private investments, public funding and one goal · investors capital sib (the fund) public sector...

Private investments, public funding and one goal Mika Pyykkö, Head of Focus Area Impact Investing

Hybrid Finance in Practice EVPA Roundtable 13 October 2016

2 Sitra • 13.10.2016 •

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. Vision of Finland as a successful pioneer in

sustainable well-being

5. Vision includes three themes,

6 focus areas and dozens of projects + 1 Building our future together

5 + 1 key facts about Sitra

Photograph: Erkki Laitila, HS/Lehtikuva 1967

Sitra • 13.10.2016 • 3

• From May 2014 till June 2017

• Focus on well-being promotion

• Impact goals

1. Active impact investing ecosystem

2. Impact investing model (financing instruments etc) in use in Finland

Sitra • 13.10.2016 •

Sitra’s Impact Investing Focus Area

4

Costs which can be prevented – examples from Finland

Sitra • 13.10.2016 • 5

Cost EUR per year

Child in custody care 100 000

Social marginalized youth 20 000

Elderly in 24/7 care 40 000

Alcohol abuse 1 billion

Physical inactivity 1 - 2 billion

Sick leaves 3 - 4 billion

Smoking 1,5 billion

Type 2 diabetes 1 billion

Loneliness etc. …

Sitra • 13.10.2016 • 6

• 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

7 Sitra • 13.10.2016 •

SIB

I SIB in Nordic Countries: Occupational Well-Being

Sitra • 13.10.2016 • 8

Objective

• Provide municipal/state employers with a service package that enables them to promote occupational wellbeing and thereby e.g. reduce sick leaves in their own organisations

• Envisaged duration of contract per organisation 3 years

Parties to the Agreement

• Municipal/state employer

• Epiqus Occupational Well-Being I Fund (Epiqus, social enterprise managing the fund/project)

Service funding and

pricing

• Service will be produced on the basis of SIB funding

• The customer organisation will be automatically liable only for its own participation fee (EUR 15/person)

• As the actual outcome-based service payment, the customer organisation will pay a separately agreed proportion of the cost-savings generated by the reduction in sick leave and any other measurable positive developments

Service providers

• The subcontractors of The Fund (Epiqus): Aino Health Management Oy, Headsted Oy, Tietotaito Group Oy and Trainers’ House Oyj

Sitra • 13.10.2016 •

Epiqus Occupational Well-Being I - Structure

INVESTORS

Capital

SIB (THE FUND)

Public Sector Employees

Reduction in the Number of Sick Leave Days

CLIENTS (PUBLIC SECTOR

EMPLOYERS)

EUR 175 per Reduced Sick-

leave Day

Manages

Procurement of Services

Delivery of Services

Capital + Returns

INDEPENDENT AUDITOR

Verify

9

SIB II: Integration and fast employment of immigrants

Sitra • 13.10.2016 • 10

• Speed up employment of immigrants, pilot new models of education and employment and combine education and work in a flexible way

Purchacer • The Ministry of Economic Affairs and Employment

Status

• Program/Fund Manager has been chosen (started officially June 1) and is especially in charge of

• Planning and managing the project

• Building up the financial instrument = fund (limited partnership)

• Fund raising and managing the fund

• Organising according to the impact goals of the project education and employment activities of immigrants in co-operation with different service providers

• Follow up, interim reporting and the final reporting

Objective

MODULE 1 30 days intensive period

Career coaching

Language training 1

DIVISION TO SECTORS

Modules 2 - 3 sector specific

Logistics

HoReCa

Cleaning

Real estate

maintenance

Environmental services

Management

IT

Entrepreneurship

Etc.

MODULE 2

20 to 50 days sector-specific

training

Priority: Deep sector-

specific skills

and knowhow

Language training 2

Work life skills

Work training

MODULE 3

Measures that commit to

work relation;

(at least 85 days

during 3 years)

Committing

Language training 3

Deep sector-specific

skills and knowhow

EXPRESS LINE (15%): To work from module 1

TRAINING LINE (10%): Training at work, education, etc.

ENTREPRENEURAL LINE (10%)

One can reverse to previous stages at any point, if necessary.

SPECIALIST LINE (5%): Tailored support for managerial tasks

Deep screening of

knowhow/skills

Due Diligence (2 to 5 days) 4 900

3 680 / 5 070

490 / 720

490 / 710

250 / 540

Employments / man-years

4 000 / 7 000

Epiqus / Intervention process

Sitra • 13.10.2016 • 11

• Occupational Well-Being project (public sector organisations)

-> Epiqus as a Fund / Program Manager; up and running since 2015

• Integration and fast employment of immigrants project (The Ministry of Economic…)

-> Epiqus has started as a Fund / Program Manager in June

• Promotion of Children’s, families’ and youth’s well-being (municipalities)

-> FIM (in co-operation with Central Union for Child Welfare) has started as a Fund / Program Manager in October

• Support of the elderly’s independence (municipalities)

• Advancing employment (government and/or municipalities)

-> Procurement process for choosing the Fund / Program Manager (one organization or joint venture) is to start

• All possible investors have shown (quite) high interest

Sitra • 13.10.2016 •

Estimation of SIB portfolio in 2016 – altogether 5 different funds in Finland

12

13 Sitra • 13.10.2016 •

Sitra Impact Accelerator for SMSes

Design phase

3 months acceleration program for 10 impact actors (3 x 3 months accelerators during 2015–2016)

Defining the social challenges Engaging P&P stakeholders and not reinventing the wheel Activating private and angel investors Curriculum development with selected service providers

Dedicated mentors @ 3 hours per week throughout

Face to face training (6 days) – overarching themes: 1. Impact measurement: developing

frameworks and effectively measuring / projecting impact as a result

2. Developing a sustainable business model per impact actor / service case

3. Developing the investment-readiness of each impact actors and connecting to potential investor(s)

Demo day: pitching to investors Publishing case study about each impact actor Sharing learning & training materials publicly

Kick-off day: importance of community development & peer learning opportunities Individual, tailored learning plans with concrete goals Online platform for virtual coaching

• Mastering social and emotional skills

• www.mightifier.com Founder,

CEO Mervi

Pänkäläinen

Mightifier

Mightifier impact

IMPROVED

SOCIAL SKILLS

Long term

wellbeing €

Decreasing social

exclusion €

Improved working

readiness €

Increased efficiency

of school work €

INPUT OUTPUT OUTCOME IMPACT IMPACT VALUE

Regular use

of Mightifier

Better

self-

esteem

Better

learning

results

Less

bullying

Efficient

use

of

teacher’s

time

Future belief

Increased

social capital

17 Sitra • 13.10.2016 •

Impact Education Program for NGOs – piloting

Design phase

x months acceleration program for x impact actors

Defining the social challenges Engaging public stakeholders and not reinventing the wheel Activating co-operation

Dedicated mentors

Face to face training (x days) – overarching themes: 1. Impact measurement: developing

frameworks and effectively measuring / projecting impact as a result

2. Developing a sustainable working model per impact actor / service case

3. Developing the funding readiness of each impact actors and connection to funders

Demo day: presentations to other NGOs Publishing case study about each impact actor Sharing learning & training materials publicly

Kick-off day: importance of community development & peer learning opportunities Individual, tailored learning plans with concrete goals Online platform for virtual coaching

• Building Social Impact Bond pilots

- Payment by results, promotion and prevention in terms of well-being -> economic and operational modelling and other support to Fund / Program Managers

• Sitra Impact Accelerator III

- 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 and government offices

• Fund of fund survey

• Preparation of national coordinative support unit

• International co-operation

• Communication

Sitra • 13.10.2016 •

Summary of Sitra’s Impact Investing Focus Area - Autumn 2016

18

sitra.fi

Facebook.com/SitraFund

@SitraFund

Building a successful Finland for tomorrow