The Government Programme for National Recovery 2011-2016 contains the commitment to establish a new model of financing social interventions — called Social Impact Bonds — that share audited exchequer savings with charitable and voluntary organisations (Section 2.13.4), as well as a commitment to examine outcomes-based contracts with community organisations to help reduce re-offending by young people, based on the social impact bond model in the U.K. (section 3.33.5). Social impact investing works by identifying public sector benefits that can be achieved by tackling social problems early and raising private capital to fund these interventions up-front. The State will only agree to repay investors if agreed outcomes are achieved.
An Advisory Group, chaired by the former Secretary General of the Department of Community Rural and Gaeltacht Affairs, Mr. Gerry Kearney, was established in August 2011 to explore the potential for social impact investing in Ireland. My department was represented on the Advisory Group. The group has been assisted by a project team consisting of members from Clann Credo — the Social investment Fund, the Centre for Effective Services and Social Finance Ltd (a UK based promoter of social impact investing). A scoping exercise was conducted by the project team under the guidance of the advisory group to help assess the potential of social impact investing in Ireland. The conclusion is that social impact investing is both desirable and feasible in Ireland subject to piloting some projects that have emerged from the scoping exercise as projects that are likely to provide improved social outcomes than can deliver social value and public sector benefits.
The scoping exercise undertaken by the Advisory Group is a welcome piece of work which has identified some opportunities which have the potential to progress to pilot social impact investment projects. I consider that if these opportunities are to progress further to a formal pilot phase then the senior management of the relevant government departments and agencies will have to carry out a full assessment of the proposals and recommend whether or not a project should proceed to a formal pilot phase. That assessment should have regard to what the appropriate outcomes are, what metrics should be put in place to measure outcomes, what financing arrangements are appropriate for particular projects and other due diligence and legal arrangements that are appropriate.
My department has written to the departments seeking their assessment of the projects relevant to them; how they measure up, what additional exchequer savings are achievable from the proposed interventions and how, and by whom, they should be measured and monitored. Given that cross-departmental and cross-agency issues may arise in some of the potential pilot projects, how such issues and arrangements are dealt with also needs to be considered and addressed.
A steering committee will be established to oversee this next stage of development. This committee will be charged with assessing the responses from departments and overseeing the organisational arrangements that are necessary to deliver social impact investment projects. The committee will include representatives from the Advisory Group who have overseen the scoping work to date and representatives from line departments under whose aegis potential projects are being considered for the next stage as well as representatives from this Department.
