DAY 4 : Social Impact Bond

Day 4 started with a presentation on Social Impact Bond (SIB), which is not a bond! but a social investment backed payment by results contract between an outcomes payer (public sector commissioner, foundation), private investors and service providers (often the voluntary sector). In addition, some necessary conditions are required, like: the social problem for an identifiable population not well served by current services, a measurable social outcome, investors willing to take the eventual performance risk, the outcome payer ready to pay for evidenced outcomes and service providers able to deliver the required service.

In order to better understand the functioning of a SBI, we treated the case study of the World’s first Social Impact Bond to reduce reoffending in Peterborough (UK). In 2010 Social Finance raised £5 million from trusts and foundations to launch the first ever Social Impact Bond to reduce reoffending among short-sentenced offenders leaving Peterborough prison. In July 2017, the Ministry of Justice announced that the Peterborough Social Impact Bond had reduced reoffending of short-sentenced offenders by 9% overall compared to a national control group. This exceeded the target of 7.5% set by the Ministry of Justice. As a result, the investors in the Peterborough Social Impact Bond received the payment.

After the break, ClearlySo, impact investment bank, gave us an overview on the impact investing landscape in Europe and explained its core business which is about supporting the capital raising of high-impact businesses, charities and funds through financial advisory work.

In the afternoon, we were split up into different groups depending on the topic we were interested in. I decided to join the group focusing on portfolio approaches for venture capital vehicles in Brazil where we debated the asset selection approaches: top down (decisions based on investment thesis) and bottom up (decisions bases on what is really happening on the market). Further more, we also covered how the portfolio management could add value to the business and finally the impact measurement based on different maturity stages of each company.

Before the end of the 4th day, another deep topic was shared and discussed among participants: what happens when social investors exit from their financial inclusion investments?

3 main considerations for an investee’s exit readiness: social impact achieved, financial sustainability and organization resilience. Several aspects should be also taken into consideration: management the continuity, selection of aligned buyers, contractual agreements at exit.

In addition: what if responsible investors sell their stake to an investor that doesn’t place priority on the social mission? The risk of mission drift or abandonment is real, and responsible investors must consider it as they make their exit decisions.

Responsible exits support the preservation of the investee’s social mission, and they take place at a time that’s best for the industry.

DAY 5 : Impact Investing and Technologies

Day-5, unfortunately last day of this incredible journey, was dedicated on investment investing and technology.

Inspiring lesson on how the use of technologies such as blockchain, digital payments, artificial intelligence, satellites and the internet of things could exponentially drive exciting changes and boost the impact investing sector.

In fact, digital and collaborative technologies enable powerful mechanisms for scaling social innovations through global and high-engagement platforms and social movements. In addition, technology has the potential to accelerate progress in developing countries and to stimulate new approaches in generating sustainable financial and social returns.

A certain number of practical cases were presented. I found particularly interesting, the following ones:

Lean Data provides data (social performance, customer feedback and behavior) to social enterprises for building more impactful businesses. Lean data uses low cost technology to gather high quality data.

Bext 360 tracks and blockchains goods (coffee for instance) at every step in the supply chain providing transparency and the platform is updated and validated in real time.

Wala brings banking to millions through a mobile app. It’s a digital financial platform that works with financial institutions to offers free banking services and low cost financial products. It is building a new way of banking for the under-banked and non-banked in Africa.

This ends my journey at Said School, Oxford University, and the Impact investing programme. These are the major take aways of my experience:

  • impact should be integrated in all financial decisions
  • intentions are important, but sometimes impact is the most important
  • the use of technology can amplify the intended impact
  • time: impact measurement and management are key for impact
  • exit: only fall in love once

A special thanks to the Oxford teachers and experts:

Gayle Peterson, Alex Nicholls, Jenn Pryce, Anthony Ross, Karim Harji, Peter Hinton, Rod Schwartz, Aunnie Patton Power, Gilberto Ribeiro

Oxford Programme team:

Rola Elchami, Annabelle Townley, Carlota Rodriguez, Kathleen Simpson

Said School, Oxford University: it was just amazing having the honor to study, live and visit the world’s second-oldest university in continuous operation.

Last but not least thanks InFiNe.lu and ABBL for this great opportunity!

Author: Fabio Mandorino