Report on the NSW Social Impact Bond Pilot

Authored by Peter Shergold, Cheryl Kernot, Les Hems, in partnership with Corrs Chambers Westgarth, JBWere, Macquarie Group, The Young Foundation

Traditional ways of funding not-for-profit organisations (NFPs) to deliver programs that address complex social problems are struggling to keep up with demand.

Despite record high levels of government funding for NFPs, there is still a significant level of unmet need and new approaches to funding NFPs are being explored. There is increasing international interest in the potential of one particular type of social finance – social impact bonds (SIBs). SIBs, it should be emphasised, are not a panacea. Their use should complement existing modes used to fund community benefit goals.

Project objectives

In this report, the Centre for Social Impact (CSI) has addressed two key questions:

1. Whether the SIB concept is feasible in a New South Wales (NSW) context
2. Whether NSW has the necessary ingredients: market conditions, NGO capacity, social investment interest and government preparedness, for this new approach to funding.

To answer these questions CSI has held detailed discussions with and considered the perspectives of NFPs, social investors/philanthropists and government agencies. The overarching conclusions are that CSI believes that the SIB concept is feasible and NSW does have the necessary ingredients, although there is much work to be done to deliver a SIB pilot.