By Abigail Rotheroe
Golden Lane Housing, the property arm of Mencap, marked a new era in the world of impact bonds on Friday by listing a tradable "retail charity bond" on the London Stock Exchange. It hopes to raise £11m for 30 new houses and will offer 4.375% return over seven years.
The Bond will be open to the average person, rather than just big investors – with a minimum initial subscription amount of £500.
This week, we also heard about plans to list a retail impact bond on the Asian social stock exchange. While retail bonds might guarantee a financial return unlike social impact bonds (SIBs), the impact bond space is becoming increasingly diverse, interesting and full of potential for socially-minded organisations to create positive change.
Our report last week examining the evolution of social impact bonds showed that appetite from charities is mixed, but we believe there is a substantial opportunity that goes far beyond merely securing another contract to deliver a niche public service.
Charities have fantastic expertise and knowledge in specific areas and can actually take the lead.
Some major charities have already stepped in to do this. Action for Children's first work under a SIB contract was commissioned by Essex Council to help support children at risk of going into the care system. It seems that this was a gateway to a whole new way of doing business.
The charity has since been able to use its experience through a new SIB in Manchester which will fund specialist foster placements for young people living in residential care homes.
More broadly the UK-wide "It's All About Me" Adoption Bond has influenced approaches to fostering across the entire sector.
Charities are perfectly placed to identify the gaps or shortfall in provision and can bring together investors, commissioners and even collaborating charities to present joint proposals to government.
The idea that it might be charities who approach ministers rather than the other way round is genuinely revolutionary. And it would give those charities leverage to influence how subsequent contracts and even policies are developed.
We could start to see the development of the kind of "feedback loops" which NPC have long held so dear: the vulnerable in society who rely on charities would find a voice, via those charities, in forming the government policies designed to ensure they can access effective services.
If the state is radically rethinking its relationship with service delivery, SIBs are likely to be central to that different approach. Better for charities to get in at the beginning and shape the whole process than to let the whole opportunity pass by.