New useful social impact bond tools from Nonprofit Finance Fund and McKinsey

A couple of useful tools came out of the US recently (where they call social impact bonds “pay for success” bonds) and are hosted on the Pay For Success Learning Hub. The Rapid Suitability Questionnaire would be quite good to give participants an idea at the start of what they’ve got themselves into and what they need to do to get ready for a bond. The Capabilities Due Diligence Tools could be a bit overwhelming if looked at too early. I think their greatest value will be as an item bank from which relevant points can be pulled at different points! It’s not clear from the tools who might be submitting information to whom, although there is a clear assumption that responses will be scored and compared against other organisations. It’s not clear what process would lead to this situation – perhaps the kind of government Request for Proposal we saw in NSW? A due diligence tool to help service providers and intermediaries to ask for government information would be very useful and might include referral mechanisms, business as usual arrangements for comparison groups and historical data to estimate outcome change/effect. The two tools are described on the website as below:

Rapid Suitability Questionnaires (RSQs)

RSQs are assessments consisting of 10-15 questions that evaluate organizational suitability and readiness to pursue a SIB model. There are seven different questionnaires customized for each of the stakeholders involved in a transaction. RSQs may be used as a self-assessment or a review of potential partners and are designed to help facilitate productive conversations between the various parties involved in a SIB.


Capabilities Due Diligence Tools

Capabilities Due Diligence Tools provide a detailed framework to assess core capabilities for participation in a SIB transaction. They will identify strengths and gaps in readiness and are customized for service providers, intermediaries, and project evaluators. These tools are designed to support advanced discussions and lay the groundwork for collaboration across the multiple stakeholders involved in a SIB transaction. Each set of tools includes six downloadable modules that structure a due diligence process for assessing the readiness of different stakeholders to participate in a transaction.

RBS ranks social enterprises on turnover growth

RBS produces an annual SE100 index that ranks social enterprises based purely on their growth in turnover in the previous year. Social enterprises sign up by completing a comprehensive online survey that covers features of the organisation, financial information and social impact. The dataset created by this survey would be amazing if the data is fairly clean and most organisations complete the survey (it’s quite long and there doesn’t seem to be a way to save, download or print, which might be a barrier). RBS has partnered with Bristol Business School, so I hope we’ll be seeing some interesting papers come out of this survey!

Growing the Social Investment Market: Progress Update (UK Cabinet Office)

The Cabinet Office report summarises recent developments in the UK and sets out immediate priorities. Thumbs up for doing this in only 18 pages!


1. Growing the Social Investment Market: A vision and strategy

2. What we have delivered (Increasing the supply of finance for social investment; Increasing the number of credible social investment opportunities; removing barriers to social investment)

3. Our priorities now (Increasing he number of credible social investment opportunities; Removing barriers to social investment)

Annex A: Market developments (a good and up-to-date summary of what’s going on in the sector, including a page on Big Society Capital investments)

Groundbreaking report sets out suitability principles of social investment

Groundbreaking report sets out suitability principles of social investment.

A report launched today by Big Society Capital, lawyers Bates Wells & Braithwaite and social investment experts Worthstone sets out a set of principles to help investment advisers decide on the ‘suitability’ of social investments for clients. Download report here.

Key findings are:

Investment objectives and social goals – investment advisers need to develop a new set of tools to explore the suitability of investments in light of the social goals of a clients.

Client discovery – Investment advisers should ask each client whether or not the investment objectives of the client involve the pursuit of positive social impact, as well as financial returns.

A portfolio approach – Once full provision has been made for a client’s financial needs as well as any legacy, investment advisers should be able to allocate assets either for philanthropy and/or social investment, where this is in fulfillment of a client’s objectives and the client provides informed consent.

Professional standards and best practice – Further work needs to be done by FSA accredited bodies, in dialogue with the FSA/FCA, and others to encourage the development of best practice standards with respect to social investment, including through the conduct of research, provision of training, raising of awareness, promotion of best practice standards and convening of debate and discussion.

Regulation and policy – The FSA/FCA should in due course consider taking further action if, as expected, the market develops and grows. The developing nature of social investment should be considered and appropriately acknowledged as part of the current MiFID review process.