INVESTSOCIAL – Impact Investment – a novel outcome-based financing mechanism to promote innovation and social well-being

Proyecto Info

  • Construction Date

    Feb 2018 - Dec 2018

  • Category

    , Sustainability and societal wellbeing, , , Research, development and innovation

Project financed by the Valencian Innovation Agency (AVI). Ref. No. INNTAL21/18/014

agencia valenciana de innovación

Impact investments are those investments that direct capital towards projects with social and/or environmental impact. The double search for profitability and social / environmental impact is what differentiates impact investments from other types of investments. Despite the fact that impact investment is gaining increasing attention and it has now become a relevant issue even on the EU public agenda, there is still much confusion about this emerging market.

One of the most interesting financing instruments in the field of impact investments arising in the field of public administration are the so-called Social Impact Bonds. The Social Impact Bonds are innovative financing instruments based on results (outcome-based financial instruments) with great potential to stimulate innovation ecosystems and face important social challenges in a context in which efficiency and effectiveness of public and private resources is key.

Social Impact Bonds have gained particular attention in recent years as a potential model to address some global social challenges, such as insufficient access to medical care and education, justice, unemployment etc. This new financing model presents a series of advantages, among which reductions in public social spending, the transfer of risks from the public to the private sector; the optimization of the use of public budgets; the increase of the budgets destined to initiatives of prevention, contributing, in this way, to fill a gap that exists in the provision of social services and the adoption of initiatives based on social innovation and the measurement of results. However, at the same time, Social Impact Bonds have also been criticized due to the complexity of the model that, in the opinion of many experts, should be simplified and standardized to streamline and facilitate their management.

Given that the market is still at an incipient stage of development, a greater impetus is needed in terms of information, dissemination and training, to make these instruments widely known and to promote their implementation to address social challenges.

In this context, the main objective of the R&D&I project funded by the Valencian Innovation Agency, INVESTSOCIAL, is to contribute to the state-of-the-art in the field of innovative financing instruments, in particular Social Impact Bonds to favour their penetration in the Valencian region and in Spain given that, despite their relevance and interest in recent years, they have not yet been timely exploited in our country due to their complexity, novelty and the need for training, tools and facilitating strategies for their implementation.