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Social Impact Bonds encourage targeted investments in well-being. Agreements are drafted so that all parties – the public sector, investors and service providers – benefit.
WHAT IS IT ABOUT?
The Social Impact Bond (SIB) is a form of impact investing. In an SIB, institutional and private investors fund services that promote well-being and assume the risks associated with the provision of these services. Projects are given precise, measurable targets, which reflect the desired increase in well-being. The public sector only pays for results that are in line with the set targets.
An SIB agreement is a tool for systemic change. The public sector can use this tool to develop its procurement procedures, moving away from simply purchasing goods and services towards the acquisition of results and impact. Each year, central government and local authorities in Finland make procurements valued at approximately 35 billion euros, so achieving an impact also means the more profitable use of billions of euros of tax revenue.
What do we do?
With Sitra’s assistance, five social impact bonds are being introduced in Finland. We advise various parties – the public sector, project administrators and service providers – on how to prepare for these agreements. For example, we provide local authorities with support in the financial and operational modelling of their well-being projects.
Who participates?
A SIB agreement requires a buyer of results (a public-sector organisation), a service provider (company or organisation), service financiers (private investors) and a project administrator responsible for the co-ordination of the agreement.
Where are we now?
SIBs are already being trialled in Finland in two projects. The first of these enhances occupational well-being in the public sector and the other, a project headed by the Ministry of Economic Affairs and Employment, accelerates the employment of immigrants.
There are seven SIB portfolios up and running or underway in Finland:
- Occupational well-being (TyHy-SIB)
Commissioners: public sector organizations as employer - Fast employment and integration of immigrants (Koto-SIB)
Commissioner: Ministry of Economic Affairs and Employment - Promotion of Children’s, families’ and youth’s well-being
Commissioners: municipalities - Advancing unemployment
Commissioner: Ministry of Economic Affairs and Employment - Support of the elderly’s indepencence
- Type 2 diabetes prevention
- Environmental Impact Bond (EIB)
SIBs
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