- Release date:
- 9 7 2013
The Big Lottery Fund today announces a new £40m fund to further develop the Social Impact Bond (SIB) market as another way of tackling deep-seated social issues in a challenging economic climate.
Commissioning Better Outcomes is being launched alongside the second phase of the Cabinet Office’s ground breaking £20m Social Outcomes Fund to support the development of more innovative and flexible approaches that are designed to deal with complex and expensive social issues.
Organisations who commission services, often have to spend their money treating problems rather than preventing them. SIBs allow these organisations to attract private investors to fund early or preventative action to tackle the underlying problem of deep rooted and complex social issues which are expensive to deal with.
This moves the focus to the outcomes produced - such as reducing homelessness or tackling youth unemployment - rather than the service being delivered, meaning there is more room for innovation and greater freedom to demonstrate solutions that work.
Each of the outcomes funds has a distinct focus within the overarching aim of growing the SIBs market. The Cabinet Office’s Social Outcomes Fund aims to fund SIBs that lead to new and innovative approaches to public services, which address complex issues using outcomes based commissioning.
Under Commissioning Better Outcomes, the Big Lottery Fund will only fund SIBs that have a clear emphasis on improving outcomes for those most in need and that ensure Voluntary, Community and Social Enterprise (VCSE) organisations have the chance to be involved. The Big Lottery Fund will also only support SIBs that do not replicate or replace services that a public body has a statutory duty to provide.
As the two funds have the same broad aim there will be a single shared application process to make it easier for customers.
Commissioning Better Outcomes will also incorporate a major support package, offering real support for commissioners to develop SIBs. The Big Lottery Fund is appointing a contractor to engage and work with commissioners to help them develop proposals.
In addition, as part of the Big Lottery Fund’s commitment, up to £3m will be available to help commissioners purchase any technical support required to finalise the structure of their SIB.
Both funds will offer top ups to outcomes payments to enable services to be commissioned through a SIB. These services could benefit people and communities across a wide range of areas, from crime and employment to health and housing. Commissioners will be encouraged to actively engage with the VCSE sector throughout the process, and to consult and find support for their proposal from a wide range of different stakeholders and potential delivery partners.
Britain is already leading the world in the development of Social Impact Bonds with more than the rest of the world put together. The Big Lottery Fund and the Government are determined to accelerate the market which is why these funds have been set up. The two funds help tackle the problem facing commissioners where costs for an intervention fall in one place, but the benefits land elsewhere, acting as a brake on the use of SIBs.
Speaking at the launch event today at Raine’s Foundation School, Bethnal Green, Nat Sloane, Big Lottery Fund England Chair said: “There is no doubt that Social Impact Bonds provide an exciting and much-needed source of funding to a sector struggling with the economic downturn. However, as a relatively new concept it can seem daunting to the uninitiated and this is where today’s announcement comes in.
Nat Sloane added: “Commissioning Better Outcomes, the support package that the Big Lottery Fund has unveiled today, and our joined up approach with the Cabinet Office will bring a significant boost to this area of the social investment market. This will contribute to our overarching goal of catalysing the social investment market in England, in a way that supports VCSE organisations to grow and become more sustainable in order to better serve those most in need.”
Nick Hurd, Minister for Civil Society, said: “Britain is leading the world in the development of the social investment market. Social Impact Bonds are an important new tool to encourage new responses to help tackle some of this country’s most deep rooted social problems.
“Through these two complementary funds we are working together to create a joined up application process and making it easier for people and organisations to develop Social Impact Bonds.”
Baroness Thornton, Honourable Secretary of the All-Party Parliamentary Group on Social Enterprise, speaking at the launch event, said: “The Social Investment market is worthy of serious attention from Government, independent funders, VCSE organisations and the finance industry, as its potential for wide-ranging benefits is significant. The launch of Commissioning Better Outcomes and its alignment with the Social Outcomes Fund is great news as it promises to ensure joined up support for the development of Social Impact Bonds as a means of providing social enterprises with a real chance to foster social innovation and the potential for meaningful savings for the tax payer.”
For more information about the two funds, and to submit an expression of interest, visit www.biglotteryfund.org.uk/sioutcomesfunds.
Applicants will follow a two stage application process beginning with an expression of interest and then submitting a full application. Whilst a single application route exists for both funds, they will each be accounted for separately. Once applications have been received the Big Lottery Fund and the Cabinet Office will determine which of the two distinct funding pots is most suitable for each application.
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Notes to Editors
- The Big Lottery Fund, the largest distributor of National Lottery good cause funding, is responsible for giving out 40% of the money raised for good causes by the National Lottery.
- The Fund is committed to bringing real improvements to communities and the lives of people most in need and has been rolling out grants to health, education, environment and charitable causes across the UK. Since its inception in June 2004 the Big Lottery Fund has awarded close to £6bn.
- The Fund was formally established by Parliament on 1 December 2006.
- Since the National Lottery began in 1994, 28p from every pound spent by the public has gone to good causes. As a result, over £30 billion has now been raised and more than 400,000 grants awarded across arts, sport, heritage, charities, health, education and the environment.
- £6.25 million funding from the Big Lottery Fund supported the social investment organisation Social Finance to pilot the world’s first ever SIB at Peterborough Prison, run in conjunction with the Ministry of Justice, to reduce reoffending rates of people leaving the prison.
- The Cabinet Office’s Social Outcomes Fund is an innovative top-up fund that will create many more social impact bonds that make a difference to people’s lives. It will attract new money by bringing in investment to help finance early, preventative programmes on some of the most complex and expensive social problems. The Social Outcomes Fund will be used to provide a ‘top-up’ contribution to PbR or SIB contracts that are designed to deal with complex and expensive social issues. It will catalyse innovative new projects in areas where the wider benefits mean that a SIB is value for money, but where no single commissioner can justify making all of the outcomes payments.
- The Social Outcomes Fund encourages active engagement from the Voluntary Community and Social Enterprise (VCSE) sector to enable service redesign and will accept expressions of interest by any interested party such as a commissioner, service provider, intermediary or investor. It operates only in England, with funding available to government departments, local councils other commissioning bodies, like police forces or the clinical commissioning groups. The Social Outcomes Fund will only top up a minority proportion of outcomes payments and the average across the Fund is expected to be 20% of the total outcomes payments.