Author: 
Angela Massey, Queensland Council of Social Service
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Social impact bonds (SIBs) are an innovative approach to funding that pay a return based on the achievement of agreed social outcomes. Private investors provide capital to pay for program delivery and receive a rate of investment return that is linked to the success of the program, as measured against clearly defined objectives.

Since the first SIB emerged in the UK in 2010 the concept has been trialled across the world, including in Australia by the New South Wales and South Australian governments.

In the current environment, with the focus on measuring and improving outcomes across the sector, these types of funding arrangements seem to make sense. They have the potential to provide significant benefits to governments, service providers and investors alike. However, they are not suitable for all social programs.

In a recent article on assessing programs for social impact bonds Elyse Sainty, Director of Social Ventures Australia warns that while social impact bonds are a promising innovation, they are not a silver bullet. Organisations thinking of embarking on the SIB journey need to work through a number of complex issues. The article provides some key questions and ‘rules of thumb’ that organisations should consider to test the viability of a prospective SIB.

As the focus continues on delivering better outcomes and ‘pay by results’ contracts we expect to see growing interest in innovative funding approaches like SIBs.

For more information on social impact bond case studies visit the SVA website. For information on other finance options check out the Community Finance page on Community Door.

In the first reading of the 2015 Queensland Budget Speech on 14 July 2015, Treasurer Pitt announced that the Queensland Government will pilot three social benefit bonds aimed at sourcing funds from the private sector to finance the achievement of quantifiable social outcomes in the community. 

The Queensland Government have since released an information sheet on social benefit bonds.

Paxton-Hall lawyers has provided a detailed article on the details and impacts of social benefit bonds in Queensland.

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