The UK’s recent budget proposal for tax incentives in social investment was greeted with cautious optimism from the sector. Yesterday it was our US sister organisation’s turn to probe through the latest Obama budget. It also made for exciting reading, with two key points to draw out:
“In 2014, the Administration will broaden its support for Pay for Success, reserving up to $195 million in the areas of job training, education, criminal justice, housing, and disability services.”
This allocation marks a $95m increase from the previous budget. For the uninitiated, “Pay for Success” is the American terminology for Social Impact Bonds (SIBs), and the first project has recently launched in New York State aimed at reducing reoffending from Rikers Island jail. Many more SIBs are in the pipeline, including a project to reduce homelessness in Massachusetts and support for low-income children with asthma in California.
However the news which has particularly captured our interest is the endorsement of the UK Cabinet Office Social Outcomes Fund:
The President’s Budget is also proposing a new $300 million incentive fund at the Department of the Treasury to help State and local governments implement Pay for Success programs with philanthropies. The fund will provide credit enhancements for philanthropic investments and outcome payments for money-saving services. This approach borrows from the Outcomes Finance Fund, a similar fund established in the United Kingdom.
The £20m Social Outcomes Fund was announced in November to facilitate the launch of further SIBs. It does this by providing a “top-up” contribution when no one commissioner can fund the outcomes payment because savings accrue across multiple departments.
Continuing on the international theme, Australia’s first “Social Benefit Bond” was recently announced by the New South Wales Government. This project will raise investment to support children in or on the edge of care system, with the aim to return them safely to their families.
It is great to see that several landmarks have already been set in the social investment space in 2013. It is exciting to note that the UK is at the forefront of this market, but also to recognise that we can learn by collaborating with our global partners.
By Sarah Henderson, Communications Analyst at Social Finance