In September Prevista welcomed a delegation of academics from Meiji University in Tokyo to discuss our innovative social investment model. Prevista is one of very few private companies to act as a social investor, intermediary and managing agent on Department for Work and Pensions (DWP) payment by results (PBR) contracts. We discussed two NEET (not in employment, education or training) programmes targeted at young people: the DWP Innovation Fund (2012-15) and its successor programme the DWP Youth Engagement Fund (2014 - present).
The Meiji University team, led by Dr. Ichiro Tsukamoto, is conducting a five year research project funded by the Japanese Ministry of Culture into the impact of social investment programmes in the United States, United Kingdom and Japan. The purpose of their visit was to ask a series of questions about how we have used social investment to capacity build small delivery partners by mitigating the risks of PBR; how we supplement our social investment with local contributions from local authorities to reduce central government spend and target needs at a very local level; and the reasons why we have decided to adopt this unique model.
Using social investment to mitigate risks of Payment by Results (PBR)
YEF and IF were commissioned and centrally funded by DWP and are PBR programmes, ensuring public funds are only drawn down once specific evidence of success against contract outputs have been produced, audited and signed off internally and by DWP. Whilst this is a sensible use of public funds, it causes significant cash flow challenges for smaller delivery organisations. On both contracts Prevista acted as a Social Investor, intermediary and managing agent providing funding to support our delivery partner’s reasonable costs.
By providing social investment, Prevista shielded our delivery partners from the risk of payment by results by providing payments to cover reasonable costs including staff, delivery and implementation before the results come through. This capacity builds our delivery partners, many of whom are very small community organisations employing less than five staff, to assemble infrastructure and deliver to local communities without the cash flow issues that PBR can cause. In return for our risk we seek a medium return on our investment over the lifetime of the contract.
As a result we have helped numerous small organisations grow and build capacity. Those who have performed well have been invited to join our other programmes, including our six new NEET contracts (funded by the Skills Funding Agency and European Social Fund), helping them to increase contract value and grow their organisations.
In addition to our social investment we also secured local financial contributions from two Local Authorities: the London Borough of Waltham Forest and the London Borough of
Croydon. These local contributions reduce the burden on central government and allow local government access to the infrastructure offered by a largescale central government programme. The Local Authorities provided a local contribution on the basis of Prevista committing to deliver specific services to defined target groups in specific areas of deprivation within the boroughs.
Why act as social investor?
We believe organisations immersed in the sector who have a deep understanding of the client group are better placed to make a lasting positive impact than organisations from outside of the sector who see social investment as one arm of their wider Corporate Social Responsibility activity. Social investment, when combined with the managing agent and intermediary role, is a very effective way of ensuring customers are served properly. This model provides extra incentives for the managing agent to get things right and provides the upfront support needed to allow managing agents to contract with genuine grassroots organisations who would not otherwise be willing or able to participate in PBR contracts. This capacity building of smaller organisations empowers them to take on new staff, achieve required accreditations and build their expertise, which in turn enables them to take on larger contract value through other funding streams, widening their footprint and deepening their impact. This provides a legacy for the social investment beyond the lifetime of any individual contract.