Private investments, public funding and one goal Mika Pyykkö, Head of Focus Area Impact Investing
Hybrid Finance in Practice EVPA Roundtable 13 October 2016
2 Sitra • 13.10.2016 •
1. A gift from Parliament to the 50-year-old Finland
2. An independent foresight agency: futurologist,
researcher, visionary, developer, experimentalist, partner, trainer, networker
3. Funded by returns on endowment capital and
capital investments
4. Vision of Finland as a successful pioneer in
sustainable well-being
5. Vision includes three themes,
6 focus areas and dozens of projects + 1 Building our future together
5 + 1 key facts about Sitra
Photograph: Erkki Laitila, HS/Lehtikuva 1967
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• From May 2014 till June 2017
• Focus on well-being promotion
• Impact goals
1. Active impact investing ecosystem
2. Impact investing model (financing instruments etc) in use in Finland
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Sitra’s Impact Investing Focus Area
4
Costs which can be prevented – examples from Finland
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Cost EUR per year
Child in custody care 100 000
Social marginalized youth 20 000
Elderly in 24/7 care 40 000
Alcohol abuse 1 billion
Physical inactivity 1 - 2 billion
Sick leaves 3 - 4 billion
Smoking 1,5 billion
Type 2 diabetes 1 billion
Loneliness etc. …
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• Can be used, when
• the buyer (public sector) wants to purchase outcome/impact = payment by results
• investments have to be done very up-front compared to expected social impact and financial return = promotion and prevention
• there is a very large or narrow population group
• there are political issues or practical risks
• Strong future orientation with focus on preventive measures
• Functional and financial modeling and impact measurement
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SIB
I SIB in Nordic Countries: Occupational Well-Being
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Objective
• Provide municipal/state employers with a service package that enables them to promote occupational wellbeing and thereby e.g. reduce sick leaves in their own organisations
• Envisaged duration of contract per organisation 3 years
Parties to the Agreement
• Municipal/state employer
• Epiqus Occupational Well-Being I Fund (Epiqus, social enterprise managing the fund/project)
Service funding and
pricing
• Service will be produced on the basis of SIB funding
• The customer organisation will be automatically liable only for its own participation fee (EUR 15/person)
• As the actual outcome-based service payment, the customer organisation will pay a separately agreed proportion of the cost-savings generated by the reduction in sick leave and any other measurable positive developments
Service providers
• The subcontractors of The Fund (Epiqus): Aino Health Management Oy, Headsted Oy, Tietotaito Group Oy and Trainers’ House Oyj
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Epiqus Occupational Well-Being I - Structure
INVESTORS
Capital
SIB (THE FUND)
Public Sector Employees
Reduction in the Number of Sick Leave Days
CLIENTS (PUBLIC SECTOR
EMPLOYERS)
EUR 175 per Reduced Sick-
leave Day
Manages
Procurement of Services
Delivery of Services
Capital + Returns
INDEPENDENT AUDITOR
Verify
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SIB II: Integration and fast employment of immigrants
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• Speed up employment of immigrants, pilot new models of education and employment and combine education and work in a flexible way
Purchacer • The Ministry of Economic Affairs and Employment
Status
• Program/Fund Manager has been chosen (started officially June 1) and is especially in charge of
• Planning and managing the project
• Building up the financial instrument = fund (limited partnership)
• Fund raising and managing the fund
• Organising according to the impact goals of the project education and employment activities of immigrants in co-operation with different service providers
• Follow up, interim reporting and the final reporting
Objective
MODULE 1 30 days intensive period
Career coaching
Language training 1
DIVISION TO SECTORS
Modules 2 - 3 sector specific
Logistics
HoReCa
Cleaning
Real estate
maintenance
Environmental services
Management
IT
Entrepreneurship
Etc.
MODULE 2
20 to 50 days sector-specific
training
Priority: Deep sector-
specific skills
and knowhow
Language training 2
Work life skills
Work training
MODULE 3
Measures that commit to
work relation;
(at least 85 days
during 3 years)
Committing
Language training 3
Deep sector-specific
skills and knowhow
EXPRESS LINE (15%): To work from module 1
TRAINING LINE (10%): Training at work, education, etc.
ENTREPRENEURAL LINE (10%)
One can reverse to previous stages at any point, if necessary.
SPECIALIST LINE (5%): Tailored support for managerial tasks
Deep screening of
knowhow/skills
Due Diligence (2 to 5 days) 4 900
3 680 / 5 070
490 / 720
490 / 710
250 / 540
Employments / man-years
4 000 / 7 000
Epiqus / Intervention process
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• Occupational Well-Being project (public sector organisations)
-> Epiqus as a Fund / Program Manager; up and running since 2015
• Integration and fast employment of immigrants project (The Ministry of Economic…)
-> Epiqus has started as a Fund / Program Manager in June
• Promotion of Children’s, families’ and youth’s well-being (municipalities)
-> FIM (in co-operation with Central Union for Child Welfare) has started as a Fund / Program Manager in October
• Support of the elderly’s independence (municipalities)
• Advancing employment (government and/or municipalities)
-> Procurement process for choosing the Fund / Program Manager (one organization or joint venture) is to start
• All possible investors have shown (quite) high interest
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Estimation of SIB portfolio in 2016 – altogether 5 different funds in Finland
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Sitra Impact Accelerator for SMSes
Design phase
3 months acceleration program for 10 impact actors (3 x 3 months accelerators during 2015–2016)
Defining the social challenges Engaging P&P stakeholders and not reinventing the wheel Activating private and angel investors Curriculum development with selected service providers
Dedicated mentors @ 3 hours per week throughout
Face to face training (6 days) – overarching themes: 1. Impact measurement: developing
frameworks and effectively measuring / projecting impact as a result
2. Developing a sustainable business model per impact actor / service case
3. Developing the investment-readiness of each impact actors and connecting to potential investor(s)
Demo day: pitching to investors Publishing case study about each impact actor Sharing learning & training materials publicly
Kick-off day: importance of community development & peer learning opportunities Individual, tailored learning plans with concrete goals Online platform for virtual coaching
• Mastering social and emotional skills
• www.mightifier.com Founder,
CEO Mervi
Pänkäläinen
Mightifier
Mightifier impact
IMPROVED
SOCIAL SKILLS
Long term
wellbeing €
Decreasing social
exclusion €
Improved working
readiness €
Increased efficiency
of school work €
INPUT OUTPUT OUTCOME IMPACT IMPACT VALUE
Regular use
of Mightifier
Better
self-
esteem
Better
learning
results
Less
bullying
Efficient
use
of
teacher’s
time
Future belief
Increased
social capital
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Impact Education Program for NGOs – piloting
Design phase
x months acceleration program for x impact actors
Defining the social challenges Engaging public stakeholders and not reinventing the wheel Activating co-operation
Dedicated mentors
Face to face training (x days) – overarching themes: 1. Impact measurement: developing
frameworks and effectively measuring / projecting impact as a result
2. Developing a sustainable working model per impact actor / service case
3. Developing the funding readiness of each impact actors and connection to funders
Demo day: presentations to other NGOs Publishing case study about each impact actor Sharing learning & training materials publicly
Kick-off day: importance of community development & peer learning opportunities Individual, tailored learning plans with concrete goals Online platform for virtual coaching
• Building Social Impact Bond pilots
- Payment by results, promotion and prevention in terms of well-being -> economic and operational modelling and other support to Fund / Program Managers
• Sitra Impact Accelerator III
- Sustainable business model, economic and operational modelling, measurement, investment readiness
- Impact Education Program for NGOs
• Interaction with possible investors, public sector representatives etc
- Guidelines for Impact Investor
- Guidelines of innovative procurement, payment by results and SIB model -> payment by results training for municipalities and government offices
• Fund of fund survey
• Preparation of national coordinative support unit
• International co-operation
• Communication
Sitra • 13.10.2016 •
Summary of Sitra’s Impact Investing Focus Area - Autumn 2016
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