Retail investors looking to make investments that deliver positive social impact are, for the first time, being offered the opportunity to invest in a social impact bond to support one of society’s most vulnerable groups: children at risk of entering care.
Offered by Allia, a charitable social investment organisation, the Future for Children Bond will help to fund a programme of family support for these children and will repay capital plus a variable return according to success. It combines two investments: a low-risk loan to a provider of affordable housing that will return investors’ initial capital; and a high-risk investment in the social impact bond (SIB) for Essex County Council, which will provide the variable return depending on the success of the programme.
What is a Social Impact Bond (SIB)?
- An investment model to provide funding for prevention and early intervention programmes that, if successful, repay investors out of longer-term cost savings to the public sector.
- Fourteen SIBs are live or in development in the UK - the first was in 2010 for Peterborough Prison. See infographic (click to enlarge)
- SIBS have, until now, been funded through private placements with institutional investors, charitable foundations and high net worth philanthropists.
- The Future for Children Bond presents the first public offer for investment in a SIB.
Facts about Allia’s Future for Children Bond
- It combines a low-risk ethical investment into affordable housing (Moody’s Aa rated Places for People Homes) to provide the funds to repay capital to investors, with a high-risk investment into the SIB - with the aim of delivering a high social impact and providing an additional variable return.
- Advised product - applications must be completed by a financial advisor.
- Full terms and conditions here
About the Essex Social Impact Bond
- The Essex SIB (developed by Social Finance) will fund a programme of intensive support to approximately 380 children and their families with the aim of diverting young people from entering care. The success of the SIB will be measured by the reduction in days spent in care.
State care costs up to £180,000 a year for a child in residential care. If the programme is successful, it will result in cost savings for Essex County Council, which can be used to provide a return to the investors.
The Essex SIB has already raised £3.1m of capital commitments from investors including Big Society Capital, Bridges Ventures and Esmée Fairbairn Foundation.
Future for Children Bond: Investment summary
| Places for People Homes (affordable housing)/strong> | Essex County Council’s social impact bond | Allia | |
| How funds are used | Fixed rate loan | Combination of equity and loans | Management fees |
| Allocation of funds as % of total subscribed | 78% | 20% | 2% |
| Returns on maturity as % of total subscribed | 100% (fixed return based upon Moody’s Aa credit rating) | Depends on success of the programme. A return is not guaranteed. |
For terms and more information or to apply, please go to www.allia.org.uk/futureforchildren
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Further information:
Ali Cort/Marcie Bell
The Foundry House
T: 01223 264481 / 07887 484247 / 07730 407085
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