Case Study

Social Impact Bonds

Client: Big Lottery Fund and Red Cross | Sectors:

The world is focused on achieving the Sustainable Development Goals, but there is a $2.5trn funding gap to ensure they are achieved, and a general recognition that we have not yet tackled some of society’s greatest issues. There is therefore an increased focus on how different players can be brought into the design and delivery of public services, including social entrepreneurs and the private sector. 

Impact bonds are widely seen as having the potential to support this agenda. In an impact bond, service providers only get paid when outcomes are achieved and a private investor provides the upfront funding to launch the service. They provide an opportunity to bring together governments, social entrepreneurs, and bring in private capital to fund new services. There are now 150 impact bonds worldwide, with more in development. 

We have been at the forefront of the impact bond agenda.
Our first impact bond evaluation began in 2014 and we are now working on nine projects, either through evaluating impact bonds or providing consultancy support to help them get launched. We began in the UK with an evaluation for the Big Lottery Fund. We then started doing consultancy work, such as supporting a charity in the UK launch an impact bond to introduce a parenting programme in London. 

Through combining the skills of our UK policy team with our international team, we are now working on international impact bond projects. This includes evaluating a mobility centre fund by an impact bond run by the Red Cross in Nigeria. As we are one of the leading impact bond evaluators, our work has received a lot of attention. We have been appointed a Fellow at the University of Oxford to advise on impact bonds, and were recently invited to speak at an international impact bond working group attended by a range of interested donors including governments from around the world, the UN and the World Bank. As a result, we have helped governments and NGOs learn the lessons from pilot impact bonds and apply them to future programmes.

The research found that the key benefits of SIBs include more innovate service delivery, additional investment and a more outcomes focused culture in service providers. One of the main challenges identified was that the scale of the Social Impact Bond needs to be large to justify the resources involved. Although there were a common set of main benefits, our research highlighted how diverse the wants and needs of those involved in SIBs are.


Key Experts

James Ronicle Associate Director