UK Adoption Agency Body Proposes New Social Impact Bond

Nick Parmée

8 November 2012

To coincide with UK National Adoption Week, the Consortium of Voluntary Adoption Agencies, supported by accountancy firm Baker Tilly and working with a group of eighteen VAAs, is proposing to launch a pioneering new family-finding service for vulnerable children using money from private and institutional investors.

It is the first solution of its kind originated in the voluntary sector and the largest example to date of social finance in the UK.

The Social Impact Bond is targeted to facilitate and support around three hundred extra adoptions a year in the UK. These are likely to be focused in particular on children from black and minority ethnic backgrounds, those with medical or clinical conditions and those that are over four years old or in sibling groups. The funding required to finance the project could come from high net worth individuals, grant-making foundations, local authorities and corporate businesses.

For every £100,000 (about $160,000) of funds made available the funder would expect to achieve a yield, and the return of the capital sum at the end of the funded period, while still achieving at least £22 million of social benefits to the lives of children.

The service envisaged would require around £5 million of working capital over a two-year period if it were to fund 300 additional placements a year. That money would be used as bridging loans for VAAs to provide them with the means to fund the increase in the number of adoptions of children. These loans, plus an additional premium, could then be repaid from payments in four stages up to two years after placement, made by the local authority for undertaking the adoption process.