SII process
When a new SII opportunity becomes available, the following steps will take place:
Key steps to develop an SII proposal
Identify the social issue and define the target cohort
Your proposal should include:
- the social issue that your program is looking to address including evidence of research and knowledge grounded in the needs of the local community.
- a description of the service model and its key components. It is important to include how the program demonstrates innovation and additionality. Additionality refers to how the program provides benefits over and above what is delivered by existing services.
- how the proposed service will be delivered in a manner respectful of and appropriate to the local context and people, including culture.
- a clearly defined target cohort with shared characteristics that can be objectively identified through eligibility criteria.
- the referral process and clear understanding of how participants will connect with your program. Consider the size of the total target cohort and if it is sufficiently large to support the proposed scale of service.
Define the outcome and outcome measurement
Measuring impact is at the heart of SII. The objective is to incentivise and facilitate collaborative efforts to improve social outcomes and establish an evidence base of ‘what works’. Your proposal should identify:
- The long-term impact of the program on the target cohort through the funding sought. As the impact is often observed far into the future, proposals should consider robust ways to measure outcomes in the short to medium term.
- Payable outcome metrics that can be measured in the program’s delivery timeframe or soon after. Outcome metrics must be objective, reliable, collectable, and linked to the social and fiscal benefits of the program to government. Proposals should identify at least one payable outcome metric that will be linked to government outcome payments.
- How outcomes will be collected, measured and evidenced. Consider what datasets will be required and how the incremental impact of the program will be measured. The incremental impact of a program is measured by comparing outcomes achieved to a counterfactual. This may be a control group or an historical performance baseline.
- Supporting evidence that the program can deliver the outcomes identified.
You may choose to also include:
- Milestone metrics which indicate progress towards achieving outcomes.
- Broader outcomes that can be included in a program evaluation of the overall impact of the program.
Provide evidence of your organisational capacity and capability
SII partners work collaboratively towards a common goal of achieving positive social outcomes, and share the risks and rewards of doing so through an outcome-based contract. This form of contracting requires service providers to have the skills and capability to:
- deliver the program and proposed outcomes
- measure and report on outcomes
- manage the risks of an outcomes-based contract and
- foster collaborative partnerships.
Proposals should include evidence of this capability, by outlining the:
- experience and past achievements of the team/organisation in delivering relevant services and effectively managing partnerships with government, investors, and other partners.
- existing approaches and frameworks to manage outcome-based contracts.
- data systems that collect, record and analyse client and outcomes data.
- risk management approach/plan.
Assess value for money of your proposal
SII focuses on prevention and early intervention programs to empower people to improve their life outcomes and reduce the need for avoidable Government support throughout their lives. Through SII funding NSW Government funds programs that deliver measurable benefits in the form of reduction and/or avoidance of government service usage.
This means that a program’s total costs should be at least covered, if not exceeded by the estimated Government benefits that the program will deliver. Providers should consider whether the benefits based on the outcomes delivered by their program cover set-up costs, cost of delivering the proposed services, transaction costs and any return to investors (if applicable).
Financial template
As part of the proposal, applicants will typically be requested to complete a financial template that asks for the following information:
- How many participants will the program support?
- How many outcomes will the program realistically achieve?
- What is the level of payment you require from government for setup and delivery costs to be paid in advance of achieving outcomes? This is the part of the funding that is not contingent on outcomes being achieved, government bears this risk.
- What share of the requested funding is contingent on the delivery of outcomes?
- Will impact investors be engaged to provide working capital and/or share the program performance risk?
Joint development phase
If your proposal is successful and proceeds to the Joint Development Phase (where organisations work with government to develop and negotiate the terms of an outcome-based contract), this information will form the basis of the SII.
During the Joint Development Phase, a detailed financial model will be developed to document the SII. Refer to the financial model templates for examples:
Resources
Refer to the worked examples (PDF 1.06MB)to see how these steps are considered.
The technical guide: Outcomes measurement for social impact investment proposal to NSW Government (PDF 1.28MB) provides proponents with more information on:
- Program measurement and design – how to define your target population, service, counterfactual and outcomes, methods to measure the effectiveness of interventions
- Financial cost benefit analysis - steps to demonstrate the value of proposals using a modified cost benefit analysis.
Workshops on outcomes-based contracting
If you would like to learn what is involved in outcome-based contracting and assess if a tender opportunity is suitable for your organisation, Social Ventures Australia ran capability building workshops on outcome-based contracting. The workshop resources (PowerPoint presentation and videos) can be found on the Advancing education outcomes for First Nations girls page under the Workshops on outcomes-based contracting - October 2023 tab.