Overcoming social challenges in the UK and beyond

So, what do you do at work?

It’s a question that we must all have been asked at one time or another. But for David Hutchison, chief executive of Social Finance, it must be difficult to know where to start.

Would it be with the Social Impact Bond – conceived, nurtured, and now totalling more than 100 around the world? Or maybe it would be working with governments to embrace new approaches to tackling social problems, or mobilising more than £100 million from social investors. And then there is partnering with social enterprises and charities to support and scale their mission in driving social change.

This array of activity over the past 10 years has led to real progress in tackling some of the most deep-rooted challenges facing society – from mental health to prisoner reoffending, assisting refugees to helping victims of domestic violence. In the UK alone, its work supports 2,000 short-sentence offenders released from Peterborough Prison, 750 children at risk of going into care in Essex and across London, 3,000 isolated older people, 2,500 people with severe mental health issues, and 1,400 homeless young people and rough sleepers, and many more.

Hutchison is rightly proud of this track record, but is keen to stress that it represents a journey that is far from complete. “We’ve positioned ourselves as an organisation that is rethinking the way the system tackles social problems,” he explains.

“We do this by thinking through the nature of the problem, identifying the barriers to change where the delivery gaps exist, and developing a hypothesis for a new model of change. The initial proposition behind Social Finance was that if we could connect social action with capital and investment in a more coherent way, we could scale the former. This still holds true. What we aspire to do is create models for change that have the capacity to scale and be sustainable – that was true when we started and is still true today.”

Making money work harder

Hutchison and his team of 70 focus on those social problems where outcomes are widely acknowledged to be poor and there is a clear appetite for change. By combining data with investment, new partnerships and a fresh approach, it incubates, designs and brings funding to new solutions, all done in partnership with governments, the social sector and funders. “We never engage with a problem unless we’re working with a partner with acknowledged domain expertise,” explains Hutchison. “We are never the expert, but we are hopefully a good convenor of experts.”

But it’s not just about working with partners – it is about developing a robust model and securing the right funding. “An early finding – going back 10 years – is that the revenue models of a number of social organisations are too frail to support repayable capital,” he says. “This reflects a more systemic problem: the way money flows around social problems is not necessarily coherent or rational, and there are a lot of barriers to social change which are beyond the control of any single organisation. Once we have a clear understanding of the problem, we develop a proper business case for change which takes account of the costs of failure and the operational reality of delivery on a sustainable basis.”

He goes on to say, however, that the design of the business case is only the first stage – a large part of the challenge is leadership and implementation. “Unless you provide and plan for that, the design is worth little more than a PowerPoint pack,” he points out.

“We have become much more engaged in the use of data and the way it has informed the management of programmes so that they can be adapted in real time to learning on the ground. This increases the scope for innovation and continual improvements in the programmes that we are running. So we’ve moved from thinking about designing a new solution to the challenges of implementation, and then sharing the learning of what we have gathered over the lifetime of a project.”

For example…

The approach resonates in different ways and to different constituencies. These include local authorities in the UK, as well as donors in the international development arena, where aid distributed in this way can be more effective than a prescriptive grant. That’s why Social Finance is working with the Global Fund, the World Bank, Grand Challenges Canada, the Inter-American Development Bank, USAID, DfID and others to address challenges in low- and middle-income countries by using Development Impact Bonds and outcomes contracts.

A good example of its UK work, though, is its effort to support nearly 400 children who are close to going into care through a five-year Multi-Systemic Therapy (MST) programme, so that they can remain safely at home with their families. Social Finance designed and now manages a £3.1m Social Impact Bond, which is funded by social investors whose investment is entirely at risk if the intervention fails to achieve its goals. MST is an evidence-based programme that seeks to improve parenting and rebuild positive family relationships, enabling families to manage future crisis situations themselves.

“Our projects, by definition, take years to deliver,” says Hutchison, “so our work has by no means finished its course. But this one certainly has the potential to deliver its objectives. It is relatively expensive but, if it is successful, the outcomes for the families involved are much more positive and the potential costs are substantially reduced. We’ve taken that model and got five boroughs in London to contract on a similar basis – it could well be the kernel for delivering to the vast majority of boroughs in London.”

Overcoming the barriers

There has been positive momentum behind this intervention despite the prevalence of systemic barriers that often prevent further progress being made. Hutchison is clear that too many still exist and says they are largely linked to funding streams and organisational setup.

“It’s partly how money is allocated and spent by the public sector,” he explains. “There are a number of dysfunctional interfaces between public budgets on things like health and social care, and health and employment, where money is – or is not – spent, but the costs of failure are picked up by a different department. We often work at interfaces between budgets, where there isn’t a strategic analysis of how the spending could be made to benefit both.”

He goes on to cite the impact of tight spending controls. “People know that alongside their contractual or statutory obligations, they will only be able to meet a certain proportion of an individual’s needs,” he says. “They don’t have the funding or the capacity to go beyond the core service that they are providing. But in discussions with people on the ground, I often hear that they know they are not solving the problem, just doing all they can within their spending restrictions.”

A key way to ensure that new models are effective is strong leadership – something that is unfortunately not always present.

“To get a network of partners to work together in a different way, there needs to be a strong and coherent narrative vision around the case for change and the case for working in a different way,” explains Hutchinson. “Even when the audience is willing, it does require sustained campaigning, advocacy and on-the-ground engagement to get people to cooperate and work in different ways. And it is also the case that any project will come under stress – it’s all too easy for short-term pressures to blow a project off course. Strong leaders can embrace these challenges.”

So how can such individuals be identified? “We have found in projects that spending a bit of time to find the right person to lead them is repaid in spades,” he says. “Simply ‘filling the role’ is a dangerous objective. In areas of complex need, where you’re looking to bring multi-stakeholders together, that level of leadership is at a premium and so they need to be given the right tools and support to lead change.”

The journey continues

So, what’s next? Hutchison, after a decade in the role, remains an optimist. Fast-forward 20 years and he predicts a world where “new models of social change and resourcing them with the right leadership and the right tools in terms of data and investment will be the way in which we empower people to tackle problems on a national scale”.

This will only happen, though, if there is an “explicit focus on outcomes rather than the cheapest possible price for the service” and an environment “that enables professionals in the field to have the flexibility to respond to need as it presents”.

Should these come to pass then some of the social problems that exist today will no longer adorn the horizon of tomorrow – watch this space.

 

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