Social benefit bonds to fund Resolve Program “a win for social wellbeing, a win for taxpayers and a win for investors”

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Long periods in hospital are “costly, isolating and stigmatising’ according to Flourish Australia CEO Pam Rutledge, but they “can be avoided when community supports such as those offered under the Resolve Program are in place.”

The Resolve Program is a community based alternative to hospital for people with severe mental health issues, which Flourish Australia has been selected to roll out for the NSW government.

Resolve is a residential program for people in periods of crisis but it will also provide a “warm line” offering after-hours phone support to prevent a crisis arising in the first place. Support will be given for up to two years under the Resolve Program.

The Resolve program brings together aspects of HASI and our Peer Operated Service in Hervey Bay to assist people who have been in hospital for between 40 and 270 days in the previous year. Its aim, like many of our programs, is to keep people well, connected and out of hospital.

The program will operate in Orange and Penrith in partnership with the respective Local Health districts.

Pam said the announcement of the program was “a win for social wellbeing, a win for taxpayers and a win for investors…This program is about helping people with a mental health issue find, maintain and lead meaningful, independent lives in the community.”
NSW Treasurer Dominic Perrottet applauded the scheme, which is expected to provide services for up to 500 people in Western Sydney and Central Western NSW, as an innovative way of tackling social challenges.

The program’s funding will be raised in the form of social befit bonds by Social Ventures Australia. The $7 million scheme is actually expected to SAVE the government $30 million in lengthy hospital admissions and will offer investors an expected return of 7.5 percent per annum.

“These bonds harness the power of private sector investment to take preventative action that makes a real difference to people’s lives,” Mr Perrottet told Pro Bono.

 

What are Social Benefit Bonds? (Or, how social services can turn a profit)

The Resolve Program will be financed through social impact bonds, but what exactly are they?

Normally, Governments fund social services directly from tax revenue. The taxpayer provides the money, the money is spent and the only “profit” is the service itself.

Some social services, however, could actually bring about NET SAVINGS to taxpayers. A new service might prove to be much less expensive than existing ones, leading to long term savings. Part of these projected savings could be used as an incentive to attract investors looking for a profit.

In the long term the investors are rewarded for making the initial outlay by receiving as a dividend, part of the savings that the new service brings about.

In the case of The resolve Program, although it will cost $7 million, it could save $30 million, leaving 23 million in savings to taxpayers and profit to investors.

In this way, it could be said that everybody is ahead at the end of the day.

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