April 10, 2013
Can private money be made to work?
The question of how to bring new investment into the sector is a contentious one – particularly with the growing clamour for private sector money to enter the market. The concern is that if private investors are seriously courted, the obligation to generate a satisfactory return on their investment will fundamentally determine the nature of the outcomes. Social Investment Bonds are one the more developed ideas that have attracted criticism. A Scottish charity thinks they may have come up with a more palatable and ‘local’ version.
YMCA Scotland set up the first social impact bond in Perth & Kinross, last year partnering with local investors and with the Department for Work and Pensions in seeking to support 300 vulnerable young people into education, employment or training.
We changed the social impact bond approach used in Peterborough to create a more localised community model that would enable local relationships to grow between investor and provider and participant. We wanted to engage the investors in the delivery of the project, to introduce them to the young people so that they could consider how together we could improve our efforts to enable them to achieve their fullest potential.
YMCA evaluated the first six months demonstrating the following outcomes:
From April to December 2012 we worked with 86 young people and alongside seven Secondary Schools
* 61 % helped into employment
* 100% retained employment
* 60 on target to complete Level 2 Qualification
* 45 on target to complete Level 1 Qualification
We do this through a series of activities with a strong focus on social enterprise (we have three small businesses now established creating employment for the young people. At the core of the approach however remains the expertise of the YMCA organisation to build a trusted relationship with vulnerable young people that can lead to an honest appraisal of their strengths and needs. This creates the potential for young person and staff to work together to upskill, to grow confidence, to tackle barriers, to achieve potential.
Our overall outcomes are:
Improved attendance at school
Improved behaviour at school
Achieve level 1 qualification
Achieve level 2 qualification
Completion of level 3 training
Entry into level 4 qualification
Entry into employment or self employment
We are greatly encouraged by this local version of the social impact bond. We are encouraged by our early results, we are encouraged by the willingness of local investors to step up and get involved, we are encouraged by the growing interest in the local approach.
YMCA is currently completing template paperwork that will enable any provider to easily navigate the terms and agreements required to establish a social impact bond.
We believe strongly in the local version of this model that enables relationships to be built and grown between all parties.
Our success is due to the very different model piloted in Perth that rejects distant investors whose sole interest may be financial. Reducing the return to investors has not removed the interest of investors. Bringing investors closer to participants in our model has increased their interest in how the relationships can work in so many different ways.
YMCA would encourage interest in this different approach to social impact bonds. YMCA would encourage Scottish government, private sector and voluntary partners to consider where this model can enable work to happen that otherwise may not be feasible.