Simplify social impact bonds and cut red tape around social investment, says G8 taskforce

Simplify social impact bonds and cut red tape around social investment, says G8 taskforce
Civil Society, David Ainsworth
15.09.14

 

World governments must simplify social impact bonds and strip away red tape around social investments, according to a report published today by an international task force set up by David Cameron.

 

The Taskforce on Social Impact Investment, chaired by Sir Ronald Cohen, the private equity entrepreneur and first chair of social investment wholesaler Big Society Capital, was set up during the UK presidency of the G8 group of wealthy countries. It includes sector and government representatives from seven countries and the EU, and makes a number of recommendations for governments and other organisations around the world. 

 

Its report, Impact Investment: The Invisible Heart of Markets, makes a series of recommendations for governments around the world, several of which have already been introduced in the UK, such as Social Investment Tax Relief, and a wholesaler such as Big Society Capital to lend money to build the market.
But it also says that the government must make more use of social impact bonds and streamline commissioning to focus more on outcomes, in order to ensure that social organisations are rewarded more accurately for the level of social value they produce.

 

“The revenues of social sector organisations should come to reflect more closely the social value they deliver, and a more coherent market will emerge as a result,” the report says.

 

The report is accompanied by recommendations from a UK advisory board, chaired by Nick O’Donohoe, chief executive of Big Society Capital, which has produced a separate report.

 

Building a Social Impact Investment Market: the UK Experience says all pension funds should be required to offer a social investment option to individual investors, and that there should be transparency around the level of bank lending into deprived communities.

 

It calls for measures similar to the Community Reinvestment Act in the US, which led to large-scale bank funding for social lenders such as credit unions and community development finance institutions.