The Big Lottery Fund has announced a new £40m fund which will support public bodies to pay social investors a return on outcomes met through social impact bonds.
The fund, Commissioning Better Outcomes, is being launched to complement the Cabinet Office’s £20m social outcomes fund. Both funds offer top ups to public bodies to pay a social investor a return for successful delivery within a social impact bond.
BIG’s Commissioning Better Outcomes fund will only help finance social impact bonds that have a emphasis on improving outcomes for those most in need and that ensure charities and social enterprises have the chance to be involved. The fund will also only support social impact bonds that do not replicate or replace services that a public body has a statutory duty to provide.
The Cabinet Office’s Social Outcomes Fund has a different focus, aiming to fund social impact bonds that lead to new and innovative approaches to public services, which address complex issues using outcomes based commissioning.
It is intended to be used in cases where solving a social problem will create savings for several different public sector bodies, but the cost outweigh the benefits for the bodies separately. When it was launched last year, it was expected that the Cabinet Office £20m social outcomes fund would enable better collaboration between public sector commissioners tackling complex issues across multiple departments.
A government spokesman said that as the two funds have the same broad aim of growing the social impact bond market there will be a single shared application process to make it easier for customers.
Once applications have been received BIG and the Cabinet Office will determine which of the two funding pots is most suitable for each application.
In addition, BIG will make up to £3m available to help commissioners purchase any technical support required to finalise the structure of their social impact bond.
Nat Sloane, Big Lottery Fund England chair said: “There is no doubt that social impact bonds provide an exciting and much-needed source of funding to a sector struggling with the economic downturn. However, as a relatively new concept it can seem daunting to the uninitiated and this is where today’s announcement comes in.
Sloane added: “Commissioning Better Outcomes, the support package that the Big Lottery Fund has unveiled today, and our joined up approach with the Cabinet Office will bring a significant boost to this area of the social investment market. This will contribute to our overarching goal of catalysing the social investment market in England, in a way that supports VCSE organisations to grow and become more sustainable in order to better serve those most in need.”
