In case it’s not on your radar, a new social investment market is being born. Centred around the opportunity for social and financial return, BSC will provide finance to organisations tackling major social issues.
What does this have to do with private equity? Quite a lot. Not only was the idea pioneered by Sir Ronald Cohen, but the private equity community, through the Private Equity Foundation (PEF), is at the forefront of developing ways in which to connect youth charities to this new market.
For starters, the industry has given generously of its skills and time to create the first ‘social impact bond’ for disadvantaged young people, enabling the scale-up of a breakthrough programme.
Over the next five years, ThinkForward aims to halve the number of 16 to 24 year olds not in education, employment or training (NEET) in Shoreditch, through the use of ‘super coaches’ in schools. Despite being a stone’s throw from the City of London, the area has a shocking child poverty rate of 75 per cent.
The social impact bond has allowed PEF to expand ThinkForward, further, faster by leveraging co-investment from BSC. The investment will receive money from government for each milestone ThinkForward’s young people meet. Should the programme be successful, investors will gain a small financial return, which in PEF’s case will be reinvested into other social investment opportunities.
PEF is already looking at ways it can roll out this expertise to help other best-in-class youth charities buck the trend and grow, in spite of the challenging fiscal landscape.
If we can make this new social investment market work, we can get many more of our most deprived young people into work.
Johannes Huth is Chairman of the Private Equity Foundation, a charity that brings together the private equity community to unlock the potential of disadvantaged children and young people (www.privateequityfoundation.org). He is also Head of KKR Europe.