Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Solid start for social bond returns
(Pictured: Peter Murphy)
by Penny Pryor
Australia’s first social benefit bond (SBB) has announced an initial annual return of 7.5 per cent. The Newpin SBB Pilot return, as certified by Deloitte, was at the lower end of a targeted annual return of between 10-12 per cent for the seven-year life of the investment.
Christian Super invested $750,000 in the bond last year and chief executive officer, Peter Murphy, was reasonably satisfied with the return.
“Coming in at about 7.5% it was just pleasing,” he said.
“It was the first year so it’s the ramp up year.”
The $7 million pilot is a partnership between UnitingCare Burnside and the NSW Government. UnitingCare’s Newpin program works to restore foster children to their families, or prevent them from entering foster care in the first place. By doing so, it presents a saving to the government and the bond’s return, paid by the government, is based on the overall performance of the program.
Social Ventures Australia helped in the engineering of the bond and in raising investor funds. Newpin is now taking referrals for its first new centre to be opened with SBB funding on the Central Coast.
During the first 12 months, 28 children were returned to their families and 10 families at risk received assistance via the Newpin centres, and that helped prevent their children from going into care.
For the UnitingCare program, the bond required a new reporting regime to ensure that Newpin’s outcomes could be measured correctly.
“The cultural and practice changes required of Newpin staff have been significant but they have been well supported by Newpin program leaders, our management accounting and research teams,” Claerwen Little, director of UnitingCare Children, Young People and Families, said.
Illustrating the unique challenges that such a new kind of impact investing instrument can face, Little says that one of the SBB’s biggest issues was starting its first year with high levels of vacancies, due to a number of successful restoration outcomes just prior to the commencement of the bond. Early referrals were also slow.
“We have worked closely with NSW Community Services to address the referral issue and if we continue to work at capacity and build up numbers in our first new centre we are confident of strong results in the years ahead,” Little said.
Christian Super’s Murphy said they expected some teething issues initially but they would continue to support it at both an investment and social level.
“We’re committed to it, we think that it does a great thing. We are very supportive of what it does,” he said.
“In terms of ethical investing…for many years we’ve been known for what we don’t do but with impact investing we’re known for what we do, do.”
