NGS Super is the first super fund to sign onto the NSW Government’s first social benefit bond, committing $500,000 to the Newpin Social Benefit Bond.
A social benefit bond, of which the Newpin bond is the first of its kind in Australia, is a form of funding for social services. A government pays a social services program provider an agreed funding amount, dependant on that program achieving certain performance targets.
The Newpin Bond is for a program conducted by UnitingCare Burnside to educate new parents in order to keep children out of out-of-home care. The saving to the NSW government is therefore the cost of that potential care, which is approximately $37,000 per child per year plus indirect savings. As at June last year there were 17,200 children in out-of-home care in NSW.
The targeted return for investors is between 10 to 12 per cent per annum over the seven-year period of the investment. Investments for the Newpin bond close on June 30.
Ian Learmonth is executive director, social finance at Social Ventures Australia and has been involved in the structuring of the bond.
As this bond is only looking to raise $7 million, and has a minimum investment of $50,000, he understands that it is difficult for larger superannuation funds to make meaningful investments.
“We need to get some scale if we’re going to end up [getting larger funds interested],” he says.
Generally social services, like Newpin, do not need large amounts of funding but the types of services that the bonds support could be extended
“That might be things around aged care and housing. It might be addressing those sorts of issues where you’re looking for greater sums of capital,” Learmonth says.
SVA is working on another bond with Mission Australia on recidivism and Learmonth says they have been talking to other governments, including the Federal government, regarding other programs.
“I think everyone is watching this with great interest,” he says.
“When other opportunities will arise is a little harder to predict. We expect another handful of these to be rolled out over the next 12, 18 months.”
By Penny Pryor