An independent analysis of the economic value delivered by welfare-to-work charity Tomorrow’s People has estimated that for every pound spent by the charity, at least £2.40 worth of value is created for society.
The figure was arrived at by calculating the welfare benefits saved, the additional tax receipts created, and the estimated reductions in government expenditure on health and criminal justice services for all the people that the charity helped to find sustainable work over the last five years.
The charity’s chief executive Baroness Debbie Stedman-Scott said the pioneering project surely demonstrated to government that “we must be prime candidates to launch a new social impact bond”.
Launched today at the Bank of England, the report by FTI Consulting analysed the work of Tomorrow’s People’s two main employment programmes, Welfare to Work and Working It Out, from 2007 to 2011. It built on an earlier study by Oxford Economic Forecasting in 2004, which at the time suggested that the charity’s return on investment was 1.6:1. The latest findings suggest that the value of the charity’s work has increased during the economic downturn, and FTI emphasised that its new calculations are conservative – if various assumptions are relaxed, the value of the charity’s work rises to as much as £7.10 for every £1 invested.
FTI Consulting was introduced to the project by Pro Bono Economics, the charity founded in 2009 by New Philanthropy Capital chief executive Martin Brookes. Pro-Bono Economics matches volunteer economists with charities that want help to assess their impact.
Setting the pace
Speaking at the report launch this morning, Stedman-Scott said the analysis done by FTI would “set the pace” for impact measurement in the welfare-to-work sector. “This is what other organisations in our sector and others, are going to want to do,” she said.
She said Tomorrow’s People would now share the findings with the world, promote them to prospective investors and use them when tendering for contracts. “We hope it will encourage others to invest in us so we can scale up our business and make a bigger difference.”
Stedman-Scott admitted the project was a “stretching exercise” for the charity, and had highlighted the importance of gathering comprehensive data about service users.
"We accept completely the issues around data collection and the need for the sector to do it in a consistent way so that consistent judgements can be made.” But the robustness of the project meant the charity should now be an obvious choice to trial a new social impact bond, she said.
“We will be talking to government about this because we will need investors and we will need a commissioner, but my worry is that with the current fiscal position there is no more spare money around to do it.
“You must understand my anger that we are actually shutting down programmes because we have not been successful in the Work Programme, when we are overwhelmed by the need for our services. For every place on one of our programmes there are four people who want it.”
Sector equivalent of the G8 Summit
She told the Treasury representative in attendance to “go back to the Treasury and convince Mr Osborne to see us”.
“We need the equivalent of a G8 Summit, a social finance summit,” she told him. “I want to make sure that we, and I’m not just talking about Tomorrow’s People, but all those in our sector that deliver consistently, get a seat at the table.”
Click here to read about Baroness Stedman-Scott’s vision for a “social FTSE”.