Defining ‘success’ in social impact investments

In Australia, New South Wales, interviewees believe that a successful social impact investment program would achieve positive outcomes for target populations, new sources of funding for services, and increased reach and impact of the impact investing program, among others. The specific success metrics included positive results for the target population, new-level appropriate funding for services, and improved practices. Several factors were identified by interviewees as barriers to achieving success in social impact bond (SIB) phases, including funding design/advisory work, intensive resourcing compared to Business as Usual (BAU) programs, and access to data.

Scaling social impact investments

The report suggests that insufficient exploitation and innovate too soon are pathologies that can limit the impact creation potential of social impact innovations. Furthermore, several routes for scaling or replicating social impact bonds for service delivery were identified, including the government’s funding of multiple SIBs simultaneously or sequentially and a commissioner developing SIBs identified by a provider or other third party. In terms of scaling dilemmas, there were a number of tensions or contradictory needs identified, including fidelity to licensed programs vs. adaptation needed to fit local context and mainstream services.

Barriers to scaling

The report outlined two pathologies that limit the impact creation potential of social impact innovations: insufficient exploitation and innovate again too soon. In addition, they identified barriers to scaling, such as insufficient data sharing, privacy issues regarding data sharing, and a small pool of potential participants.

Measures to support scaling

Measures to support scaling were identified, namely streamlined ethics and data privacy processes, funding development support to build personnel capacity, and funding for the design of deal frameworks, standard contracts clauses, and supporting tools such as financial models. Effective processes for valuing IP and negotiating the use or sharing of IP, programs that support larger populations rather than more niche services, and the structured and systemic sharing of existing datasets were also identified as measures to support scaling.

Component decoupling and scaling

Through interviews and research, a theme that emerged was the isolation and replication of specific components of SIBs or SIB programs to support scaling. The report identified several SIB characteristics that could be decoupled for scaling, including operating structure, financial structure, governance structure, data collection and sharing agreements, and data collection/management systems.

Organisational capabilities required for participation

Increasing participation in SIBs calls for a range of new organisational capabilities, such as scaffolding, skills for negotiations and business development, active contract management, and cross-sector understanding. The study suggests that building these new organisational capabilities requires experimentation, openness to collaboration and co-design, and the perception/awareness of SIBs and the skills to match their complexity.

Unintended consequences of participation

Participants in SIBs reported several unexpected outcomes, such as changes in their internal structures, heightened discussions concerning IP of social programs, and new ways of working required for these programs providing ‘fresh eyes’ on existing ways of working.

Conclusion

The study recommends establishing learning networks, such as fostered networks of professionals from various sectors, for continued education and collaboration. It also emphasizes the importance of committing to SIBs as a long-term investment and adopting measured and cautious experimentation by stakeholders to achieve a positive impact that could tackle complex issues.