Posted on 28th January 2011
Government has "missed an opportunity" in calling for wholly private funding for the proposed Early Intervention Foundation announced in a government report this week, says Daniela Barone Soares, chief executive of venture philanthropy organisation Impetus Trust.
While welcoming the report, Early Intervention: The Next Steps , written by MP Graham Allen, Barone Soares believes the government should use its political capital to attract funding.
“We are very supportive of the ideas contained in the report, which are similar to what we are doing – identifying models that work, scaling them up, and monitoring and evaluating impact with a view to adapting and replicating them in other areas. However, the case for early intervention is not disputed, and this initiative has multi-party support, so it seems a wasted opportunity not to use that political capital to leverage the support needed,” she says.
“It will be a challenge to find enough funding for Mr Allen's proposals. Creative thinking will be needed about methods to motivate private funders to invest in the proposed Early Intervention Foundation.”
She cites the Obama administration’s Social Innovation Fund (SIF) that leverages private funding from grant-makers and others, matching each dollar with at least $3 of private funding, as a model to follow. The SIF aims to raise a total of $200m or greater. It directs funding through innovative, hands-on grant-makers or intermediaries across the country who identify, fund and support promising non-profit organisations working in low-income communities over a period of years.
“Intermediary organisations are better than government at identifying organisations with impact, working with them to create value, doing due diligence and providing the evidence base to scale up. The government kick-starts it but match funding comes from philanthropists and other funders who recognise the value and see no reason to duplicate – why is Mr Allen not exploring this model? The most powerful models are where business, the voluntary sector and government all work together,” argues Barone Soares.
“The Social Impact Bond is also worth considering. Of course, it is always difficult to measure impact, particularly in early intervention, when the effects are felt after many years, but intermediary metrics to evaluate effectiveness can be found.”
The Allen Report focuses on scaling up best practice models of early intervention in order to prevent poor children from becoming poor adults, generation after generation. Children born in the most 'at risk' families in the UK have a 70% chance of being classified as 'at risk' themselves by the time they reach 30; disadvantaged children start lagging behind their better-off peers even before school begins.
It highlights examples of best practice targeting root causes of inter-generational poverty and makes three broad recommendations – more support for proven early intervention models, the creation of Early Intervention Places to make a coherent start on early intervention, and the establishment of an Early Intervention Foundation to support local people, communities and agencies. The Foundation would also “tie in to the potential of raising capital from private and other investors”.
Proposals on how the Foundation might be funded independently of central government will be set out in a second paper due before the summer parliamentary recess.
Impetus has recently launched an Early Years joint initiative with the Sutton Trust. Over a period of four to five years, organisations will receive a support package comprised of unrestricted funding of up to £500,000 in addition to tailored capacity-building support from the investment team and network of consultants and advisers. The Initiative has already secured £1.5m in funding, and an initial three investments should be in place by June 2011.
Deputy Prime Minister Nick Clegg has also called on financial institutions in particular to play their part in finding creative ways to fund social investment.
“The Coalition Government has said clearly that we need a new social contract between the financial services industry and broader society,” he says. "Financial services do not exist in a social vacuum, indeed no single commercial sector can operate in isolation from the values of wider society. The financial institutions of the City have an important role to play, not only in rebalancing the economy, but also in rebalancing society in a fairer direction."
