1. Supporting Life Chances through Social Impact Bonds
Life Chances Fund
Supporting Life Chances through Social Impact Bonds
July 2017

2. Life Chances Fund Supporting People through Social Impact Bands
A Social Impact Bond (SIB) – what is it?
Apply to the Life Chances Fund (LCF)
GOLab – supporting learning

3. What is a Social Impact Bond (SIB)?
A SIB is a payment by results service delivery contract with start up investment
Features:
Social investment - social outcome & financial return
Upfront costs covered by investment capital
Financial risk is taken by investors
Defers cost of service provision
(commissioner only pays for outcomes achieved)
A Social Impact Bond is a Payment by Results Service Delivery contract, with start up investment
In other words, a commissioner (or a group of commissioners), is willing to pay for a number of outcomes for a group of service users.
The commissioner goes through a procurement process, selects a provider (or providers) and pays for any outcomes achieved
BUT Payment by Results contracts can be a challenge for providers, especially those who can’t afford to operate whilst waiting for outcomes to be achieved, or have risk-averse governance structures. This means that VCSE organisations can find it hard to apply for Payment by Results opportunities, yet are often well placed to understand and respond innovatively to the needs of service users, in particular those with multiple and complex needs. SIBs can provide the opportunity for a more open market
Features of SIBs include:
The up-front service delivery costs are covered by investment capital.
This means that the financial risk is taken by investors
SIBs delay the cost of service provision for commissioners – who only pay for those outcomes that are achieved
It is likely that some additional resources will be needed to get the data right early on

4. What is a Social Impact Bond?
Investor(s)
Provider(s)
Upfront Working Capital
Outcomes Payments (triggered by results)
Services
Provided
For Life Chances Fund we can only fund Local Government (not central Government) Commissioners
Commissioners could include charities and foundations with the power to commission in their own right
Target
Population
Commissioners
Results of
Social Outcomes
Achieved

5. What is a Social Impact Bond (SIB)?
Financial Risk taken by the investors means that
Resources are freed up:
Commissioner funds used to start up fee for service
Provider funds used to start up payment by results
A wider range of smaller local providers can provide
But, is this better value for money for you, given:
Data management, collection, analysis & verification costs
Management and governance costs
Investment arrangement fees and return on investment
A Social Impact Bond is a Payment by Results Service Delivery contract, with start up investment
In other words, a commissioner (or a group of commissioners), is willing to pay for a number of outcomes for a group of service users.
The commissioner goes through a procurement process, selects a provider (or providers) and pays for any outcomes achieved
BUT Payment by Results contracts can be a challenge for providers, especially those who can’t afford to operate whilst waiting for outcomes to be achieved, or have risk-averse governance structures. This means that VCSE organisations can find it hard to apply for Payment by Results opportunities, yet are often well placed to understand and respond innovatively to the needs of service users, in particular those with multiple and complex needs. SIBs can provide the opportunity for a more open market
Features of SIBs include:
The up-front service delivery costs are covered by investment capital.
This means that the financial risk is taken by investors
SIBs delay the cost of service provision for commissioners – who only pay for those outcomes that are achieved
It is likely that some additional resources will be needed to get the data right early on

6. The value for money case for a social impact bond
Commissioner Saving For Local Community Benefit
Cost to Commis-sioner of fee for service or PbR
Savings to Commis-
sioner
Savings to Commis-
sioner including
20% LCF
Top Up
Impact of SIB
Investor return & SIB costs
Net Cost of Interventions
Cost of more effective Interventions
Net Cost to Commissioner
Status Quo
SIB
Cost Saving
Cost Saving with LCF

7. Life Chances Fund Supporting People through Social Impact Bands The life chances Fund Aim
To help people in society who face the most significant barriers to leading happy and productive lives (by growing the market in locally commissioned SIBs):
34 SIBs launched and 25 procuring in 17/18 (Commissioning Better Outcomes)
85 SIB projects applied for first two LCF rounds.
Round 3 by 15/9 covers
Drugs and Alcohol; Young people Children’s Services
4. Early years Older people healthy Lifestyles
Innovation Strand – e.g.: homelessness, victim support, flood protection
Introduce our role as Fund Administrators

8. Life Chances Fund Expressions of Interest
Third round open to 15 September
Electronic application form online
helpline to assist -
LCF funding team speaks to each commissioner named
Development Grant money of around £30K
Full award application - end April 2018
Ministerial decisions - July 2018
Launch your Social Impact Bond by July 2019
The LCF support contract can provide help from DG to launch
The date of the third round will be confirmed after purdah
Applications will be made via the online portal on the life chances fund website (link provided later in presentation)
We can provide support via our helpline.
It’s important to be aware that, as part of our assessment process, a member of our funding team will be in touch with each commissioner named in an application – please let commissioners know this so that they expect our call

9. LCF Call out requirements
Typically 20% contribution from Life Chances Fund
No more than 49.9% Life Chances Fund contribution
Must be 50%+ outcome based
Primarily Local Commissioners
Early intervention in complex social issues
VCSE and service user active involvement
LCF final outcomes payments Autumn 2025
LCF closes 2026
Learning is evaluated and shared to scale SIB benefits to others
Scale – outcomes

10. Thinking of Applying? First Steps…
Research Social Impact Bonds & intervention ideas & talk to:
others who applied to Life Chances Fund previously
commissioners willing to pay for outcomes
service providers experienced in the service area
service users and the local community supporting them
Investors early to give you advice on whether the SIB is attractive to investors/test fit with investment fund aims
your peers in this room now and after this event
Do a skills audit: what Technical Support do you need to buy in
Read the LCF guidance and look at the LCF EoI online
Gather and share learning – subscribe to GOLab newsletter and look at the Big Society Capital Good finance

11. Established in 2016 as new centre of academic excellence for innovative government commissioning
Joint partnership between the University of Oxford & HM Government

12. Trusted knowledge base
Vibrant hub of stakeholders
Centre of academic excellence
Support for commissioners

13. Research challenge
The promise of OBC… …that it can deliver a range of benefits including: improved cost effectiveness, innovation, accountability, systems-level planning, and responsiveness, with risk transferred to the private sector (NAO, 2015; Brown, 2013). At the same time, evidence supporting the effectiveness of schemes operating under OBC is alarmingly limited (Fraser et al., 2016).
Public service commissioning and performance management systems have become increasingly focused on outcomes.
We understand OBC as encompassing a range of approaches including PbR and SIBs.

14. How we work with commissioners
Individual engagement prior to application for development funding
Thematic workshops and masterclasses for commissioners
Weekly telephone or online surgeries, every Tuesday, bookable online
Publication of technical guidance and toolkits around the development and implementation of outcome based commissioning
Curating and publishing the best sources of academic and practitioner literature

15. Life Chances Fund Supporting People through Social Impact Bands Annex
For more information about Life Chances Fund visit
For information/resources around SIBs visit:
data.gov.uk/sib_knowledge_box/home
For any other questions –
Introduce our role as Fund Administrators

16. Get in touch http://golab.bsg.ox.ac.uk @ukgolab
linkedin.com/in/go-lab /
Get in touch

17. Case Study – Ways to Wellness SIB A social prescribing service
Ways to Wellness SIB is for people in the west of Newcastle whose daily lives are affected by certain long-term health conditions. GPs refer patients to the service. Ways to Wellness provides a link worker to complement the medical support that people receive, to help them feel more confident to manage their long-term conditions and make positive lifestyle choices. Structure: The seven year project offers social prescribing for up to 3,500 patients at any one time in the west of Newcastle. In the first year of service, April 2015 to March 2016, 1,126 new patients were referred, 83% of which continue to use the service. Finance: Ways to Wellness has been awarded £2 million from the Big Lottery Fund Commissioning for Better Outcomes Programme, £1 million from the Cabinet Office Social Outcomes Unit and £1.63 million from Bridges Ventures Social Investment Fund. The service is expected to turnover £10 million over the duration of SIB.

18. Thank you! A world better led, better served, better governed
Supporting innovative public sector commissioning
to achieve better social outcomes
through world-class academic research and practitioner engagement
A world better led, better served, better governed