Abu Dhabi Skyline/Bloombergby Kudakwashe Muzoriwa
Abu Dhabi’s Authority for Social Contribution-Ma’an is set to introduce the GCC’s first social impact bonds, an innovative and internationally recognised financial tool that raises private investment to support high-impact social programmes.
HE Salama Al Ameemi, the Director-General of Ma’an, said, “ We are proud to be leading the way in the region for introducing this internationally-recognised method of financing and delivering solutions for social challenges.”
Social impact bonds were first introduced in the UK and are now used by more than 40 countries worldwide to help develop an outcome-oriented approach to social challenges, at the same time encouraging innovation and growth within the third sector.
The long-term nature of social impact bonds provides social service providers with the investment and commitment to get their innovative ideas off the ground, supporting the growth of the third sector.
Ma’an stated that private investors, such as HNWIs or investment funds can invest in the social impact bond (giving service providers the upfront capital to deliver the social programme) and the government will pay back the investor—with interest—but only if the outcomes are achieved.
The social impact bond which is expected to be launched in 2020, will operate on a pay-for-success basis, whereby payment relies on a successful social outcome—a first for government contracts.
Social impact bonds allow investors to meet the increasing demand for using financing to generate social good as well as supporting CSR efforts in a way that avoids dependence and grows capital which can be recycled and reinvested in other social good projects.
Similarly, they also ensure that governments only pay for programmes that work and make a measurable social impact.