The Christie Commission’s roadmap for public service reform published back in 2011 continues to challenge public service providers. Public Services have faced the dual challenge of finding ways to sustain funding for existing service delivery while simultaneously testing and moving to new ways of preventative working. As a result, the need for financial models which support this shift in delivery and funding has grown significantly. Various models have been developed to help support this move to preventative delivery with varying degrees of success.
In England and Wales, commissioners have increasingly used payment-by-results models (such as Social Impact Bonds and Outcomes Contracts). However the operational criticisms of them are well rehearsed and include a significant amount of contractual set up and monitoring, a need to find the funds for repayment plus interest, and a lack of clarity around how the work will actually be sustained after the Bond is paid back.
In Scotland the political landscape is different, where there is an often repeated ideological opposition to SIBs on the grounds of “profiting from suffering”. However, it also true that the charity and social enterprise sector is suffering. In our recent report at the Centre for Social Justice (CSJ) into the state of small charities, entitled “Underfunded and Overlooked”, we found that the funding and power imbalances within the charity sector leave smaller charities without consistent access to public and private funding that would enable them to turbo-charge their impact. So, while in Scotland any model adopted has by necessity had to take cognisance of the operational and ideological hurdles, we urgently need new and better funding models if we are to sustain our charitable infrastructure. Indeed, this would prove popular with the public. Polling for the CSJ revealed 79 per cent of UK adults agree that small, local, charities seem to be often overlooked and under resourced.
During the period 2010 -2018 Public Social Partnerships (PSPs) were the favoured model in Scotland. The model had no additional funding and relied on the Public Body to work in partnership with the Third Sector to generate new ways of working. However, they singularly failed to be sustained or scaled.
Back in 2016 The Robertson Trust, as Scotland’s largest independent funder, was keen to find a way to drive partnership between Third Sector, Government and Philanthropy to make changes to social policy. It developed a hybrid model using the best of the SIB and PSP approach. It called this new model Social Bridging Finance (SBF).
While Social Bridging Finance (SBF) shares certain principles with existing models, it differs in some key respects. The SBF model intentionally involves third sector delivery partners earlier and more deeply in the commissioning of services and works on the expectation that those services which evidence their success will be sustained, with no requirement for payback to the investor as the trial funding comes from philanthropy. The model also requires the inclusion of a contractual commitment from the public sector to sustain services ONLY IF the charity achieves the pre-agreed outcomes during the initial trial phase.
Social Bridging Finance is therefore a straight-forward model which enables grant funding from independent funding sources to support the initial demonstration phase of an evidence-based service, whilst also ensuring that the public sector only sustains those services which successfully meet agreed outcomes.
HOW DOES IT WORK?
1. DESIGN A working group is formed between a public sector body, a third sector organisation and an independent funder to replicate an existing evidence-based service model which has been trialled successfully elsewhere, or at a small-scale in the existing geography. The service should enable a move from reactive to preventative services and meet an identified need which the public sector body is prepared to fund longer term. Very importantly the partners need to agree the success criteria in advance.
2. CONTRACT A binding contract is signed between the partners to commit the public sector organisation to sustaining funding for the service for a specified period of time, if the agreed success criteria are met. This pro forma contract is just 12 pages, that of a SIB can run to several hundred pages!
3. DEMONSTRATION After an allowance for an initial set-up phase the service is delivered for an agreed period of time, usually 2 years. During this trial stage, which is grant funded (this can be from a range of sources, including Trusts and Foundations, public sector, and individual philanthropists), partners can adjust how the interventions are delivered, in order to ensure the best chance of meeting the agreed success criteria. A Project Board is established with senior representatives from all the partners to ensure strategic level oversight of progress.
4. EVALUATION An “audit” is commissioned by the partnership and paid for by the independent funder at the outset of the trial period. This “audit” will make an informed judgement as to whether or not the agreed success criteria have been met at the end of the trial. It is not an evaluation of the service.
5. SUSTAINABILITY If the external “auditor” determines that the agreed success criteria have been met, then the contract determines the length of time for which the public sector organisation will sustain the service. If the trial period has not been successful, all partners ensure that they take learning from the process and walk away, thus the public sector commissioner faces no risk from the trial as this is carried in full by the grant funder.
HOW HAS IT WORKED?
To date, the model has been used six times. In all but one case the model has worked extremely well with the independent evaluation stating: “the emerging evidence suggests the SBF model has potential to enhance the long-term sustainability of preventative services delivered by the third sector.”
Case Study: MCR Pathways
From 2010, over a period of five years, the charity MCR Pathways developed a mentoring programme in six schools in the north east of Glasgow. The programme worked in school with young people in the care system and provided a carefully matched adult volunteer who met with them once a week. The impact of this “one good adult” was highly significant and transformed the educational attainment of the young people. MCR approached a consortium of funders highlighting a close working relationship with Glasgow City Council. The Council wanted to roll the model out further but didn’t have the finance to do an extended trial.
The funders together funded £1M a three year no risk trial to help MCR move from 6 to 12 schools in Glasgow. Using the Social Bridging Model, the funders were able to get Glasgow City Council to sign a contract which said that if MCR delivered the desired educational outcomes in the 12 schools by the end of three years, GCC would then roll the model to all of its 29 schools and sustain the funding for a further five years.
Eighteen months into the trial period, Maureen McKenna the Executive Director of Education at GCC, asked that the trial be stopped, not because it wasn’t working but because the model was working so well she felt it would remiss of her not to roll to the other schools. She also agreed that she would not sustain for just five years but would change her systems and embed the model as business as usual for educational provision in Glasgow.
She said of the model, “The Social Bridging Finance model has worked exceptionally well for us in Glasgow. We wanted to transform the way we provided support for young people. We needed support to move from where we were to where we wanted to be. This model has allowed us to create a new approach which is now business as usual”.
Not only has MCR now expanded out to 29 schools in Glasgow, the then Education Secretary at the Scottish Government, John Swinney, took the model and funded an £18M roll out currently underway with MCR across 200 schools in Scotland.
From those involved in the other trials, the feedback has been equally positive. For example, Kate Rocks, when Head of Children’s Services and Criminal Justice at East Renfrewshire Council said of the model “It allows you permission to be brave and to test what is required … it gives you freedom.” Paul Clancy when Executive Director of Children and Family Services at Dundee City Council said “It’s changed our approach and the intensity of the work we’re involved in. It bridges you to a new place…”
CONCLUSION
Social Bridging Finance is not a silver bullet for changing public services, but by using philanthropic money it can help de-risk change for the public sector in its move to preventative services. The model plays to each of the three partners strengths; the public body can scale and sustain, the charity can deliver impactful flexible services, and the funder can provide the initial risk capital to make it all happen. All delivered with a partnership approach, surely something that is sadly lacking in many of our public services at present!
Kenneth Ferguson is Head of Scotland at the Centre for Social Justice Foundation