Mr. Jim Clifford is a partner at Baker Tilly, an
accountancy firm in Britain, and a father to nine adopted children. The adoption process in Britain is failing in
his eyes. The children have only a short
window to be placed in a family and if they are not placed by local
authorities, then move on to the national adoption register. Working alongside the Consortium of Voluntary
Adoption Agencies, the two organizations will support the incorporation of a
social-impact bond (SIB) to alleviate the issues provided by the Britain
adoption process. The fund will be
called “It’s All About Me,” and will provide children with the means to seek
out parents. This SIB was added on July
17th this year, is expected to raise $3 million from Bridges
Ventures and Big Society Capital – pools of social-investment capital.
One of 18 voluntary adoption agencies will be commissioned
by local authorities in Britain to assist children in seeking out
families. The funds will be used to pay
for a variety of functions to support adoptive parents. The process for payout has specific
milestones that must be reached.
In
order for the program to receive payment, four areas must be completed:
- Child registration into the program
- Placement with a new family
- First year anniversary of placement
- Second year anniversary of placement
Benefits to the
adoption agencies: This program will cost $85,544 per child, which is still
a cost saving of a little less than half for the adoption agencies if they were
not able to place the foster child.
Benefits to investors: Investors should be earning an annual
interest of 4% and repayment of their capital after ten years
Will this work? This concept is new and still requires trial
and error before it will allow for smooth transitions, effective implementation
by the agencies, and to provide promised benefits to investors. This particular SIB was designed so that in
the case that anything did not work out the way that it was planned, agencies
would feel the bulk of the burden.
Although there is the possibility of this failing, the continuous
merging of the non-profit sector with an investment model provides government
organizations with a new channel to support their missions. This may not be an immediate success, but the
integration of this hybrid model is providing a promising future for existing organizations
working to further their social causes.
What are the ways that the use of SIBs can guarantee profits
for investors?
Do SIBs provide an advantage for social ventures and non-profit
organizations?
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