A Funder’s Perspective on Public Social Partnerships and Social Impact Bonds
The Robertson Trust
Conclusion and Key Learning
This paper has provided a brief overview of recent developments around PSPs and SIBs in the UK and has assessed the comparative strengths and weaknesses of both models from a funder’s perspective. Specifically, the paper has highlighted that:
(i) Both PSPs and SIBs have qualities that may attract finance from charitable funders interested in achieving social outcomes. However, both models also have issues that may act as barrier for funders choosing to invest in them such as the current tendering process that services in the PSP model must go through before they receive public funding.
(ii) Both PSPs and SIBs may be able to produce high quality services by utilising the skills and experience of the third sector and other partners in developing innovative solutions to social problems.
(iii) Both PSPs and SIBs may provide value for money for the public sector by ensuring that public funding is only used to fund services that are proven to achieve positive outcomes. However, the public sector may pay more through the SIB model than they would through the PSP model.
(iv) Both PSPs and SIBs offer a way for third sector organisation to access more sustainable funding than is currently available. However, through bringing together the third sector and the public sector at the outset, PSPs can be seen to potentially offer a more sustainable funding model than SIBs.
A major challenge in assessing the attractiveness of both models is the limited evidence base they have. This is due both to the small number of PSPs and SIBs that have been setup to date and the lack of robust evaluations that have been undertaken on the ones that have been. Even where evaluations have been published, there is a lack of consistency around why one service has been deemed a success and others have not. In order for the strengths and weaknesses of PSPs and SIBs to be properly understood and for funders to understand the merits of becoming involved in the future, more detailed evaluations need to be undertaken of the models. This will provide those who are considering becoming involved in future pilots with a clear expectation of what each model entails. Additionally, it will help ensure that money is being invested into those models that produce the best results and that time and resources are not wasted through pursuing social investment models that do not offer genuine value for money in the long term.
For the future development of social investment in the UK, aspects of the current models need to be clarified and improved upon. For example, the fact that the mainstreaming of successful services under the PSP model is currently done through a tendering process acts as a barrier for third sector organisations choosing to become involved with them. There has also been a lack of consistency in the PSPs that have been developed to date around which pilots have been rolled out beyond the initial time period and which ones were not3. This lack of certainty and predictability may act as a barrier to charitable funders choosing to finance PSPs.
There is also a need to address the third sectors’ concerns about social investment and ensure they understand the benefits they can offer service providers. At the moment, the process of setting up a project through a social investment model is overly laborious which acts as a barrier for third sector organisations and funders getting involved. Consequently, funders may be holding back to see what happens with the models and as a result, their resources are not being fully utilised. Until these issues are addressed, it is unclear how funders can engage with social investment models in the long term.
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