Social Impact Investment: Building the Evidence Base.

190 Pages·2015·4.919 MB·English

by  OECD

social impact investment
building the evidence base
contents
Chapter 1. Overview of social impact investment social impact investment
Chapter 2. The social impact investment framework
Chapter 3. Definitions and characteristics of social impact investment building the evidence base
Chapter 4. C ontext setting: Differences in social needs and service delivery across
selected countries
Chapter 5. Social impact investment market data: Initial findings
Chapter 6. Policy actions and implications
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isbn 978-92-64-22893-1
93 2015 01 1 P

Social Impact
Investment
BUILDING THE EVIDENCE BASE
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Please cite this publication as:
OECD (2015), Social Impact Investment: Building the Evidence Base, OECD Publishing, Paris.
http://dx.doi.org/10.1787/9789264233430-en
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ISBN 978-92-64-23343-0 (PDF)
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FOREWORD –
Foreword
New and innovative approaches are needed for addressing social and
economic challenges. Social impact investment seeks to leverage innovation
and apply measurement rigor to achieve social outcomes. This approach has
become increasingly relevant in today’s economic setting as social challenges
have mounted while public funds in many countries are under pressure. Interest
in social impact investment has grown considerably across several OECD
countries including the G7 and G20. The field of social impact investment is
expanding rapidly with a growing number of players entering the market. At
the same time, greater knowledge about social impact investment as well as
evidence about market activity and outcomes achieved to date are needed.
The OECD social impact investment initiative is therefore timely as it aims
to inform OECD member countries as well as non-OECD economies about
developments in this area and the potential role of policy.
This report provides a framework for assessing the social impact
investment market and focuses on the need to build the evidence base. The
report highlights the importance of further international collaborations in
developing global standards on definitions, data collection, impact
measurement and evaluation of policies. In a fast evolving new area,
experience sharing between players in the market is also vital. International
organisations, such as the OECD can play an important role in facilitating
these collaborations as well as conducting further analysis and data collection.
The project has been managed by Karen Wilson, consultant in the
Structural Policy Division of the Directorate for Science, Technology and
Innovation at the OECD. The report was written by Karen Wilson, Filipe
Silva, Junior Policy Analyst in the Structural Policy Division of the
Directorate for Science, Technology and Innovation and Dominic Richardson,
Policy Analyst, Directorate for Employment, Labour and Social Affairs.
Social impact investment has become a growing area of interest within
the OECD, linking to two strategic OECD initiatives, New Approaches to
Economic Challenges (NAEC) and Inclusive Growth as well as ongoing
work across a number of Directorates.
The OECD Committee for Industry, Innovation and Entrepreneurship
(CIIE) agreed to the declassification of this report in January 2015.
SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE © OECD 2015
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– ACKNOWLEDGEMENTS
ACKNOWLEDGEMENTS
The OECD is grateful to the Department of Employment and Social Development
in Canada, the UK Cabinet Office, and the Bertelsmann Foundation for their support of
this work.
In addition, the OECD would like to thank the Social Impact Investment Taskforce,
established by the G8 during the UK Presidency, for their input throughout the process.
A particular acknowledgement is extended to the Chair of the Taskforce, Sir Ronald
Cohen, for his leadership, vision and drive in catalysing a global movement to build the
social impact investment market.
The authors would like to thank the many experts who contributed to this work
including all of the members of the Social Impact Investment Taskforce, their colleagues
and others serving on the Working Groups and National Advisory Boards.
During the course of the project, the OECD held two Social Impact Investment
Expert Group meetings and would like to thank all of those experts for their time and
input. The full list of attendees is available in Annex A.
The authors would also like to thank Dirk Pilat, Deputy Director of the Directorate
for Science, Technology and Innovation and Nick Johnstone, Head of the Structural
Policy Division in the Directorate for Science, Technology and Innovation for their
support of this work and input during the process and on drafts of the report.
In addition, the authors thank the Directorate for Employment, Labour and Social
Affairs for their contributions to this work, particularly in Chapter 5 which uses data
from the OECD Social Expenditure database and builds upon their work on social
policy.
The authors also thank colleagues from other OECD Directorates for their input
including the Centre for Entrepreneurship and the Development Centre’s Network of
Foundations Working for Development. Other Directorates engaged in the work have
included Development Co-operation Directorate, Statistics Directorate, Directorate for
Financial and Enterprise Affairs, and Directorate for Public Governance and Territorial
Development.
SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE © OECD 2015
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TABLE OF CONTENTS –

Table of contents
Abbreviations ................................................................................................................... 9
Executive summary ........................................................................................................ 11
Chapter 1. Overview of social impact investment ....................................................... 17
1.1. The need for new approaches to address social and economic challenges ............ 18
1.2. Evolution and trends in the social impact investment market ............................... 21
1.3. Parallels to the evolution of capital markets.......................................................... 24
References .................................................................................................................... 28
Chapter 2. The Social impact investment framework ................................................ 31
2.1. The social impact investment framework ............................................................. 32
2.2. Social needs ........................................................................................................... 33
2.3. Demand side .......................................................................................................... 33
2.4. Supply side ............................................................................................................ 35
2.5. Intermediaries ........................................................................................................ 39
2.6. Enabling environment ........................................................................................... 47
References .................................................................................................................... 51
Annex 2.1. List of SIBs ................................................................................................ 54
Chapter 3. Definitions and characteristics of social impact investment ................... 57
3.1. Existing definitions and challenges ....................................................................... 58
3.2. Definitional characteristics, attributes and eligibility ............................................ 59
3.3. OECD working definition of SII ........................................................................... 74
References .................................................................................................................... 78
Chapter 4. Context setting: Differences in social needs and service delivery across
selected countries ........................................................................................................... 81
4.1. Introduction ........................................................................................................... 82
4.2. Social outcomes and social spending .................................................................... 82
4.3. Models of social service provision: Who does what and how? ............................. 98
4.4. Evaluating what works in social service provision ............................................. 102
References .................................................................................................................. 107

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Chapter 5. Social impact investment market data: Initial findings......................... 109
5.1. Introduction ......................................................................................................... 110
5.2. Data types and data collection purposes .............................................................. 110
5.3. Review of existing data sources: Data sources by framework component ........ 111
5.4. Current approaches to data collection ................................................................. 124
5.5. Current SII data and market estimation ............................................................... 129
5.6. Challenges in SII data collection ......................................................................... 134
5.7. Possible future approaches for data collection .................................................... 135
References .................................................................................................................. 143
Annex 5.1. List of existing data sources .................................................................... 147
Annex 5.2. List of OECD data sources relevant to SII .............................................. 151
Chapter 6. Policy actions and implications ................................................................ 153
6.1. Policy actions and implications ........................................................................... 154
6.2. Policy actions to date........................................................................................... 154
6.3. Recommended policy actions for building the evidence base ............................. 156
6.4. Evaluation of broader social impact investment outcomes ................................. 160
References .................................................................................................................. 169
Annex 6.1 ................................................................................................................... 172
Glossary ........................................................................................................................ 175
Annex A. OECD Expert meetings: List of participants ........................................... 183

Tables
Table 2.1. Examples of Gates Foundation PRI activity ................................................... 37
Table 3.1. List of attributes for social target areas ........................................................... 63
Table 3.2. List of attributes for beneficiary context ......................................................... 65
Table 3.3. List of attributes for good/service characteristics ........................................... 66
Table 3.4. Social returns and economic efficiency .......................................................... 67
Table 3.5. List of attributes for delivery organisation intent ............................................ 69
Table 3.6. List of attributes for measurability of social impact ....................................... 70
Table 3.7. List of attributes for investor intent................................................................. 72
Table 3.8. List of attributes for tisk adjusted return expectation ...................................... 73
Table 3.9. List of characteristics, attributes and eligibility .............................................. 75
Table 4.1. Although younger and older cohorts have experienced little change in
unemployment risks, more unemployed people are out of work for a year
or more ............................................................................................................ 85
Table 4.2. Indicators of policing safety and crime trending in the right directions,
but still have some way to go.......................................................................... 88
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TABLE OF CONTENTS –
Table 4.3. Cross-nationally, changes in aggregate childcare enrolment do not map
to female (un)employment figures .................................................................. 91
Table 4.4. Old-age and health spending dominate public social protection budgets,
and have been increasing in almost all countries ............................................ 97
Table 4.5. The governance of social services is complex and varied across countries .. 101
Table 5.1. Summary of type of demand-side players, challenges and data sources....... 112
Table 5.2. Social enterprise in UK surveys .................................................................... 116
Table 5.3. Summary of type of supply-side players, challenges and data sources......... 118
Table 5.4. Summary of types of intermediaries, challenges and data sources ............... 121
Table 5.5. Examples from academic literature ............................................................... 130
Table 5.6. Some market estimates from industry reports ............................................... 132
Table 5.7. Snapshot of the B-corp profile information .................................................. 137
Table A.5.1. Types of Non-Profit Institutions ............................................................... 152
Table 6.1 Examples of types of policy actions taken in G7 countries and Australia ..... 155
Table 6.2. WGIM guidelines for impact measurement .................................................. 160

Figures
Figure 1.1. A spectrum of capital ..................................................................................... 18
Figure 1.2. The SIITF impact continuum......................................................................... 22
Figure 1.3. Microfinance: Clients and institutions globally, 1997-2011.......................... 23
Figure 1.4. Financial intermediation ................................................................................ 24
Figure 1.5. Financial sector development ........................................................................ 25
Figure 1.6. Life-cycle of a firm and stages of financing .................................................. 26
Figure 2.1. Social impact investment market framework ................................................ 32
Figure 2.2. The SIB model ............................................................................................... 46
Figure 3.1. List of characteristics ..................................................................................... 60
Figure 3.2. Defining characteristics, attributes and eligibility ......................................... 61
Figure 3.3. Social needs and investment sectors .............................................................. 62
Figure 3.4. Degree of publicness ..................................................................................... 66
Figure 4.1. One in 20 over 60’s have dementia, on average one in 8 over 65’s
are subject to long-term care, and in the next 30 years rates the support
ratio for older people will halve .................................................................... 83
Figure 4.2. Australia has the most success in activating low skilled youth ..................... 85
Figure 4.3. Satisfaction with affordable housing increased in recent years,
but experiences of difficulty in meeting costs also increased ....................... 87
Figure 4.4. Prisons in France, Italy and the United Kingdom are overfull ...................... 89
Figure 4.5. In countries where there is low childcare enrolment and low part-time
employment, there is likely to be unmet demand for childcare .................... 90
Figure 4.6. Social protection, health, housing and education account for over 60%
of total public spending ................................................................................. 93
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Figure 4.7. Expenditure trends show services are taking up more of the social
protection budget, in some case exceeding cash spending ............................ 94
Figure 4.8. In most countries old-age spending is growing, in Australia and Japan,
services are increasingly used ....................................................................... 95
Figure 4.9. How much of central government funds are devolved to local authorities
for social interventions varies widely.......................................................... 102
Figure 5.1. Financial assets of institutional investors .................................................... 119
SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE © OECD 2015