1. WHERE CAN SOCIAL FINANCE TAKE US INTHE
FUTURE?
Social Finance is authorised and regulated by the Financial Conduct Authority FCA No: 497568
SYDNEY, AUGUST 2013
Jane Newman, International Director
Jane.newman@socialfinance.org.uk

2. ©Social Finance 2013
ABOUT SOCIAL FINANCE 2
SOCIAL
ORGANISATIONS
Social Issues
Change the way
government tackles social
problems
Expand the range of
investors participating in
social investment
Support growth of strong
and effective social
enterprises
INVESTORS
GOVERNMENT
DELIVER SCALABLE AND SUSTAINABLE SOCIAL CHANGE
OUR MISSION IS TO DEVELOP AND BUILD FUNDING MODELS TO TACKLE
ENTRENCHED SOCIAL PROBLEMS

3. ©Social Finance 2013
THEVALUE OF ACTIVE MANAGEMENT OF SOCIAL INVESTMENT 3
Controlled
innovation
Due diligence
rigour
Immediate
capital
requirements
Investment in
management,
skills & info.
Service
integration &
partnerships
Active investment
Impact
New service
delivery
landscape
In our experience, the value of social investment is often in the expertise, rigour and
capacity it can bring to addressing social needs and scaling enterprises

4. ©Social Finance 2013
BUILDING A SOCIAL INVESTMENT MARKET 4
INTERMEDIARIES
Matching supply and
demand; product
development
“….practitioners agree that, for impact investing to work, attention needs to be paid
to all the key dynamics of the marketplace.” (IMPACT – Australia, 2013)
DEMAND FOR
CAPITAL
Who needs
finance for social
or charitable
purpose
objectives?
SUPPLY OF
CAPITAL
Who will provide
capital and on
what terms?
EFFECTIVE ENABLING ENVIRONMENT
Source: Adapted from IMPACT – Australia. 2013,
DEEWR and JBWere; and Social Finance UK

5. ©Social Finance 2013
BUILDINGTHE UK SOCIAL INVESTMENT MARKET 2001-2012
5
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Social
Impact
VCT to be
launched
Impact
Investment
Fund
launched
GSIF to be
launched
BSC
launched
Impact
Ventures
UK Fund
to be
launched,
Berenberg
Bank/LGT
BSC
Results
Fund to be
launched
Bridges Social
Entrepreneurs
Fund launched
Big Issue
Invest
Social
Enterprise
Fund
launched
Deutsche
Impact
Investment
Fund
launched
Social
Venture
Fund UK
to be
launched
5

6. ©Social Finance 2013
BUILDING A SOCIAL INVESTMENT MARKET 6
INTERMEDIARIES
Matching supply and
demand; product
development
“….practitioners agree that, for impact investing to work, attention needs to be paid
to all the key dynamics of the marketplace.” (IMPACT – Australia, 2013)
DEMAND FOR
CAPITAL
Who needs
finance for social
or charitable
purpose
objectives?
SUPPLY OF
CAPITAL
Who will provide
capital and on
what terms?
EFFECTIVE ENABLING ENVIRONMENT
Source: Adapted from IMPACT – Australia. 2013,
DEEWR and JBWere; and Social Finance UK
  

 e.g. investment contract and readiness fund
Social investment tax relief? - consultation

7. ©Social Finance 2013
7OPPORTUNITIES FOR SOCIAL INVESTMENT ASTHE MARKET
MOVES FORWARD
Health and Social Care
• Scale up established models – e.g. Shared Lives
• New models – support for long term conditions, palliative care
• ‘Internal investment’ models
Social Housing
• Housing e.g.
• Bringing empty homes back into use
• Development of affordable housing
• Specialist accommodation and support e.g.
• elderly; disabled; homeless etc
• Regeneration
Increasingly we see interest in exploring how social investment could be a used to tackle some
of our ‘mature economy’ challenges. E.g.
Social Impact Bonds
• Children in care
• Addiction and reoffending
• Families with complex needs
• Social isolation
• Tackling long term conditions
• Thematic funds – e.g. care and wellbeing

8. ©Social Finance 2013
HEALTH AND SOCIAL CARE INTHE UK –THE SOCIAL NEED 8
A radical shift is required to develop new forms of care and support, which are more
preventative, more community based and better draw on people’s own resources.
Four major challenges :
• Forms of care for older people with
long-term health conditions that provide
better continuity and integration of support
and promote dignity and independence.
• A wider range of provision for people with
disabilities.
• Improving the health of the population,
particularly among more disadvantaged
groups.
• Supporting people to address health
conditions that prevent them from working.
• The number of over 65 yr olds is due to increase
from c. 11 million to c. 16 million by 2021.The
majority will have one or more long term health
conditions.
• Over a quarter of disabled people feel they do not
have control and choice over daily life.
• The average difference in disability-free life
expectancy between people living in the 5% most
deprived wards and the 5% least deprived wards is
17 years.
• The cost to the Exchequer alone of ill health among
the working age population is c. £70 bn per annum.
←
←
←
←

9. ©Social Finance 2013
9EXAMPLE 1: SHARED LIVES
Shared Lives is a service in which an individual
becomes a carer and shares their family and
community life with someone in need of care
support. In many cases that person becomes a
permanent part of their supportive family.
• Shared Lives carers are paid a modest amount to offer long-
term accommodation, short-term breaks and respite care in
their family home. There are now around 8,000 Shared
Lives carers in the UK supporting nearly 11,000 people,
with the sector doubling in size in the last six years.1
• Shared Lives arrangements are organised in the UK by 152
registered local schemes, which play a recruitment, training,
support, and supervision role.
• Individuals in need of a placement are matched with a carer,
through a collaborative process in which they have
significant input. This lays the conditions for a strong
personal relationship in an arrangement.
• Personalised care and the opportunity to share in their
carer’s social networks encourages an individual to gain
independence and work towards achieving personal goals,
improving their quality of life and reducing isolation.
Alan, aged 22 from SouthTyneside,
suffers from Asperger’s Syndrome and
alcoholism.
His family care broke down, and this was followed
by a series of expensive residential placements,
none of which helped Alan and led to deteriorating
behaviour.
Alan was introduced to a Shared Lives carer and
his local Shared Lives scheme carefully managed a
matching process, which started with
get-togethers, progressed to overnight then
weekend stays, and finally a week-long stay prior to
a care arrangement formally being established for
him.
He is now settled and regularly participates in
community education classes and leisure centre
activities, and is working towards achieving a work
placement.
Alan’s Shared Lives arrangement has significantly
improved his quality of life, and saved the local
authority £49,000 per annum (£965 per week).
Notes: (1) Based on data from the NHS Information Centre.
We are developing an investment model to enable a substantial expansion of shared
lives schemes, including through enabling in-house services to ‘spin-out’ and grow.

10. ©Social Finance 2013
CARE AND WELLBEING FUND 10
Social Finance is developing a £20m proof of concept Fund with the following objective:
‘The Fund’s objective is to improve health and wellbeing in the UK with particular focus on
disadvantaged groups such as the frail elderly, those with a long-term health condition and those
with a disability.
The Fund aims to support, with investment, the growth of ambitious charities, social enterprises
and ventures which deliver improved wellbeing. The focus will be on prevention, early
intervention and community-based solutions.’
A strongly mission-driven fund, seeking to attract socially motivated investment with
cornerstone from Big Society Capital and matched by co-investors
Investment Strategy
Equity-like investment approach:
• Active portfolio management
• Risk capital – using combination of
equity, quasi-equity and loan stock
• Aim to build diversified portfolio to
include a range of risk profiles
Key Themes
• Ageing and long term conditions
• Disability
• Health improvement
• Health and employment
Proof of concept fund:
mid single digit net IRR
Social impact assessment and reporting

11. ©Social Finance 2013
SOCIAL IMPACT BONDS 11
SOCIAL
IMPACT BONDS ARE
AN INNOVATIVEWAY
OF ATTRACTING
NEW INVESTMENT
THAT BENEFITS
INDIVIDUALS AND
COMMUNITIES

12. ©Social Finance 2013
SOCIAL IMPACT BONDS:
PETERBOROUGH PRISON PILOT STARTED IN 2010
12
INVESTORS
£5 million
SOCIAL IMPACT PARTNERSHIP
3,000 male prisoners sentenced to less than 12 months
Reduction in
re-offending
MINISTRY OF
JUSTICE/
BIG LOTTERY
FUND
Payment
based on
reduced
convictions
Support in prison, at the
prison gates and in the
community
St. Giles Trust
Support to prisoners’
families while they are in
prison and post release
Ormiston Trust
Providing volunteer
support post intensive
phase or with lower
risk/need clients pre and
post release
SOVA
Support needed by the
prisoner, in prison and the
community. Funded as the
need is identified eg. Lower
level mental health support
Other Interventions
Return depends
on success

13. ©Social Finance 2013
PERFORMANCE MANAGEMENT: AN ILLUSTRATIVE EXAMPLE
Performance management has enabled the manager of the Peterborough SIB to better direct
resources in order to achieve outcomes among short-sentence prisoners.
13
The data dashboards developed in cooperation with
providers has informed the changes in service provision:
1. Informed commissioning of additional services
• Performance management highlighted the high proportion
of prisoners with mental health needs and a gap in the
current service provision.
• In Year 2, the One Service Partnership commissioned MIND,
a mental health charity, to be part of its service offering.
2. Better use of existing service providers
• Analysis illustrated low numbers of prisoners accessing the
family support intervention despite having identified need.
• In Year 2, the service offering was adjusted and a new, in
prison “Maintaining Family Ties” course was commissioned.
3. Improved case worker ownership of services
• Case workers are able to understand the impact of their
service offerings.
• There are indications of improved satisfaction among
service providers when they are part of the decision making
mechanism for improved delivery.

14. ©Social Finance 2013
PETERBOROUGH: AN EARLY GLIMPSE 14
90
95
100
105
110
115
120
125
130
Sep06-Mar08 Sep07-Mar09 Sep08-Mar10 Sep10-Mar12
Rebased reoffending data
Peterborough binary
Peterborough frequency
-1.7%
-0.3%
4.7%
-11.8%
6.7%
-2.5%
2.0%
-23.0%-25.0%
-15.0%
-5.0%
5.0%
15.0%
25.0%
Change in Peterborough reoffending relative to national
levels
Binary Frequency
Sept 06-Mar 08 Sept 07-Mar 09 Sept 08-Mar 10 Sept 10-Mar 12
*This should be interpreted with care since re-offending is measured over a shorter period of
time than will be used when calculating payments on the bond and the national comparator
group will be compiled on a different basis.
On 13 June 2013, the Ministry of Justice published data on the Peterborough pilot. This gives the first
early sense of how the Social Impact Bond is doing. Peterborough has shown a 23% relative decline to
the national data.

15. ©Social Finance 2013
OTHER APPLICATIONS 15
Peterborough
reducing re-
offending - MoJ
Reducing
NEETS (x5)
- DWP
Reducing rough
sleeping - GLA
Reducing
NEETS (x4)
- DWP
Intensive
Fostering -
Manchester
Edge of Care
- Essex
Edge of Care
Adoption
Social isolation
& long term
conditions
Drugs
Recovery
HMG Social Outcomes Fund
Big Lottery Support
Wider set of contractual developments – e.g. PBR, risk sharing, - and developments in social investment

16. ©Social Finance 2013
Initial SIB model
2nd stage
implementation
Scaling
EXAMPLE OF IMPACT DELIVERED SO FAR 16
Peterborough
SIB
Essex,
Manchester
and Liverpool
feasibility
studies
Further PbR pilots
-Doncaster
-Local Government Incentive models
Essex children at the edge of care
MST SIB launched
Procurement support in
Manchester
Announcement of large-scale PbR
focused on recidivism and including
short-sentenced prisoners
Work on additional four SIB models in
Essex, including drugs and social
isolation
Feasibility studies started in five other
local authorities on children in care
Criminal
Justice
Adolescents
in or on
edge of care
Social Impact Bonds are demonstrating an ability to create systemic change.

17. ©Social Finance 2013
BUILDING MARKET INFRASTRUCTURE 17
Outcomes Funding Capacitybuilding Investors
£20m Social Outcomes
Fund (Nov 2012) (Cabinet
Office)
£40m Co-Commissioning
Fund (Big Lottery)
• Single EOI process
• ‘Top-up’ contribution to
outcomes-based
commissions (PbR or
SIBs) - aggregate savings
that accrue across
multiple budgets
• Aim of catalysing
innovation
Market building
• Social Finance
• Big Lottery Support
Funds
• £15m Bridges Social
Impact Bond Fund
In development
• Thematic funds
Investor base
• Social investment tax
relief? (Treasury
Consultation launched
June 2013)
• Investing4Growth
Resources
• Centre for Social Impact
Bonds
• Template contracts
• ‘Knowledge Box’
• http://data.gov.uk/sib_kn
owledge_box/knowledg
e-box

18. ©Social Finance 2013
18
INTERNATIONAL
DEVELOPMENTS

19. ©Social Finance 2013
GLOBAL PERSPECTIVE 19
In Delivery In Development (??)
Uganda 0 1
Mozambique 0 1
Swaziland 0 1
Kenya 0 1
SIBs*
DIBs*
0
5
10
15
20
25
UK Australia US Europe Israel South Africa Canada Columbia
Demonstration SIB
In Development
Launched
*indicative
Source: Social Finance UK

20. ©Social Finance 2013
DEVELOPMENT IMPACT BONDS 20
Working Group case studies
• HIV prevention in Swaziland
• Elimination of sleeping
sickness in Uganda
• Business development
services for SMEs
• Energy efficient buildings
• Low cost private schools in
Pakistan
• Access to secondary
education in Uganda
• Girls’ access to education in
Kenya
Social Finance and the Center for Global Development Working Group to explore how
development funders could improve aid outcomes. Draft Report launched 6 June 2013.

21. ©Social Finance 2013
INTHE SPOTLIGHT 21
• G8 Social Impact Investment Forum June 2013
• G8 Taskforce
• OECD
• EU
o Commission communiqué February 2013
o Social investment funds – EUSEF
• Global Learning Forum
• Etc
Social investment is increasingly attracting the attention of Government…..

22. ©Social Finance 2013
22
GROWING THE
INVESTOR BASE

23. ©Social Finance 2013
23MAPPING OUR ENGAGEMENTWITHTHE INVESTOR UNIVERSE
Trusts and
Foundations
Corporates
Local funds
e.g. Regional Growth
Funds, local authorities,
housing associations,
Investing 4 Growth
Professional social
investors
e.g. Bridges, Deutsche, Nesta,
Big Issue Invest, Social Venture
Fund, LGT/Berenberg
Blue chip asset
managers
e.g. Pensions Corp,
Rathbone
High net worth
individuals and
family officesPrivate banks
Mass affluent
investors
IFAs / IFPs
Deal-specific
engagement
Co-development
Deal-specific
engagement
Corporate finance
relationships
Corporate finance
relationships, sub-
adviser relationships
EIGHT NEW INVESTORS IN SOCIAL FINANCE PROJECTS THISYEAR; £12.6M TOTAL RAISED TO DATE
Tailored products,
e.g. VCT, GSIF
Social Finance and
social care and
wellbeing fund
Fund
seeding

24. ©Social Finance 2013
24
THANKYOU