Abu Dhabi is to introduce the GCC’s first Social Impact Bond, an innovative and internationally recognised financial tool that raises private investment to support high-impact social programmes, under the Authority for Social Contribution – Ma’an.
Launching next year, Social Impact Bonds operate on a pay-for-success basis, whereby payment relies on a successful social outcome – a first for government contracts.
For example, across the world, Social Impact Bonds have been used to improve foster care in the UK, reduce reoffending rates in prisoners in New York, improve early years education in Utah and reduce homelessness in Australia.
First introduced in the UK, Social Impact Bonds are now used by more than 40 countries worldwide and help to develop an outcome-oriented approach to social challenges, encouraging innovation and growth within the third sector.
Social service providers will have the freedom to innovate and come up with a solution that delivers the social outcome. Private investors, such as high net worth Individuals or investment funds, will then invest in the Social Impact Bond (giving the service provider the upfront capital to deliver the social program) and the government will pay back the investor - with interest – but only if the outcomes are achieved.
The long-term nature of Social Impact Bonds provides social service providers with the investment and commitment to get their innovative ideas off the ground, supporting the growth of the third sector.
It allows investors to meet the increasing demand for using financing to generate social good as well as supporting CSR efforts in a way that avoids dependence and grows capital which can be recycled and reinvested in other social good projects.
It also ensures that governments only pay for programmes that work and make a measurable social impact.
The Authority for Social Contribution – Ma’an will facilitate the Social Impact Bonds and support the contractual arrangements between government departments in Abu Dhabi, social service providers, and third-party investors. It will also be responsible for monitoring the Social Impact Bond and measuring performance.
Ma’an is currently looking into 24 different projects with the possibility to be developed into Social Impact Bonds. They will soon announce a series of Memorandums of Understandings (MoUs) with different government and private sector partners to progress these projects.
Salama Al Ameemi, Director General of Ma’an, said: “Social Impact Bonds are a game-changer for how we think about the delivery of social programs, putting a relentless focus on specific and measurable outcomes for the people of Abu Dhabi.
“We are proud to be leading the way in the region for introducing this internationally-recognised method of financing and delivering solutions for social challenges. Ma’an will be launching Abu Dhabi’s first Social Impact Bond next year and we are currently working with government and private sector partners to identify potential projects that will be suitable.
“It is part of our wider mission to encourage the third sector to flourish in Abu Dhabi and deliver solutions to social challenges in partnership with government, the private sector and civil society.” - TradeArabia News Service