News and Comment

Is social investment the answer?

Monday 12 September 2016


At OPM Group we have been involved in much of the early thinking around new models of financing and investment, and how these are changing the landscape of commissioning and delivery, for a number of years now. We have shared our experience of evaluating SIBs, designing feasibility studies and delivering commissioner advisory support through a series of blogs and articles, and have attended roundtables, launches, conferences, events and joined in numerous other discussions about the potential of these new models.

But we still have so many questions. To what extent are new models of financing and investment the answer to funding shortages today? What is the potential in the longer term? Is social investment to attract ‘new’ money or improve outcomes – or both? What do commissioners, providers and social investors need in order to deliver it? To what extent are current models scalable? And, crucially, is social investment the answer?

To help us develop our thinking we invited a small group of friends around the table from commissioning, provider and funding backgrounds. We asked them to help us work through these questions from their perspectives, to help identify commonalities and differences in their experiences, needs and opinions. And also to test out whether there was any benefit of bringing together stakeholders from across these different roles. And we found that there were, many.

We learnt of the strengths of current Social Impact Bond (SIB) models of funding and delivery. For example, as well as fronting money, funders can play an important ‘critical friend’ role, supporting providers to think strategically about how they identify and measure against the progress of their intended outcomes. Where this works well, the funders act as a core member of the provider team and provide ongoing advisory support across the life of the project.

This comes with some caution however. It is clear that the current investment models work well for more established providers which have the existing structures, experience, networks and resources needed to receive social finance and deliver on its requirements. As such, we have designed a toolkit for smaller providers to support them in negotiating the terrain, identify the forms of social finance that works for them and to help get them on the ladder of social investment.

The story for commissioners is equally complicated. The atmosphere of austerity naturally encourages local authorities to be more risk averse. This means that whilst new models of social financing and investment might seem a logical answer to budget cuts they can actually generate a great deal of cynicism. Indeed, for our guests, the issue is less about innovative sources of funding and more about innovative responses from providers to tackle local problems. It is – as ever – an outcome question, not a funding one.

As such, the advice of our round table experts is that the focus on the funding model is not necessarily the right place to start. For them, what is far more important is understanding the outcomes to be achieved and building the right sorts of partnership arrangements to achieve against those outcomes. Part of this process is to understand what problems are being tackled well by providers, as well as identifying areas of ‘outcome failure’ to prevent the cycle from happening again.

This observation has led to us to design a series of workshops that bring together commissioners and providers to talk about how they can collectively tackle outcomes in a creative and innovative way. It has been a helpful reminder for us that money alone isn’t the answer but that problems are best solved by a room full of people having a conversation.

More information about our work in this area can be found here. If you’d like to discuss any of this work, please contact Peter Holland.