Social investment: The future of the charity sector?

By Guest contributor 9 August 2013

Lady Diana Whitmore MAEd is Chief Executive and a founding Director of Teens and Toddlers UK. Diana is also founder, President and Co-chair of the Psychosynthesis & Education Trust, having practised psychosynthesis for 35 years, and the author of two books: Psychosynthesis Counselling in Action, and Psychosynthesis in Education: A Guide to the Joy of Learning.

Social investment is a growing trend that offers huge opportunities for charities during an economically difficult time. At Teens and Toddlers we have embraced social investment as a means of expanding our service delivery to achieve our ultimate goal of reaching more young people in need.

Our programme is unique because it targets two sets of vulnerable children simultaneously, pairing young people (age 13-16) from disadvantaged areas  as mentors and role models to nursery children in need of extra support. To date, we’ve reached over 9,310 disadvantaged young people and children in over 34 local authorities, and we have ambitious plans to reach 4,100 young people annually by 2018. But we simply cannot do this without financial support – and that’s where the social impact bond model comes in.

According to recent  research, young people NEET between the ages of 16–18 have a long-term resource cost of nearly £22 billion and a public finance cost estimated at £12 billion. The vast bulk of costs result from underemployment due to educational underachievement, unemployment, payments in benefits and tax losses.

Our Department for Work and Pension’s-funded project has the potential to generate huge savings for the public purse by tackling the rising number of NEET young people in the North West of England. Announced in October last year, the three-year funding contract, as part of the DWP’s Innovation Fund, covers 144 school projects in 18 schools over 3 years – benefiting over 1,100 at-risk 14-15 year olds.

The Innovation Fund contract is managed by social investment intermediary, Social Finance.  The investors – who put up the capital for the programme and therefore bear the financial risk rather than the charity – include The Barrow Cadbury Trust, Big Society Capital, Bridges Ventures, CAF Venturesome, Esmee Fairbairn and the Impetus Trust. Success measures include improved attitude to school, improved attendance and behaviour at school, the achievement of a QCF Level 1 qualification in interpersonal skills and the achievement of GCSEs.

We’re almost a year into the contract and it looks extremely positive. We have excellent preliminary results for the first four outcomes (the final two won’t be available until the students have completed their GCSEs next summer), and by the end of the 2012 summer term 380 of the total 1,150 had completed the DWP programme, with a retention rate of 80%.

We believe the key to making social investment a success is to ensure robust evaluation processes are in place, along with a carefully created infrastructure to manage the endeavour. We have been measuring our results since 2001 and we know what we do works: only 5% of our young people become NEET- compared to their teachers’ prediction that 45% will drop out – and only 1.6% report a pregnancy. This evaluation track record is critical for us because it demonstrates we are a sound investment. As long as charities work closely with their funding partners to keep things on track and deliver results, this type of investment could well be the future for the charity sector.