed.
Families eligible for Resilient Families are identified and referred by DCJ.