New South Wales Government: Children in out-of-home care

 

Introduction

The Newpin ‘Social Benefit Bond’ (SBB) set up in New South Wales (NSW), Australia, focuses on restoring children in out-of-home care to their families and preventing children from entering out-of-home care. The project completed raising finance in 2013, and will operate for seven years.

 

Overview of the issue

Children in out-of-home care often have poorer outcomes than their peers. By restoring children to their families, and preventing children from entering out-of-home care, the lives and life-chances of those involved will be considerably improved, whilst at the same time realising considerable savings for the NSW government. Out-of-home care costs the NSW government a minimum of $37,000 per child per year, but can rise to as much as $250,000. When the project was in its development, the number of children in care in the state stood at 18,000

 

What is the intervention?

The $7m SBB will fund four new centres and pay for the expansion of UnitingCare Burnside’s Newpin programme. Newpin (New Parent and Infant Network) is an intensive programme that provides support to parents to improve parenting styles, behaviour and practices. This helps parents to build positive parent-child relationships. It is delivered in Australia by UnitingCare Burnside, a leading child and family organisation with a history of providing out-of-home care in NSW for more than 100 years. Families will be referred to Newpin for involvement in their projects. To be referred to the project they must have at least one child under the age of five who has been in out-of-home care for at least three months or who is at risk of entering out-of-home care.

 

How the intervention is funded

 UnitingCare Burnside and Social Ventures Australia (SVA) worked together to develop the SBB, with the assistance of the NSW Department of Family and Community Services. Investment was raised from private investors, and pays towards up-front for the cost of the scheme. However, unlike most SIBs the government also provides an up-front payment to cover the costs of the intervention, with the remaining payments dependent on the successful completion of outcomes. There is therefore significant capital protection, with investor losses limited to 25 per cent of capital during the first four years and 50 per cent thereafter. Loss of capital would only occur if restoration rates fall below the counterfactual baseline rate.

 

A diagram illustrating the text in the relationships section

(SVA, 2013)

 

Outcomes and prices to be paid for outcomes

 The outcomes relate to the rate and number of children restored to families as well as children who re-enter out-of-home care after initially being restored. In addition, the SBB will measure the number of prevented entries to out-of-home care for families at risk of having a child removed. For a successful outcome to have been reached, a child must have been restored to their family for a continuous twelve month period

Payments will be made based on the achievement of these outcomes at an agreed rate of savings for each outcome. The extent to which outcomes relating to payment are achieved will be determined by an independent certifier. A financial return of 10-12 per cent per year is predicted depending on the successful performance of the service. Outcome payments will be made by the Department of Family and Community Services, and are capped at $55m.

 

 

Impact measurement and counterfactual

 The savings potentially generated for the State are calculated using a counterfactual ‘Live Matched Control Group’ which measures the ‘average’ rate of family restoration of children with similar characteristics to those in the SIB. By the third year of the project, this counterfactual rate of restoration will have been decided upon, but this will be updated annually over the course of the SIB so that the results of the project are measured against an up-to-date ‘normal’ expected outcome. For the three years before this live restoration rate has been calculated, the project will be working to the assumption that this rate is 25%.

 

Size of the cohort

It is anticipated that approximately 700 families will be referred to the Newpin programme over the contract period.

 

Savings to the commissioner

 The average restoration rate in New South Wales is currently around 25%, whilst Newpin’s services usually achieve a rate closer to 75%. If the SIB intervention meets these figures for the entire cohort, then NSW can expect to generate savings of around $80m by 2030.

 

Length of contract

Seven years.

 

Key innovations

The sharing of risk between the Government and investors is a key innovation of the SBB pilot. Private investors are provided additional incentives to invest in social outcomes while the public sees the benefit of Government funding being provided contingent on achievement of outcomes.

This model provides a way to access private capital which facilitates upfront expenditure over and above what is available from public funds at the time it is needed.

The focus on achieving outcomes and relationship management between NGOs and Government has driven improvements in NGO services. This is due to increased information sharing, more direct responsibility for the success of services, and the ability to identify and measure the impact of the service.

 

Development timeline

Date

Milestone

September 2011

NSW Government put out a request for proposals for organisations interested in participating in the Social Benefit Bond pilot

March 2012

NSW Government announced the successful proposals and entered the Joint Development Phase with UnitingCare Burnside.

March 2013

Signed Implementation Agreement between the NSW Government and UnitingCare Burnside.

July 2013

Service began operation

From July 2013

Payments will be made quarterly as per the payment model

June 2020

Service ends under the agreement

September 2020

Final payments made

 

Quotes from those involved

Politicians

“The $7 million Social Benefit Bond trial is a bold new way of improving services and lives through increased investment into the child protection system in NSW while at the same time providing long-term social and economic benefits for the state” Mike Baird, NSW Treasurer.

“This is another way the Government is harnessing the creative capabilities of non-government organisations to improve the lives of vulnerable children and young people in NSW by reducing the need for out-of-home care. Social Benefit Bonds are helping Government reform due to their emphasis on detailed measures, outcomes, transparency and contracting” Pru Howard, NSW Minister for Family and Community Services.

Service providers

“The reason we’re so excited about this pilot is that it makes us demonstrate to all of you that change is possible, but it also highlights the need for early intervention and prevention work” Sally Cowling, UnitingCare Children, Young People & Families (Tomkinson, 2012, p.7).

Investors

“This new asset class is exciting because it is mobilising social investment capital by allowing philanthropists to recycle their capital and attracting new sources of funding to the market, thereby growing the total pool” Paul Bide, Private Investor.

 

Wider Reading

Centre for Social Impact (2011) Report on the NSW Government Social Impact Bond Pilot.

NSW Department of Family and Community Services (2013). Newpin Social Benefit Bond.

NSW Treasury (2013). Social Benefit Bonds Trial in NSW FAQs.

NSW Treasury & NSW Department of Family and Community Services (2013). NSW Government Signs Australia’s First Social Benefit Bond. Press Release: 27 March 2013.

Pro Bono Australia (2013). NSW Signs Australia’s First Social Benefit Bond.

Rose, S. (2013). UnitingCare Burnside takes first NSW social benefit bond to market. Australian Financial Review.

Social Ventures Australia (2013), Newpin Social Benefit Bond.

The Australian Newspaper (2013). First social benefit bond signed in NSW.

Tomkinson, E. (2012). Social Impact Bonds: An Australian Snapshot. Sydney: Centre for Social Impact.

UnitingCare Burnside’s Newpin (2013). UnitingCare Burnside's Newpin Programme chosen for first Australian Social Benefit Bond.