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Demystifying social impact bonds   By Edwin Lo Chief Investment Officer

Social impact bonds are an innovative funding mechanism design to help assist in addressing complex social issues such as homelessness, disadvantage and access to education. Here we take a closer look at how these bonds work in practice.    Social impact bonds – also known as social benefit bonds – are fixed income securities whose proceeds are used to finance new and existing social projects. They bring together different groups, including governments, private investors, service providers and social enterprises to deliver effective and prevention-focused solutions to the toughest issues facing communities.  The goal of these securities is not to replace public services but to allow governments to explore innovative policy solutions while minimising financial risk and delivering better outcomes for people.  Private investors provide the funding for these projects, which are delivered by social service providers. Bond and principal returns to investors are partly generated by the cost savings to governments in dealing with a social issue and are contingent on the achievement of desired social outcomes.     Examples of social bonds UFS’ flagship fund, the Ethical Conservative Balanced Fund, has invested in several social impact bonds in recent years.  We believe investing in social impact bonds aligns well with our investment principles, which are linked to the United Nations’ Sustainable Development Goals (SDGs), providing a way we can make a direct impact in attempting to combat social issues within our community.  Uniting was the first not-for-profit in Australia to issue a social impact bond, Newpin, in 2013. The Newpin Program is designed to support families in South Australia, with the objective of enabling young children in out-of-home care to return and live safely with their families. The program involves an 18-month centre-based program that is designed to strengthen family engagement and improve parent-child relationships.  Young people were also the focus of another UFS investment in Youth CONNECT, which ran from 2018 to 2023. This program focused on providing ongoing case management and support for young people at the intersection of homelessness and care experiences.  During the five-year period, 297 young people aged 15-25 and 219 young people completed the program, with the majority achieving its core objectives, which included continuing education, employment, job-seeking or personal development activities.   A third initiative partly funded by UFS is the Foyer Central Social Impact Bond, which funds the delivery of the Foyer Central Program. The program is delivered by Uniting and SGHC in partnership with the New South Wales Department of Communities and Justice. The Foyer Central program is centred on supporting vulnerable young people and providing social and affordable housing. A purpose-built facility comprises 53 studio-style units, located three kilometres from the Sydney CBD.   Most recently, the Ethical Conservative Balanced Fund invested in the Women’s Livelihood Bond series, launched by IIX, which was the first gender-lens impact investing security listed on a stock exchange. The sixth WLB was launched in December 2023 and is designed to help improve the lives of women and girls in South and South-East Asia and Africa.   Benefits for investors Once considered a risky asset class, the maturity of a number of successful social impact bonds such as Youth CONNECT which have met or exceeded social targets, is helping to prove that these innovative investments can bring tangible benefits to both investors and society.  Social bonds can also help to improve a portfolio’s alignment with the UN SDGs, an action plan to protect the environment, end poverty and reduce inequality by 2030. The SDGs have emerged as a common language for understanding how companies and portfolios are positioned for environmental and social impact.  UFS will continue to look for future opportunities to invest, as well as keeping investors updated on the progress of existing projects and their impact on the communities they serve.      Important information: The Uniting Financial Services (UFS) unregistered managed investment schemes are available for investment only to wholesale investors. Prospective wholesale investors who wish to invest via our unregistered managed investment schemes can access the Information Memoranda for these any of these funds on the UFS website. While the information in this email has been prepared with all reasonable care, UFS accepts no responsibility or liability for any errors, omissions or misstatements however caused. No action has been taken to register or qualify these products or otherwise permit a public offering of these products in any jurisdiction outside Australia. Past performance is not indicative of future performance.

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  Important for you to know Financial services are provided by The Uniting Church (NSW) Trust Association Limited ACN 000 022 480, ABN 89 725 654 978, AFSL 292186 (“UCTAL”) and by The Uniting Church in Australia Property Trust (NSW) ABN 77 005 284 605 (“UCAPT”) (together and separately “Uniting Financial Services”), for The Uniting Church in Australia, Synod of NSW and the ACT (“Synod”), under a s.911A Corporations Act 2001 (Cth.) authorisation and pursuant to APRA Banking Exemption No. 1 of 2021 and ASIC Regulatory Guide 87 and ASIC Corporations (Charitable Investment Fundraising) Instrument 2016/813 exemptions. Uniting Financial Services® is a registered trademark of UCTAL used with permission of UCAPT. None of The Uniting Church in Australia, UCAPT and UCTAL is prudentially supervised by APRA. Therefore, investments with or contributions to these Uniting Church organisations will not receive the benefit of the Financial Claims Scheme or the depositor protection provisions in the Banking Act 1959 (Cth.). All financial services and products are designed for investors who wish to promote the religious and charitable purposes of Uniting Financial Services and The Uniting Church in Australia and for whom profit considerations are not of primary importance in their decision to invest. The information on this page has been prepared without considering your objectives, financial situation or needs. You should, before acting on it, consider its appropriateness to your circumstances or refer to the relevant disclosure document. Loan applications are subject to credit approval. Interest rates are subject to change. Fees and charges may apply. 

Kindly note that the information on this webpage is only intended for wholesale, professional or sophisticated investors (as defined in the Corporations Act). Please do not refer to this webpage if you are not one of these investors. Uniting Financial Services is not providing any personal advice or recommendation regarding any financial products described or referred to on this webpage. Prospective investors should make their own enquiries and should seek all necessary financial, legal, tax and investment advice. Past performance is not indicative of future performance, all information contained on this wepbage is current at the date of publication, however may be subjected to change without notice.