The Wales Council for Voluntary Action (WCVA) has launched a financial bond to support the development of partnerships between the voluntary and public sector through a payment-by-results approach.

The umbrella body for Welsh voluntary organisations will finance the Wales Wellbeing Bond through its Communities Investment Fund programme and plans to invest between £2m and £3m over the next 18 months in projects that will help redesign or create new cost-effective public services.

Matt Brown, Communities Investment Fund manager, said: “With all the pressure on public finances new ways of delivering our public services need to be developed.”

He described the bond as an “overarching principle” and told civilsociety.co.uk that “we are trying to build on the momentum we have seen in social impact bonds in England”. But because the political set-up in Wales is different, they are “giving it a Welsh narrative”. WCVA is already working with a few organisations to set up bonds.

Once the voluntary sector organisation and public body have agreed a new service and how to measure it, then the Wales Wellbeing Bond would finance the delivery costs of the voluntary organisation and assuming targets are met the public authority would repay Wales Wellbeing Bond.

Each bond will be tailored to the project and partnership but WCVA has outlined four main delivery models:

• Special purpose vehicle – the creation of a new legal entity to provide a vehicle for investment
• Consortium – to build on complementary areas of expertise
• Standalone voluntary sector organisation – to finance a different approach to existing activity
• Payment by results – if a voluntary organisation is awarded a contract where some of the funding is reserved until outputs are achieved the Wales Wellbeing Bond can provide bridging finance for the organisation