Governments move on impact investing

The policy sets out a ten point action plan to deliver more social impact investment transactions.

Key events throughout February have signalled a growing shift towards impact investment opportunities across a number of Australian jurisdictions. In February the NSW Government released its Social Impact Investment Policy alongside the creation of the new Office for Social Impact Investment (OSII). The South Australian Government has also moved a step closer to their first Social Impact Bond, with expressions of interest requests for their SIB trial closing in mid-February. We are encouraged by the steps these two governments have taken to harness the potential of the market to solve some of our community’s toughest social problems.

The NSW Government’s Social Impact Investment Policy sets out a clear commitment to continue and build on the experiences of the social benefit bond (SBB) pilot which resulted in the Newpin SBB and the Benevolent Society SBB in 2013. The policy sets out a ten point action plan designed to deliver more social impact investment transactions, grow the market, remove barriers and to build the capacity of market participants. This is an exciting development for the social sector as many of the challenges and obstacles limiting the market have now been clearly identified, and we’re hopeful they will be progressively addressed in this new round of opportunities.

Features of the policy include:

  • Two new impact investment transactions per year – creating momentum and building an evidence base
  • Publishing benchmark costs and outcomes data – simplifying the development of appropriate financial models
  • Roundtables and market sounding – to ensure all parties with an interest in the market are abreast of developments and able to provide feedback
  • Promoting understanding and readiness – across sectors and within government agencies

The initial market sounding workshops held by the OSII got off to a great start. Ian Learmonth, Elyse Sainty, Caitlin Phillips and I attended the first of the workshops; the reducing re-offending, managing chronic health conditions and the mental health sessions. All were valuable opportunities to learn about the process ahead and were well represented. The Government is expecting to move quickly both in the request for proposals and in the joint development phases of the transactions, and it was made clear that service providers will need to commit experienced and senior resources to meet the timeframes.

Our team will be attending the upcoming homelessness and open ideas sessions as well. We are particularly interested to hear from service providers about their ideas in the open session as the initial four category guidelines may sideline some worthy solutions. We look forward to working with innovative service providers in the lead up to the request for proposal deadline in late April or early May.

With strong results for the Newpin SBB, and positive feedback from social purpose organisations about the evaluative rigour encouraged through impact investment structures, we’re excited to be working alongside the sector to explore new opportunities to increase impact through these innovative financing structures.

We look forward to the solutions proposed by service providers in both NSW and SA and are interested to see how different impact investment structures might vary across the states. No doubt new challenges, new solutions and new structures will continue to emerge.

Is your organisation considering opportunities in the impact investment space?