The state of social impact investing in Australia, according to expert Ben Gales

Ben Gales, Executive Director Economic Policy at NSW Treasury, knows what it takes to build financially sustainable ways of creating social change. He worked on Australia’s first social impact investments, and then lead Social Enterprise Finance Australia (SEFA) for several years. He talks about the NSW Government’s plans for the future of social impact investment in the lead up to this year’s Investing for Good Conference and Marketplace.

Ben Gales, Executive Director Economic Policy at NSW Treasury, knows what it takes to build financially sustainable ways of creating social change. He worked on Australia’s first social impact investments, and then lead Social Enterprise Finance Australia (SEFA) for several years. He talks about the NSW Government’s plans for the future of social impact investment in the lead up to this year’s Investing for Good Conference and Marketplace.

I re-joined NSW Treasury just over a year ago after many years working in social impact investment, and I’m very proud of what the NSW Government has already achieved in this space. We’ve led the way in developing sustainable projects and delivered six investments to date, improving the lives of more than 16,000 people across the state. And there’s so much more to come. 

Here’s a look at where we are today and where we’re focussing moving forward. 

What we’ve achieved so far

We’ve worked hard to develop ground-breaking social impact investments in the areas of out-of-home care, prisoner reoffending, mental health, chronic health and youth homelessness. Cumulatively, these investments represent more than $200 million in outcomes-based contracting.

While several investments are in early stages, results from our first investments are very strong. For instance, this year the Newpin Social Benefit Bond, which works to return children in out-of-home care safely back to their families, achieved a cumulative restoration rate of 63 per cent. This translates to an investor return of more than 13 per cent.

In addition to the investments we deliver, we do extensive work across all sectors to help build the broader market for social impact investment. We’ve provided capacity development workshops to hundreds of not-for-profit organisations, as well as building capacity and awareness amongst our government colleagues and private investors. Further, our Expert Advice Exchange (EAX) has connected 135 not-for-profit organisations to 2,200 hours of pro bono corporate advisory services.   

Growing the impact of our investments

Social impact investment gives us a terrific opportunity to partner with the non-government sector to pilot innovative social service delivery models. The focus on paying against outcomes brings an exceptional level of rigour and evaluation in assessing what works. This means we can build a robust evidence base and fund the most impactful programs, which in turn delivers better value to taxpayers.

We also know we can’t deliver social impact investments without strong partnerships with the social services sector. These investments offer great benefits to the sector, including longer contracts, the ability to innovate and evolve service delivery models, and building capacity to focus on, and measure, outcomes.

We have a solid plan to continue to grow these partnerships over the coming months and years, with the aim of achieving four key outcomes. 

1. Scale our social impact investments

   • We need to scale successful models, both in terms of the size of financial transaction and – more importantly – the number of people benefiting from the social outcomes. 
2. Speed up the process
   • Early pilots took some time to develop, but each project is a learning opportunity and we’re constantly finding ways to do things faster and more efficiently. 
3. Build the pipeline
   • There is ample investor appetite – the limitation is the lack of product to invest in. We have our work cut out for us to work extensively with all sectors to identify a pipeline of investment opportunities.
4. Mainstream the successes
   • Social impact investing is still in early stages of development. We want to build on our lessons, principles and implementation know-how, so that these models are more widespread and commonplace. 

We can’t deliver any of these goals alone. That’s why we’re again partnering with NCOSS for the Investing for Good Conference and Marketplace. By bringing together key decision makers and stakeholders from across all sectors, we can work collaboratively to develop the social impact investment sector, and work to deliver better outcomes for the people of NSW. 

Ben Gales is speaking at Investing for Good 2017 on Thursday 9 November. To learn more about the Conference and Marketplace, visit www.investingforgood.sydney