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'Don't expect too much from SIBs', says NPC

10 Mar 2016 News

New Philanthropy Capital has urged the Chancellor not to expect too much, too soon from Social Impact Bonds in a pre-Budget paper published today.

New Philanthropy Capital has urged the Chancellor not to expect too much, too soon from social impact bonds in a pre-Budget paper published today.

The paper, entitled A balancing act: Charities and the 2016 Budget, said that SIBs are “still a nascent market” and warned that “there is a risk that too much is being expected of them too soon”.

NPC argued that not enough is known in the sector about social investment products and regulation and said that “there is insufficient demand from social organisations, many of which lack the financial skills and knowledge to manage such investments”.

The think tank said that, should there be more in the Budget about SIBs, it will look to the government for “assurance that they will be used to fund innovation, rather than as a wholesale funding model to replace commissioning and grants for charities”.

Rob Wilson, minister for civil society, said in January that he wants the SIB market to be worth £1bn by the end of this parliament and defended the government’s decision to focus resources on social investment.

A balancing act also warns the sector that the Chancellor may make cuts to housing benefits, which “could threaten to fatally undermine the business model of some charities” operating in that area. “Given the breadth of the supported housing sector… the number of organisations and beneficiaries impacted could be significant”.

Ruth Gripper, consultant at NPC and co-author of the report, said: “Hailing the potential of charities to help the most vulnerable in society is the easy bit, and is what charities have been doing for years anyway. The real test is whether this Budget supports effective charities into the future to actually make this happen.

“The sector will be watching the Budget nervously, knowing there is a lot at stake. If the Prime Minister and the Chancellor are really committed to charities and their beneficiaries, we will need to see that reflected in the announcements next Wednesday, from safeguarding some of the best existing work to smart decisions on how scarce funding is allocated.”   

A full copy of A balancing act: Charities and the Budget can be found here.

CFG and nine other sector bodies submitted joint Budget recommendations at the end of February.

The Budget will take place on 16 March.