FRAMING PAY FOR SUCCESS Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: MARCH 2014 Toby Eccles, Founder & Development Director

©Social Finance 2014 CASE STUDY: RE-OFFENDING RATES IN THE UK 2 RECONVICTION RATE WITHIN 1 YEAR AVERAGE NUMBER OF PREVIOUS OFFENSES AVERAGE NUMBER OF PREVIOUS JAIL TERMS 63%43 7

©Social Finance 2014 PETERBOROUGH SIB MODEL 3 INVESTORS £5 million SOCIAL IMPACT PARTNERSHIP 3,000 male prisoners sentenced to less than 12 months Reduction in re-offending MINISTRY OF JUSTICE/ BIG LOTTERY FUND Payment based on reduced convictions St. Giles Trust Other Interventions Return depends on success HMP PETERBOROUGH Ormiston Trust MIND SOVA

©Social Finance 2014 GLOBAL ACTION ON IMPACT BONDS HAS SURGED US 3 SIBs, including a US$27m SIB, for high risk youth, early childhood education and recidivism by Goldman Sachs and others One SIB on recidivism by New York State, Merrill Lynch, Social Finance US and others Harvard Lab providing technical assistance to 9 state governments UK 14 SIBs for issues that range from recidivism to homelessness by UK government, Social Finance and others G8 Taskforce on Social Impact Investment Focused on developing policy to scale solutions such as impact bonds Australia 2 SIBs on out-of-home care by New South Wales State, Social Ventures Australia and others Uganda Rhodesian Sleeping Sickness DIB by DfID and Social Finance Swaziland HIV prevention DIB by CHAI and Social Finance The Netherlands One SIB on youth unemployment by Rotterdam City, ABN AMRO and others South Africa BDS bond by Bertha Center, Social Finance and others Social Impact Bonds launched Development Impact Bonds under exploration / development Market infrastructure established Mozambique Malaria DIB by Nando’s, Dalberg and others Outcomes Funds £20m UK fund White House proposal for US$300m fund Specialist intermediaries 6 organizations with a core focus on bonds Organizations in at least 10 other countries exploring impact bonds Latin America IDB’s MIF launching US$5.3m facility to support SIB ecosystem building and pilot SIBs 4

©Social Finance 2014 RIGOROUS INVESTIBLE CLIENT-CENTERED PARTNERSHIP INNOVATION HOW SIBS CAN ADD VALUE FLEXIBLE

©Social Finance 2014 FOCUSING ON ADAPTIVE MANAGEMENT 6 DATA COLLECTION & ANALYSIS IMPACT BETTER PERFORMANCE MANAGEMENT & RESULTS DELIVERY FLEXIBLE CONTRACT

©Social Finance 2014 FREEING UP SERVICES TO BE BETTER Serving the funder Checking receipts Feedback from regulators & politicians Ensuring services stay the same Serving the user Checking results Feedback from service users & impact measurement Ensuring services improve 7 FROMTO

©Social Finance 2014 SHIFTING FROM “BUSINESS AS USUAL” 8 Measuring social outcomes Designing flexible contracts Valuing social outcomes Evaluating risk transfer

©Social Finance 2014 NOT LOSING SIGHT OF THE SOCIAL CHANGE 9 Focusing on service users Measuring program effectiveness Crystalizing value to government Facilitating investment Promoting flexibility for adaptation Having pressure to improve ProgramSystem

©Social Finance 2014 YOUR QUESTIONS? 10 Contact details Web socialfinance.org.uk socialfinanceus.org

©Social Finance 2014 PETERBOROUGH SIB MODEL 11 INVESTORS £5 million SOCIAL IMPACT PARTNERSHIP 3,000 male prisoners sentenced to less than 12 months Reduction in re-offending MINISTRY OF JUSTICE/ BIG LOTTERY FUND Payment based on reduced convictions Providing specialized support pre- and post- release to high/medium risk clients St. Giles Trust Support needed by the prisoner, in prison and the community. Funded as the need is identified Other Interventions Return depends on success HMP PETERBOROUGH Support to prisoners’ families while they are in prison and post release Ormiston Trust Low level mental health support to prisoners while they are in prison and post release MIND Providing volunteer support pre- and post- release to low risk clients SOVA

©Social Finance 2014 SHIFTING FROM “BUSINESS AS USUAL” 12 Measuring social outcomes as opposed to focusing solely on outputs & service delivery Designing flexible contracts to enable interventions to adapt to lessons learned Valuing social outcomes based not only on estimates of cost-savings but also on value to society Evaluating risk transfer from the public to private sector and where it adds most value