Case Study: Aspire Social Impact Bond
About the Aspire Social Impact Bond (SIB)
Aspire SIB is Australia’s first social impact bond focusing on homelessness and offers investors the opportunity to obtain a competitive financial return while making a lasting difference to the lives of people in Adelaide experiencing homelessness. The bond, underwritten by the South Australian Government, funds the Aspire Program, run by the Adelaide based homelessness services specialist Hutt St. Centre, in collaboration with community housing providers Common Ground Adelaide and Unity Housing Company.
The bond was oversubscribed and raised $9 million from private and philanthropic investors.
Aspire Program
The Aspire Program is based on a housing first intervention model, and founded on the principle that people benefit more through first being given suitable housing followed by support in areas like health, education and employment. Participants will be provided stable accommodation, job readiness training, pathways to employment and life skills development. They will also have the long term support of a dedicated Case Manager to connect them with wider support services.
Key Features
Investor returns are determined by Government payments to the Aspire SIB Trust, which are based on savings generated.
Outcomes are determined by measuring health, justice and homelessness service utilisation relative to a historical baseline.
A bond term of 7.75 years with a 2% p.a. fixed coupon over 4.75 years, then performance coupon based on the level of the Trust’s assets.
In the event targets are met, investors can yield an estimated 8.5% per annum.
Termination rights for poor performance to limit downside loss to approximately 50% of principal.
Target scenario estimated return 8.5% p.a. (objective only).
Targeted Impact
Approximately 600 adults who are experiencing homelessness are expected to be referred to the program over a four-year period, where each person will be provided support for up to three years.
An investor
The Aspire Bond presented a unique opportunity for the WC Rigby Trust, established to provide "low cost housing for the poor”. Ben Clark of Australian Executor Trustees, which was appointed trustees of WC Rigby Trust in 1913, realised that Aspire presented an opportunity for the trust to invest capital to achieve a mission-aligned outcome. As Ben notes, before deciding to invest ‘Our investment committee determined that critical to calculating the investment risk, was an understanding of the 'social' or program risk. In order to provide a qualified opinion, we needed to conduct additional due diligence on the capacity and capability of the charity partner delivering the Aspire program and it was not until we'd met with the CEO of Hutt St Centre and toured their premises, were we able to complete our due diligence and make a decision to invest.’
You can learn more about the Aspire SIB here.