Freshfields is leading the way in innovative finance, developing Social Outcomes Contracts (SOCs), including Social Impact Bonds (SIBs) and Development Impact Bonds (DIBs), that are changing how social projects are funded.
Freshfields aims to harness our specialist skills to bring about systemic, measurable public benefits. Since 2011, we have been at the forefront of delivering pro bono advice on SOCs to help develop the market. SOCs are a broad category of innovative financing that includes SIBs and DIBs, where payments are tied to achieving specific outcomes.
SIBs bring together private finance, public investment and the expertise of the charity sector to fund and deliver programmes that create measurable results. In SIBs, typically a government body repays investors if the target outcomes are achieved. Freshfields has been an early advocate of SIBs, identifying them as a key innovative funding mechanism with the potential to unlock major new sources of funding to tackle important social problems.
DIBs are similar to SIBs but involve donor agencies as the outcome payers instead of, or alongside, governments. Philanthropic funders or organisations repay investors if the outcomes are achieved. For example, Freshfields has worked on an outcomes fund in Ghana to improve education outcomes for children in schools.
We started working on our first mandate in 2011 when the market was still very new. Since then we have worked to launch over 70 SIBs and DIBs. In the last year alone we have advised on 25 SIBs, unlocking over £100 million in funding for social purposes.
Duncan Kellaway, Freshfields Partner who leads this work, says “for over a decade, we have worked with a wide range of clients to help develop the SIBs and DIBs market, driving the creation of key contracts and bringing together the sector’s principal stakeholders to deliver established results for important social causes. Our clients include specialist private investors, development investment banks, NGOs and foundations.”
Freshfields Senior Associate, Daniella Jammes, has been involved in the advice on SIBs from the start and says the work has been interesting and pushed her outside her comfort zone. “SIBs are a fairly new concept so it’s been a huge learning process. These programmes are relatable to individual people’s lives and their stories can be very powerful.”
Daniella’s responsibilities include negotiating with local authorities and clinical commissioning groups. “It’s less precedent-based than some of our work so there’s lots of freedom to invent new solutions,” she says. “You have to really think about the underlying issues and what you’re trying to achieve when setting up new structures and contracts.”
Freshfields’ contribution to the development of the SIB market “has been profound,” says Antony Ross, Senior Advisor at Bridges, specialist private investors focusing on positive social impact. “Their pro bono advice has been essential to the SIBs that Bridges has in place, which has ensured significant investment into social sector organisations. It must also be recognised that Freshfields’ support has also been central to growing the wider sector and contributing to the rapid development of SIBs over the last decade.”
Supporting young people
During 2017-18 we assisted Bridges and Social Finance to set up the pan London SIB which invested £6m across six London boroughs in family therapy to assist children in need at the edge of care.
Freshfields has been working on similar initiatives since our initial work with Bridges in 2012 on a £3m contract for children on the edge of care or custody in Essex, which led to advice on the first SIB which invested £7m in funding foster placements for children in residential care in Manchester. We then assisted with similar interventions for £6m funding of foster care services in Birmingham and in Cardiff.
These therapeutic programmes invest additional resource in moving challenged adolescents into stable foster placements where they will enjoy better life outcomes, in the knowledge this will save the local authority substantial sums over time. These four SIBs made available nearly £5m for children’s services.
Improving health outcomes
We advised Bridges in 2014 on its landmark first healthcare SIB aimed at improving health outcomes through self-care and lifestyle change for those with long-term health conditions in Newcastle. The investment agreement with Ways to Wellness and general contract with Newcastle West Clinical Commissioning Group presented challenges in navigating the complex NHS procurement system, although our work has brought more than £1.6m of additional healthcare funding. This programme effectively boosted the use of social prescribing in the UK and we have worked on numerous other social prescribing SIBs since.
We assisted the Elton John AIDS Foundation in 2017-18 in piloting the world’s first SIB designed to tackle HIV with a £2m investment in HIV services in south east London with the aim to dramatically reduce HIV transmission. For further information see our case study on this SIB and its impact here.
Tackling homelessness
We also supported several SIBs set up to tackle youth homelessness in 2015 delivered by specialist charities: Depaul in London and Manchester; Local Solutions in Liverpool; and St Basil’s in Birmingham. We provided specialist advice to Social Finance on structuring these SIBs, often under tight timescales. Building on this expertise, we also helped Numbers for Good set up of another SIB to reduce homelessness in West Yorkshire with Fusion Housing as the delivery body.
These four SIBs unlocked over £3m of funding to help young homeless people with complex needs (such as substance misuse and mental health issues) that mean they cannot be currently housed in state-supported accommodation.
We have continued supporting SIBs in this area with similar homelessness interventions in London, Greater Manchester and Kirklees to assist rough sleepers off the streets and support them in building a new life, including help to integrate and house refugees.
Growing alternative funding
As well as the direct impact of these SIBs, our pro bono work has helped develop the social investment market in the UK. We have worked on a significant proportion of the UK SIBs currently commissioned in the UK. The UK Government has adopted some of our contracts as sector templates to develop the market and we have co-chaired a working group with the Government Outcomes Lab to develop a new template for use in the UK.
International growth
This financing model is increasingly being adopted abroad and we are working on a growing number of SIBs, and closely related DIBs, across the world. We helped the European Bank for Reconstruction and Development (EBRD) in 2020 adopt a results-based approach to provide professional training for more than 1,000 young Palestinians to support their transition into sustainable employment. The project was a test case to assess how private sector investment can tackle the region’s challenges by promoting results-oriented employment services.
“Freshfields’ contribution gave great comfort to internal EBRD stakeholders that risks had been identified and managed effectively,” says Paolo Monaco, Regional Head of SME Finance and Development. “The strong result achieved in structuring the project could not have been accomplished without the tireless, patient and highly skilled work of the Freshfields team.”
We have worked with the Education Outcomes Fund (EOF, a UNICEF hosted fund) since 2019 to help develop their templates for outcomes-based funding which have been used to improve education outcomes for children in schools, such as in Sierra Leone.
We provided legal support around the contracting of an outcomes fund in Ghana where EOF partnered with the Government of Ghana and the World Bank to launch the $30 million Ghana Education Outcomes programme, targeting out-of-school children to provide remedial interventions to reintegrate 70,000 children back into school. We worked with EOF from inception to advise on the structuring, joining meetings with the Ministry for Education of Ghana to explain the legal side of outcomes based contracting and then drafting and negotiating all of the relevant contracts.
Amel Karboul, CEO at EOF, said that “Freshfields are the go-to legal experts for outcomes-based commissioning, and have been central to positioning EOF as a global leader in outcomes-based education financing."
Innovative employment initiatives for vulnerable job seekers in France
We advised KOIS on the structuring of three employment focused SIBs in France from 2022-24, empowering vulnerable job seekers into work through innovative employment initiatives. These projects, driven by NGO partners and financed by the French government, include the Déclic Emploi SIB implemented by Les Eaux Vives EMMAÜS promoting the long term workforce integration of individuals with mental health challenges and the Gojob SIB focusing on a digital staffing platform to enhance the employability of vulnerable job seekers.
Marie Roche, the lead partner on these matters, shared: "Freshfields has a long-standing commitment to its pro bono work on initiatives which have positive social impacts. These social impact bonds, which help people in France get into work, very much come into this category.” Salma Badr Alaoui, Manager at KOIS added: "We are extremely proud to have supported brilliant social innovators in their mission to improve employability in France. The support of the Freshfields’ team was invaluable in bringing these SIBs to life.” These collaborations highlight the power of public-private partnerships in creating lasting social impact, unlocking new opportunities and driving meaningful change.
Empowering youth employment in Turkey
We advised Bridges on the launch of the first SIB in Turkey in 2023. This SIB focused on training and employing young people, in a country with 20% youth unemployment, in Turkey’s growing technology sector. The $1.25 million SIB has supported over 600 unemployed young people to access skills training in tech related industries, growing Turkey’s tech talent by bringing the qualifications required by the software sector to the country’s young people. To date, over 140 young people are now employed in the tech sector.
Reproductive health in Kenya
We also supported KOIS in structuring a DIB aimed at addressing the need for access to sexual and reproductive health (SRH) services for adolescent girls in Kenya in 2023. The expected impact of the DIB includes 193,000 adolescent girls using SRH services, including 50% from vulnerable populations, ultimately improving SRH outcomes for adolescents and young women by fostering a safer and more supportive environment for their reproductive health needs.
Transforming education for children in India
We advised the British Asian Trust on the LiftEd programme in 2024, a DIB aimed at using outcomes based financing to improve literacy and numeracy skills in schools in India across five years. We also helped establish the EdTech Accelerator fund to improve at-home learning outcomes in India, with both programmes together improving life chances for up to 4 million Indian children over five years. This is an area of focus highlighted by the government of India as the highest priority. Our transactional lawyers provided over 1800 hours of pro bono advice on the DIB and Accelerator, supporting on the structuring and drafting of principal documents. Because the DIB and Accelerator were funded by both Indian and international donors, we had to navigate Indian laws on funding and foreign aid, working closely with an Indian law firm to develop a workable structure.
Anushree Parekh, Associate Director, Social Finance at the British Asian Trust said: “We would like to thank Freshfields for their pro bono legal support on the LiftEd DIB and EdTech Accelerator. Structuring these transformational projects for Indian children could not have been achieved without the highly skilled work of the Freshfields team.”
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