With social impact investing emerging as a new way to create positive social change, TACSI set out its perspective on how the market could be shaped to bring about the best outcomes.
Executive summary of the TACSI submission to the Australian Government’s Social Impact Investing Discussion Paper, February 2017.
Based on seven years of designing innovations in the social sector, The Australian Centre for Social Innovation (TACSI) believes impact investing can play a significant role in improving outcomes for Australians.
The opportunity to source private sector funding and investment, broaden the responsibility and accountability for social outcomes, and to adopt approaches that ensure funding is directed at ‘what works’, should strengthen responses to our most challenging social issues.
However, the benefits of impact investing will not automatically materialise. For impact investing to affect social outcomes it must be accompanied by measures that actively support improvement in the social solutions to be invested in. TACSI’s experience suggests there are two key ways this improvement could be realised.
Firstly, current solutions are often silo-ed and manifest as a series of fragmented programs or services, yet we know many social problems are inter-generational, and closely wedded to issues of employment, health, and education. By acting as a convenor of portfolios of social impact investments directed at systems innovation, the government could ensure funding addresses key gaps, enabling meaningful and sustainable improvement in people’s lives and a better financial return on investment.
Secondly, TACSI has observed that social policies, programs and services are rarely tested for efficacy before implementation. To optimise the effect of impact investment and manage the risk of unintended negative consequences, TACSI recommends the government incentivises investors, or directly funds, the capability of organisations (including government agencies) charged with delivering social outcomes, to design and test programs before they are scaled. Our experience also suggests that purposefully supporting ‘lead innovators’ and open-sourcing of innovation offers the opportunity to accelerate and broaden the base of social problem solving.
TACSI supports the principles for social impact investing as set out in the discussion paper but believes they can be made stronger in four main ways: explicit reference to improvement in people’s lives as the overarching objective; providing for solutions that extend the existing evidence base; more emphasis on co-designing solutions with people who would be the target of interventions; and, more emphasis on building innovation capability.
TACSI’s work in the areas of education, youth unemployment, affordable housing and consumer-directed care, support the discussion paper’s identification of these areas as early opportunities for impact investing. With an approach that emphasises system responses, co-design and testing of solutions, we are optimistic more opportunities can be found.