Social investment - the way forward for public services?
One of the challenges in developing ‘social action’ approaches to public services, where volunteers play a key role in delivery, is working out how to pay for them. A couple of weeks ago I attended the ‘Social Investment and Public Services: the next five years’ conference. Jointly hosted by Social Finance, Big Lottery Fund and the Local Government Association, the event brought together over 400 funders, commissioners, providers and other interested parties to explore the ins and outs of using social investment in public services.
Here are five things I learned:
There is a real and growing need for new forms of investment…
Despite considerable reductions in public spending over the past few years, there’s still a long way to go to eliminate the deficit. Over the next five years we can expect to see public services continue to tighten their belts, while at the same time dealing with rising and complex demands. We need new forms of investment that are accessible, flexible, operate outside political cycles, incentivise innovation, and galvanise local partners to work towards clear and common goals.
But it is really challenging to make it work in practice
The case for social investment is pretty clear, but it’s not easy in practice. Some of the key challenges raised at the event included:
- Helping Commissioners and Members to feel comfortable in adopting an investment mindset.
- Coping with the rigorous demands of social investors if you’re a small provider with limited capacity.
- Adapting local procurement processes to be more flexible and responsive, whilst still meeting the required standards of best practice.
There’s no easy solution to any of these issues but you can learn a lot from organisations that have already been through the process (see below).
There is no single ‘right’ way to do social investment…
There are a wide range of different approaches to consider in setting up a social investment model. Some commissioners may be very clear about the problem they are trying to address, but be open to innovative solutions. In these cases, they may be happy to work with providers and investors to think about their metrics, target populations and the design of the intervention. In other instances, they may start with a very clear specification and simply be looking for the best provider to deliver it. No approach is right or wrong but it is helpful to be clear about your approach from the start.
But there are some logical steps you can take
Many of the methods and techniques used in a Social Impact Bond are common to good commissioning practice. You need to have good market knowledge, be able to clearly specify the outcomes you are trying to achieve and achieve the necessary standards of fairness and transparency in your processes. There’s also a logical sequence of questions you need to ask yourself:
- What is the problem you have identified?
- Which group of individuals would benefit from a solution?
- Which types of services could improve outcomes?
- How should success be measured and paid for?
There’s lots to learn from the early adopters
If you’re just starting to think about social investment now, you’re in a great position, as there is a huge amount you can learn from organisations that have already been through the process. For example, Essex County Council has undertaken work to support children at risk of going into care. They used a Social Impact Bond to fund Multi-Systemic Therapy for 380 young people and their families over an eight year period. At the conference, they spoke about the rich and valuable learning they drew from their first attempts at using social investment – and how much easier they expected it to be second time round. They have also shared a useful case study of their work, alongside other national and international examples, on the Centre for Social Impact Bonds website.
There’s also lots of helpful information being generated by our partners on the Centre for Social Action Innovation Fund, the Cabinet Office, together with Social Finance and the Big Lottery Fund, which you can find here. We hope it will encourage many more commissioners, funders and providers to think creatively about how social investment, and social action, can deliver better outcomes.