Employment Social Impact Bonds BB - Welcome - We are excited to present to you here today. - Our intentions are to present you N4G and how it came about, a few selected projects; then reflect on the learning of our journey over the last year and also our work previously Obviously we want to make it interactive and would love to hear & share your experiences in this space

Supporting you to develop social impact bonds Stage 1: Define the social issue Questions to answer What is the social issue needing to be solved? Which population should be targeted? What age range are we looking at? Which geographical area? Activities Assess stakeholder engagement Assess the feasibility of measurement with each target population Key Question: Is there an engaged commissioner interested in tackling the social issue? Stage 2: Develop Social Intervention Strategy What do the target population need? Where should the service intervene? What are the current gaps in service provision? What services will meet the needs of the target population to improve the outcome? Analyse research reports Consult with public and voluntary sector organisations that work in the local area Focus group with target population Develop hypothesis on the most appropriate intervention strategy Key Question: Are there compelling intervention programmes to solve the social issue? Stage 3: Develop the outcome metric What programmes could be funded as part of a SIB? Do they have track record of improving outcomes? What are their costs? Can they operate alongside each other? Which metric should be used to evaluate outcome? How do we structure a baseline/ control against which to measure the impact (including population size)? Where are there cost savings from improved outcome? What is value of cost saving? Map landscape of potential providers Review quantitative evaluations of programmes meeting needs of target group Review delivery budgets to understand delivery cost Work with commissioner & researchers to evaluate alternatives Ensure proposed metric is operationally feasible & meets investors’ needs Working with commissioner’s analytical team to estimate cost saving from an improved outcome Key Question: Can a robust outcome metric be developed? Stage 4: Develop financial model Can the SIB financial model work? What proportion of cost savings will need to be shared with investors? Activity Build a financial model and run a range of scenarios Key Question: Does the financial model generate savings to the Commissioner and a return to investors in an acceptable time frame?

Lessons learnt from investors Success based payment to Delivery Partner Non-diversified risk of one Delivery Partner Equity-style risk should assume equity-style returns Investors’ model likely to price the deal with discounted success

Lessons learnt from working with social ventures Buy in from Board & Senior Management is key Investment readiness preparation is essential – business planning, financial modelling and ensuring capacity to deliver Need for historical data Need for collaborative attitude Commitment and willingness to acquire new skills e.g. data management

The stages of creating a social impact bond Originate Deal Identify government champions & savings opportunities Vet models of intervention Perform nonprofit due diligence Conduct financial modeling Secure Public Sector Contract Develop & secure government contract Secure authorisation from commmissioner for multi-year contract Formulate partnership agreement with metrics & payment terms Structure instrument Develop operating model & structure investment vehicle Articulate cash flows, including financial & social returns for target milestones Finalise methodology, including metrics & evaluation strategy Raising Capital & Execution Recruit investors Finalise terms and negotations Sign contracts Issue the instrument & raise investment capital Managing SIB over its lifetime Provide active ongoing project & data management & financial intermediation Modify intervetions and structures as needed Coordinate third-party evaluation

Thank you! Contact us : dominic@numbers4good.com tony.wilson@cesi.org.uk DLThanks so much for your time, we’ve found it really helpful to reflect on our journey so far and we hope you’ve found it interesting. Have you got any questions?