By Will Horwitz
This is the second in a series of posts about Scotland’s exciting progress on promoting prevention and early action, following meetings with government officials and third sector organisations in March 2013. A full report is also available
Scotland has not embraced social investment models like social impact bonds with the same enthusiasm as England, preferring to wait for evidence to emerge. This approach, buttressed by strong scepticism of private sector involvement in social programmes particularly from the third sector, has led to some alternates however. The exciting Perth YMCA Social Impact Bond embeds a SIB in its local community, while Public Social Partnerships offer a light-touch mechanism for involving the statutory sector in new programme design without forcing them to commit funding upfront.
The Perth YMCA SIB
Developed by Perth YMCA as part of the Department for Work and Pensions’ Innovation Fund, the ‘SIB-local’ will support 300 young people into education, employment or training. In contrast to most SIBs which raise finance from large often private sector investors, the Perth team reimagined the model with a more localised community feel, recruiting 12 investors – all local businesses or individuals – who were keen to be engaged directly in the delivery of the project, offering their own skills and resources as well as their investment. They contributed between £5000 and £50,000 each. Over the first six months the project worked with 86 young people, with 61% helped into employment, and most on target to achieve qualifications.
The Chief Executive of YMCA Scotland recently wrote: “Our success is due to the very different model piloted in Perth that rejects distant investors whose sole interest may be financial. Reducing the return to investors has not removed the interest of investors. Bringing investors closer to participants in our model has increased their interest in how the relationships can work in so many different ways.” The YMCA have made public template paperwork to allow others to copy the approach.
It seems like a exciting development. Investors motivated by their ongoing investment in the community offer something very different from distant financiers motivated by monetary return, shifting away from the attempt to co-opt big finance and towards mobilisation of all a community’s resources, including its finance.
Public Social Partnerships
A charity aiming to develop or prove a new approach to delivering some aspect of public services has three options. Pilot it in isolation, with philanthropic or trust funding, and then present the evaluation report to the public sector with a request for future funding. Try and persuade the public sector to fund it from the start. Or involve the public sector in developing the pilot, funding it privately initially but hoping that having bought into it from the start a public agency will be more likely to carry on funding it if successful.
This third route seems the most likely to succeed but it can be difficult to involve public agencies in this kind of informal discussion. Public Social Partnerships offer a solution. They are little more than a framework under which to have this conversation with a local agency but by offering a structure they also seem to make the process more likely. A public social partnership usually involve three stages
A design stage, where the third and public sectors work together to design an intervention
A pilot stage, where the intervention is tested, and adjusted if necessary. This is often funded from charitable or philanthropic sources
A long term delivery stage, where a successful pilot leads to the public agency tendering for long-term delivery. This could be built into the initial contract, although often the public agency only commits to consider tendering if the pilot is successful.
The approach is popular in Scotland, and was developed initially with support from the Scottish Government. It was launched in Scotland in 2009 and initially involved ten pilots. The learning led to production of a guide on PSPs in 2011, and informed the Reducing Reoffending Change Fund design last year. PSPs have been successful in developing new services which then receive public sector funding, but the weaker structure means that projects which perform well in the pilot are not necessarily commissioned (some have not been) (pdf).
The PSP model could easily be adopted in England, alongside SIBs and other models if appropriate. They might be particularly useful for charities looking to pilot a new approach to delivery but keen to involve the public sector as potential future funders. This mechanism ensures local agencies are bought into the process from the start rather than being presented with an evaluation report and funding request at the end. Although not a form of social investment in the strict sense it does seek to achieve similar ends.
This blog, and the paper attached, are the view of Community Links alone and do not necessarily represent the views of the Scottish Government or Scottish Ministers
Image courtesy of Howard Lake