Download social impact investing and existent possibilities mika pyykkö

SOCIAL IMPACT INVESTING AND
EXISTENT POSSIBILITIES
MIKA PYYKKÖ, PROJECT DIRECTOR
THE FINNISH INNOVATION FUND SITRA
24. – 25. April 2017
Brdo Congress Centre, Ljubljana – Slovenia
5 key facts about Sitra
1. A gift from Parliament to the 50-year-old
Finland.
2. An independent foresight agency:
futurologist, researcher, visionary,
developer, experimentalist, partner, trainer,
networker.
3. Funded by returns on endowment capital
and capital investments.
4. Envisages Finland as a successful pioneer in
sustainable well-being.
5. Its vision is supported by three themes, six
focus areas and dozens of projects.
+1
Building our future
together
Sitra promoting systemic change
FUNCTIONS & THEMES
PROJECTS
ACTIONS
Circular economy
RESOURCE-WISE AND
CARBON-NEUTRAL SOCIETY
Resource-wise citizen
Health tools
Digital Health HUB
CAPACITY FOR RENEWAL
Social and healthcare financing
Impact investing
NEW WORKING LIFE AND
SUSTAINABLE ECONOMY
Transformation of work
Leadership training for sustainable economic policy
CONTINUOUS
Ratkaisu 100 challenge prize
SOCIETAL TRAINING
Renewal of state cultural grants
Public-sector management
Megatrends
CONTINUOUS
FORESIGHT
Vision for sustainable well-being
Development of new business ecosystems
Education for a changing world
Research
Trial
Pilot
Workshop
Training
Fund
Events
Foresight
Call for ideas
Study
Strategy
Challenge competition
Networking
Investing with Impact
Picture from: Investing for Impact: Case Studies across Asset Classes (2010) Bridges Ventures and the Parthenon
Group
Social Impact Bond
- Can be used, when
– the buyer (public sector) wants to purchase outcome/impact = payment by results
– investments have to be done very up-front compared to expected social impact and financial return
= promotion and prevention
– there is a very large or narrow population group
– there are political issues or practical risks
- Strong future orientation with focus on preventive measures
- Functional and financial modeling and impact measurement
Costs which can be prevented – examples from
Finland
Cost
EUR per year
Child in custody care
100 000 / person
Social marginalized youth
20 000
Elderly in 24/7 care
40 000
Alcohol abuse
1 billion / society
Physical inactivity
1 - 2 billion
Sick leaves
3 - 4 billion
Smoking
1,5 billion
Diabetes (inc. Type 2 diabetes)
1 billion
Loneliness etc.
…
The economic and operational model
underpinning SIB work
1. Determine demand and define target group (preliminary) = segmentation
2. Verify the development of the effect, costs thereof during the past 2-5 years and future
trends = compare change in well-being of target demographic group against demand
3. Verify causes for cost development
4. Define root causes for cost development and opportunities to prevent these =
customer orientation, insight
5. Define the target results (social and economic) = clear (behavioural) goals
6. Define the activities necessary to affect root causes (service/operational package) =
theory, exchange, competition, methods mix
7. Select organization(s) to implement service package
8. Calculate the net execution costs for the service package
9. Conduct a cost-benefit analysis: achievable benefits vs. required investment
10. Final decision on establishing SIB program planning etc.
Finnish SIB – basic structure
Estimation of SIB portfolio in Spring 2017 –
altogether 5 + 1 different funds in Finland
SIB
Status
Occupational Well-Being (public sector
organizations as an employer)
Up and running since 2015 (Epiqus as a Fund /
Program Manager)
Fast employment and integration of immigrants
(The Ministry of Economic Affairs…)
Has started in January 2017, inofficially in October
2016 (Epiqus)
Promotion of Children’s, families’ and youth’s
well-being (municipalities)
To start (FIM in co-operation with Central Union for
Child Welfare)
Advancing employment
(The Ministry of Economic Affairs and Employment)
Procurement process for choosing the Fund / Program
Manager (one organization or joint venture) is to start
Support of the elderly’s independence
(government/regions/municipalities)
Procurement process for choosing the Fund / Program
Manager (one organization or joint venture) is to start
Type 2 diabetes prevention
(The Ministry of Social Affairs and Health)
Modelling getting started
Sitra Impact Accelerator
Design phase
3 month acceleration program for 10 impact actors
(4 x 3 months accelerators during 2015–2017)
Defining the social
challenges
Dedicated mentors @ 3 hours per week throughout
Engaging P&P
stakeholders and not
reinventing the wheel
Activating private
and angel investors
Curriculum
development with
selected service
providers
Kick-off day: importance
of community
development & peer
learning opportunities
Face to face training (6 days) – overarching
themes:
Demo day: pitching
to investors
1.
Individual, tailored
learning plans with
concrete goals
Impact measurement: developing
frameworks and effectively measuring /
projecting impact as a result
Publishing case
study about each
impact actor
2.
Developing a sustainable business
model per impact actor / service case
Online platform for
virtual coaching
Sharing learning &
training materials
publicly
3.
Developing the investment-readiness of
each impact actors and connecting to
potential investor(s)
Experimental Culture Into Use: Objectives for
Concrete Actions and Measures
NATIONAL OBJECTIVES
Best results from
local and regional
experiments
utilised to test on
a larger scale
• Finland a forerunner for experimental
culture
• New solutions and business ideas to
develop society discovered through
experiments
• Deregulation and removing of obstacles of
successful experiments
Strategic actions
and measures
open opportunities
for smaller scale
local and
regional
experiments.
LOCAL AND REGIONAL
OBJECTIVES
• New local and regional solutions
with potential for scaling up
• Citizens and communities get
involved in experiments
I
Valtioneuvoston kanslia
I
vnk.fi
The Big Picture
• Experimental culture not just a matter of having tools, but
of changing mindsets
• PMO works to raise awareness on all levels
• Links to numerous other themes like
• Innovative procurements, leadership methods,
different types of design, behavioural insights,
sustainable development, etc
15
I
Valtioneuvoston kanslia
I
vnk.fi
Summary of Sitra’s Impact Investing Focus Area
– Spring 2017
Building Social Impact Bond pilots
- Payment by results, promotion and prevention in terms of well-being  economic and operational
modelling and other support to public sector and Fund / Program Managers
Sitra Impact Accelerator IV
- Sustainable business model, economic and operational modelling, measurement, investment readiness
- Impact Education Program for NGOs
Interaction with possible investors, public sector representatives etc
- Guidelines for Impact Investor
- Guidelines of innovative procurement, payment by results and SIB model  payment by results
training for municipalities, provinces and government offices
Preparation of national coordinative support unit together with PM’s office
(impact investing and experimentation)
International co-operation
Communication
Challenges
- Due to new market
- Procurement
- Silos in public sector  who pays by results
- Budget period in public sector  how to reserve money for payment by results for example after
three years
- Number of Fund / Project Managers
- Number of scalable concepts
BUT AFTER ALL LOT OF INTEREST AND POTENTIAL!
sitra.fi | seuraavaerä.fi
@sitrafund