9 June 2017 | Internet

What are the Bonds of Social Impact, the novel solution that apply some countries to solve the subject of neither-nor and other social problems

Poverty, delinquency, unemployment, problems of health, house and environmental.

These are only some of the constant challenges that face all the governments of the world.

The majority does not finish solving them by a very simple question: the money in the state coffers does not reach to approach it everything.

The same happens to them to the civil organizations (ONG) dedicated to fight these problematic ones, whose pockets - employees in their majority of donations still more are limited.

How to solve the dilemma?

Some ago years a solution arose: to attract the great owners of capitals causing that to help are income-producing not only from the moral but also economically.

But how to obtain it?

Through a novel mechanism of called financing Bonds of Social Impact (TWICE).

TWICE they work - al just as other titles of debt offering a rate of return, but that gain is tied to a social or environmental objective.

We put an example: a State wants to solve a problem of youthful unemployment in certain city.

It emits a bond that offers a X rate of return whoever to invest in enabling and using to a group target of young people.

The investor and the State agree themselves and normally choose to a €œsupplier on watch€ - a NGO that will dedicate to the qualification and labor insertion of those young people.

Also a university, another NGO or a consultant are chosen to a evaluator - by example that will be the one in charge to measure the success of the objectives.

The economic yields come directly tied to the objectives and usually are stepped goals.

Thus, for example, if that group target completes its qualification, the investor obtains X rents.

If it manages to find a a job, the percentage increases; Y S.A. end of a year those young people follow employees, the gain raises still more.

€œToday he has sent more than 70 TWICE in 60 countries and move US$278 million€, he indicated to BRITISH BROADCASTING CORPORATION Mar­a Laura Tinelli World, director of Acrux Partners, a consultant of investment of impact with base in the United Kingdom and Argentina that specializes in this innovating mechanism.

€œAlso there are developing other 100 projects, 14 of them in Latin America€, counted the expert, who is at the moment in Argentina, where adviser to the government of Buenos Aires in the development of its own one TWICE, which she will aim at the problem of the calls neither-nor (the young people that neither study nor work).

How they were born

The parents of Bonds of Social Impact were the British, who created the concept in 2010.

The United Kingdom or stood out in the world as Mecca of the investment of impact, that one that looks for a social or environmental aim in addition to economic.

The case of London

The jail of Peterborough
2.000 were the prisoners of Peterborough in the project.

  • -7,5% it was the objective of reduction of the rate of criminal recidivism
  • 12 months of attendance, before its liberation and later.
  • -8,39% the reduction obtained in the rate of criminal recidivism.

In that context, the specialized consultant British Social Finance invented the model of TWICE along with the British Ministry of Justice doing against the problem of youthful the prison recidivism.

She chose herself as pilot test to the jail of Peterborough, a city to the north of London.

The objective of the bond was to obtain that 2,000 prisoners who less than fulfilled a sentence of a year did not return to fall in the crime after their liberation.

The British government proposed to only pay bonds if a reduction of at least 7.5% in the rate of recidivism were reached.

The men before received attendance on the part of €œsuppliers on watch€ during 12 months and after its liberation and the results they were a success:

The recidivism was reduced in a 8.39% (in agreement with considered by two universities and one consultant).

Profitable

According to Tinelli, TWICE rates €œnot very different€ from other titles of debt pay.

Despite it observed that they are not comparable to traditional bonds, to begin because there is no a market where to sell them and to buy them.

€œIt is in fact more similarity to a deprived public association€, it explained.

Mar­a Laura Tinelli, director of Acrux Partners, adviser on impact investment and affirm that TWICE they are multiplying in the world thanks to his success.

Another great difference with a normal bond is that the investing one only receives if the results are fulfilled.

As all investment, €œat greater major, risk level it is the rate of return€.

Nevertheless, the experience until now has demonstrated that generally TWICE they are a quite safe investment.

€œThe majority of the bonds that are in course is being successful€, it indicated to the director of Acrux Partners.

Latin America

Adolfo Diaz Valdez is the director of Strategic Planning of the government of the city of Buenos Aires and the one in charge to design the TWICE local one, who in Argentina will have another modality and he will know himself as €œBond of Social Impact€.

The civil servant shelp to BRITISH BROADCASTING CORPORATION World that the great advantage of this mechanism for a S-state that it only pays by results.

€œHe serves to us because he allows us to prove alternative solutions to the problems without having to assign entrance bottoms€, he indicated.

€œOne is pleased just in the end and based on the results€, he added. €œThat allows us to innovate€.

Buenos Aires is not the only Latin American city that develops this initiative.

Projects TWICE in the world

+70 projects with Bonds of Social Impact anywhere in the world at present.

  • the 60 countries where they are in march.
  • US$278 million, the value of TWICE.
  • the 100 developing projects.
  • 14 in Latin America.

In fact March the past Colombia one became the first country of the region that TWICE sent by US$8,5 million, that it looks for to generate use to benefit to vulnerable populations moved by the conflict armed in the cities of Bogota, Cali and Pereira.

Before, in 2015, in Peru something similar to TWICE was used, a Bond of Impact of Development, that benefitted to indigenous populations in the region of the Amazon.

At present there are projects of TWICE in Brazil, Chile, Costa Rica, Ecuador and Mexico.

The Latin American initiatives are fomented by the Multilateral Fund of Investments of the Inter-American Bank of Desarrollo (BID-FOMIN).

Susana Garc­a-Robles, main specialist of the Unit of Access to Funding of the BID-FOMIN, shelp to BRITISH BROADCASTING CORPORATION World that is difficult to predict the success that can have these first €œpilot tests€ in the region.

€œWe know that TWICE they have been much successful in England and other developed markets, we are going to have to do if really this it is a good instrument for Latin America€, he indicated.

However, he observed that the region is a very fertile land for this type of innovating proposals.

€œHere there are many needs related to basic deficiencies of health, education, house, of use€, he affirmed.

€œIf this instrument gives result can be very good for proving it concerning the local municipalities and governments€.

Susana Garc­a-Robles of the BID-FOMIN thinks that in the future all the investments they must have a social or environmental return, in addition to financier, due to the €œchange of paradigm€ of the new generations.

Investors

It is clear why TWICE he can serve to him to a government, a NGO that want to help and the people who receive that benefit.

But, why he could interest an investor to him?

Fabiana Oliver is the person in charge of viability of the Organization Roman, family office Argentine - a team of professionals who administer the goods of a family, which they are potential investors in the Argentine project.

Oliver shelp to BRITISH BROADCASTING CORPORATION World that the interesting thing of TWICE is that they are a viable and efficient investment.

€œWhen one wants to help generally makes a donation, but that does not give viability him in the time to the project that quer©s to support€, it indicated.

€œOf TWICE, as one receives a gain can reinvert in the project and in addition when working in alliance with the State and the NGO, and when knowing clearly and measurable goals, the help takes control more efficient€, it maintained.

But what happens with those who only want to make money?

Be able someday this will tool to attract the investors who mainly look for a financial gain?

€œI believe yes that€, risked Garcia-Rivet of the BID-FOMIN.

€œIf one does not look at the financial returns in the world today are so high either€, it observed.

GETTY IMAGES

They will serve Bonds as Social Impact to fight the social problems in Latin America? The experts are optimistic.

Shift of paradigm

In addition, according to the expert, in the next years a €œshift of paradigm€ thanks to a new generation will be seen - made famous millennials- that €œmore and more they will demand that all the investments have a social or environmental return, in addition to financier€.

On the other hand, Tinelli also was optimist on the future of TWICE in Latin America.

€œThe Bonds of Social Impact drive actors who usually do not work of coordinated form to be united to solve a problematic one€, he indicated.

€œThe positive in the Latin American context is that they as much break traditional threads between the government and the private sector, generating efficiencies in the use of the resources public and learnings of the State as of the organizations of the civil society€.

€œI consider that if we managed as region to prove the model, with successful examples as those of the United Kingdom, we will be able to install this new way of joint work between the State and the prevailed one€, it anticipated.

Source: BRITISH BROADCASTING CORPORATION World

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