Once an investor is interested in a proposed SIB, providers can expect detailed questions around the business case, probing the soundness of the proposed programme and the provider’s ability to deliver the outcomes. The questions below are fairly standard. You’ll be expected to provide evidence for your answers.
Due dilligence - what it was like:
An investor came to visit and wanted to observe a skills session with a beneficiary. Afterwards, he asked me questions around the young person’s circumstances, personal and social barriers, and their engagement with the programme. We spoke along with my manager about the programme as a whole and how and why I think it works. I was surprised at the level of detail they wanted to know.– Delivery team member of potential SIB
- How complementary is the proposed project to your existing activities?
- Age group and profile of participants
- How aligned are the programme and the proposed outcomes with your current mission?
- Which external factors, locally or nationally, could affect your ability to deliver the contract e.g. changes to benefits, local policy shifts, changes in procurement processes?
- Which project team members have been identified as programme staff and which roles need to be recruited?
- CVs/biographies of key team members
- Have you delivered this intervention before, in a comparable area, and with a comparable cohort? Provide details and any third party evaluations if available.
- What is the evidence base for this approach? Is there evidence of sustained outcomes? Which outputs and outcomes were measured?
- Which external partners or resources are needed to make the project a success? Have these already been secured? If not, what is the plan for doing so?
- How will you make people aware of the programme and secure beneficiary referrals?
- How will you monitor, report on and respond to outcomes data?
Financials and contracting structure
- How much money do you estimate needing to borrow to fund working capital?
- Assumptions for:
- Number of referrals onto the programme
- Number of referrals that convert into active participants
- Duration of support provided
- The percentage of participants achieving outcomes and time taken
It is advisable to provide detailed spreadsheets.
- On what information have you based these assumptions, and do you consider your estimates to be conservative or ambitious? Provide any supporting data e.g. relevant prior experience.
- What are your detailed operating cost assumptions? Include staff, IT, travel, insurance, marketing, other overheads, data reporting and analysis, participant costs, regulatory compliance e.g. Merlin.
- Will any capital investment be needed, e.g. offices/vehicles/IT for outcomes-reporting?
- What if you only achieve [80%] of the target outcomes?
- What steps could be taken if the project falls behind plan?
- Which level of outcomes will you need to achieve to break even?
- Do you have any strong preferences on the contracting and financing structure?
- Has the proposed project been discussed with the board, and what is their appetite to take on social investment? What is the process to secure final approval?
- Who would participate in the project board or governance committee?
- How do you think an investor could add the most value to the board?
As discussions with an investor progress, providers are usually asked to share a package of information about their organisation that demonstrates the soundness of their operations and management. This sample list is fairly standard:
Organisation and team
- Strategy document
- Corporate brochures and documents
- Risk register
- Names and biographies of the senior management team, board of trustees and other key individuals
- Last three years annual audited accounts
- Last 12 months management accounts
- Most recent budget/business plan
- Any other MIS/financial analysis
- Breakdown of revenue and cost lines
- Details of any major contract wins/losses/renewals (historic or in the next two to three years)
- Details of concentration/diversification of sources of income or costs
- Details of any existing borrowing or other liabilities, including property leases and pensions
- Details of property leases and any major rent reviews/lease maturities in the next three years
- Theory of change
- Latest social impact report or scorecard
- Plan for tracking and reporting on inputs, outputs and outcomes
- Example of social impact reporting, for the organisation or specific contracts
- Copies of any formal impact evaluations or research reports
- Systems for data entry and analysis, their integration with financial information, and processes for using data to inform decision-making
- Details of any contracts that involve working with a similar cohort or intervention, including:
- Contract value and term
- Your role and the role played by other partners
- Description of the intervention/approach
- Success rates, length of intervention, outcomes reported
- Overview of previous experience of payment-by-results or other outcomes-based contracts
- Examples of delivering contracts with considerable flexibility to evolve the model in response to changing needs and conditions
- Details of two referees e.g. commissioners