avpn.asia

AVPN Webinar17 March 2014

Social Impact Bonds series #1

Jane HughesDir, Knowledge ManagementSocial Finance US

77 Summer Street, 2nd Floor, Boston, MA 02110

AVPN PRESENTATIONMARCH 2014

Our work spans geographies and issue areas; however, our fundamental approach is consistent.

1) Assess the Problem: First, we dive into the problem and ask: a) What is the problem? b) How big is the unmet need? c) Is there an intervention that can improve results? d) Can impact investing play a role?

2) Identify a Social Outcome Financing Solution: If a social impact financing strategy is appropriate , we identify promising ways to finance the expansion of programs with a track record of performance, a strong evidence base, and a focus on outcomes.

3) Shape the Partnership: We develop performance-based structures that align the incentives of government, investors and providers to achieve shared, measurable goals.

4) Raise Capital: We raise capital from impact investors to fund the initiative.

5) Collaborate through Completion: We work over the investment life with all stakeholders to ensure that social and financial goals are met.

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WHAT WE DO

© Social Finance 2013 4

Social Impact Bond Application Criteria

Address a pressing social need with an evidence-based provider• Policy priority for government

• Reputable service providers with proven track record• Intervention with measurable outcomes

Achieve a positive ROI for Government• Financing needs currently not served

• Net government benefits exceed costs of intervention• Acceptable investment time horizon

Maintain quality metrics & data• Program implementation data

• Administrative data• External evaluation

Do no harm

SOCIAL IMPACT BOND ASSESSMENT CRITERIA

Aligns with most assessment criteria Aligns with some assessment criteria

Evidence-based Intervention

Sufficient Net Benefits within Time Horizon

Replicable and Scalable

Vulnerable Population Potential Intervention

Justice-Involved Adults and Youth

Post-incarceration support and job training to reduce recidivism

At-Risk YouthCommunity-based wraparound services to reduce substance abuse, out-of-home placements, and other problems

Low-Income Mothers Prenatal and early childhood support for first time, low-income mothers to improve family success

Low-Income Seniors Supportive housing and care coordination to reduce out-of-home healthcare usage

Individuals with ChronicConditions

Preventative care and management of chronic diseases, e.g. education and home retrofits to reduce asthma-related emergencies

Chronically Homeless Persons

“Housing first” supportive housing to reduce emergency healthcare and shelter usage

Hard to Employ Individuals

Job training for hard-to-employ populations to fill skill gaps

0 – 5 Year Old Children Providing all children with the tools necessary tobegin school ready to learn

K-12 Students Support educators working to restart chronically under-performing schools

PROMISING APPLICATIONS

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AN INNOVATIVE MULTI-STAKEHOLDER PARTNERSHIP

Outcome PayerState of New York / USDOL

Evaluator / ValidatorDOCCS Research /

Chesapeake Research Associates

Service ProviderCenter for Employment

Opportunities

Investors

Investors invest $13.5mm 1

2

Deliver employment services 3

Achieve outcomes (recidivism, transitional jobs, and employment)

4

Measure and validate outcomes5

Pay if – and only to the extent that – outcomes are achieved

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Receive performance-

based payment

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Social Finance NYS Workforce Re-entry 2013

LLC

Rockefeller First Loss Guarantee Facility

Rockefeller provides 10% first loss protection*

*The first loss protection is only available to the Class A-1 investors

IntermediarySocial Finance Inc.

Social Finance structures,

coordinates, and manages the project

Fund operations

Target Population2,000 High-Risk

Formerly Incarcerated Individuals

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NYS WORKFORCE RE-ENTRY 2013 UPDATE

Intervention

• The Center for Employment Opportunities (CEO) will provide intensive services including training, transitional employment and permanent job placement with the dual goals of reducing recidivism and improving employment for up to 2,000 former New York state prisoners

• New York state will act as payor of outcomes• Public sector savings could equal ~$7.8M

Transaction• $13.5M investment from impact investors and philanthropy, privately placed via Bank

of America Merrill Lynch private wealth platform• Investment will assist 2,000 individuals over 5.5 years• Payments based on reduction in recidivism and increased employment• Outcomes will be validated by independent third party by a randomized control trial

Problem• Prisoners in New York State have a high likelihood of returning to prison after

release, but there are intervention programs that have demonstrated success in reducing recidivism

The nation’s first privately placed Social Impact Bond

- Please type your questions into the box on the control panel

Question & Answer

Register for next webinars at:http://www.avpn.asia/events

• 26 March 2014 Social Impact Bonds #2 Social Ventures Australia, Ian Learmonth, Executive Director of Impact Investing

14 – 15 May 2014www.avpn2014.com