1. Sitra and Impact Investing, especially SIBs in Finland
Mika Pyykkö, Project Director
Impact Investing

2. 5 key facts about Sitra +1 Building our future together
A gift from Parliament to the 50-year-old Finland.
An independent foresight agency: futurologist, researcher, visionary, developer, experimentalist, partner, trainer, networker.
Funded by returns on endowment capital and capital investments.
Envisages Finland as a successful pioneer in sustainable well-being.
Its vision is supported by three themes, six focus areas and dozens of projects.

3. Key facts about Sitra’s Endowment Capital
Government contributions to the Endowment
16,8 m€
16,8 m€ (Nokia)
Total 84,1 m€
Key facts about Sitra’s Endowment Capital
Market Value 807 m€ ( )
Book value of investment 661 m€ (balance sheet)
Endowment 235 m€ (balance sheet )
Has to be invested ”profitably and securely” (Law on Sitra 4§)
Returns are used to finance Sitra’s operations (~ 30 m€ annually)
Investment guidelines
Listed Equity ( %)
Fixed Income ( %)
Alternatives (Real Estate, Private Equity) (0 - 20%)
Average returns :
20 years 7,8% p.a.
15 years 3,9% p.a.
10 years 4,3% p.a.
5 years 8,9% p.a.

4. Sitra promoting systemic change
FUNCTIONS & THEMES
PROJECTS
ACTIONS
Circular economy
Resource-wise citizen
RESOURCE-WISE AND CARBON-NEUTRAL SOCIETY
Research
Trial
Pilot
Workshop
Training
Fund
Events
Foresight
Call for ideas
Study
Strategy Challenge competition Networking
Social and healthcare financing
Health tools
Digital Health HUB
CAPACITY FOR RENEWAL
NEW WORKING LIFE AND SUSTAINABLE ECONOMY
Transformation of work
Impact investing
Leadership training for sustainable economic policy
SOCIETAL TRAINING
CONTINUOUS
Ratkaisu 100 challenge prize
Renewal of state cultural grants
Public-sector management
FORESIGHT
Education for a changing world
Vision for sustainable well-being
Development of new business ecosystems
Megatrends
CONTINUOUS

6. Investing with impact Impact ventures Social Impact Bond
(equity...)
Social Impact Bond
Social enterprises
(loan...)
Picture from: Investing for Impact: Case Studies across Asset Classes (2010) Bridges Ventures and the Parthenon Group

7. Sitra and impact investing
Impact investing focus area from May 2014 till December 2017
Focus on well-being promotion
Impact goals
Active impact investing ecosystem
Impact investing model (financing instruments etc) in use in Finland
Impact investing assistance unit

9. Why Social Impact Bond (SIB)?
In fact not a bond, but “a result based funding agreement”
Payment by results -> tax payers money in useful use by support of private capital
Upfront investments to well-being and health -> promotion and prevention
Foresight -> sustainable well-being
Date driven management -> facts, not personal opinion and/or hype
Person/ population group in focus -> segmentation, structures and processes for outcome/impact
Service design -> co-operation/coalitions

10. Mid term review of Prime Minister Sipilä’s Government (April 2017)
…An impact investing project (Employment SIB) will be launched to employ young people and long-term unemployed jobseekers, and private funding will be used to prevent long-term unemployment…

11. The economic and operational model underpinning SIB work
Determine demand and define target group (preliminary) = segmentation
Verify the development of the effect, costs thereof during the past 2-5 years and future trends = compare change in well-being of target demographic group against demand
Verify causes for cost development
Define root causes for cost development and opportunities to prevent these = customer orientation, insight
Define the target results (social and economic) = clear (behavioural) goals
Define the activities necessary to affect root causes (service/operational package) = theory, methods mix
Select organization(s) to implement service package 
Calculate the net execution costs for the service package
Conduct a cost-benefit analysis: achievable benefits vs. required investment
Final decision on establishing SIB program planning etc.

12. The economic and operational model underpinning SIB work – economic perspective
With intervention
Estimate without intervention

13. Measurement of SIB project – based on modeling
Indicators
Result/impact metrics for agreement (when money moves)
Metrics to lead practical activities (optimising the use of resources)
Process metrics (quality of outputs and process)
Other metrics (based on interest of public sector as a bonus payer, investors and/or some other stake holders)

14. Finnish SIB – basic structure

15. SIB II: Fast employment and integration of immigrants (Koto-SIB)
Speed up employment of immigrants, pilot new models of education and employment and combine education and work in a flexible way
Objective
Commissioner
The Ministry of Economic Affairs and Employment
Status; has started officially in the beginning of 2017
Epiqus as a Fund/Project Manager is especially in charge of
Planning and managing the project
Building up the financial instrument = fund (limited partnership)
Fund raising and managing the fund
Organising according to the impact goals of the project education and employment activities of immigrants in co-operation with different service providers
Follow up, interim reporting and the final reporting

16. Epiqus/Koto-SIB ecosystem
Personnel service providers
Educational service providers
Employers
Benefited by managing services
Thousands of identified workplaces
Managing

17. Koto-SIB intervention process

18. Koto-SIB impact indicators
Labour market benefit
Income tax
-> starting point expectation: labour market benefits are paid less to immigrants involved to Koto-SIB and they pay more taxes than immigrants not involved to Koto-SIB
-> goverment pays as a bonus to the fund 50 %
- of saved labour market benefits
- of added tax income
-> best possible scenario based on modelling: goverment can save EUR 70 million during years period; reality about EUR million

19. Koto-SIB – lessons learnt
Program/ Fund Manager and The Ministry of Economic Affairs and Employment as a commissioner have to co-operate close enough
Local employment agencies play an important role
Cultural understanding is important
Training etc activities have to be based on needs of labor market /companies
Incentive structure has started to change whole business area

20. Estimation of SIB portfolio by the end of 2017 – altogether 6 (+ 1) different fund process in Finland
SIB
Status
Occupational Well-Being project (public sector organizations as an employer)
Up and running since 2015 (Epiqus as a Program/ Fund Manager); the fund about EUR 0,6 million
Fast employment and integration of immigrants project (The Ministry of Economic Affairs and Employment)
Has started in January 2017, inofficially in October 2016 (Epiqus) ; the fund about EUR 14 million
Promotion of Children’s, families’ and youth’s well-being (regions/municipalities)
To start (FIM in co-operation with Central Union for Child Welfare and Epiqus)
Advancing employment
(The Ministry of Economic Affairs and Employment)
Procurement process for choosing the Fund / Program Manager (one organization or coalition) is started
Support of the elderly’s independence (regions/municipalities)
Planning is going on
Type 2 diabetes prevention
(The Ministry of Social Affairs and Health?)
Basic modelling is going on

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