NAB, together with Sacred Heart Mission (SHM) and the Victorian Government, has developed a new financing model for governments and not-for-profit organisations to address complex social issues, including chronic homelessness.
The Contingent Grant model has introduced a new instrument to Australia that enables philanthropic organisations to provide a financial guarantee to investors that fund social impact investing programs. It unlocks philanthropic capital to underwrite the risk of losses and lowers the cost of financing.
It is the first transaction in Australia to include guarantees from philanthropy in the delivery of a government pay-for-performance contract.
'This is financial innovation of the best kind because the end result is more tangible help for vulnerable people in our society,' said David Gall, NAB Chief Customer Officer, Corporate & Institutional Banking.
'Our aim is to work with Sacred Heart Mission to share the way philanthropic funds have been used so that more communities can benefit.'
Social impact investing typically brings together governments, service providers, investors and communities to tackle a range of social and environmental issues such as homelessness, mental health and offender rehabilitation.
NAB and SHM developed the Contingent Grant model to finance the expansion of SHM's Journey to Social Inclusion programe, through the Victorian Government's Social Impact Bond pilot.
The NAB Foundation and three other philanthropic organisations have provided the financial guarantee for investors funding the third iteration of the program. This iteration will help 180 people experiencing chronic homelessness in Victoria to get and stay in housing, improve their mental health and wellbeing, resolve drug and alcohol issues and build skills and community connections.
'If we are going to break the cycle of homelessness once and for all, we need to embrace innovative financial models that will bring investors and philanthropy together in new ways and different ways to resolve this issue,' said Catherine Harris, Sacred Heart Mission General Manager.
'The Contingent Grant model gives service providers such as us, and governments, the ability to unlock the potential of philanthropic capital. It's a win-win for governments, not-for-profit groups and philanthropic organisations.'
See a case study of the Journey to Social Inclusion here. Written by the Centre for Social Impact, it discusses innovative funding initiatives that can arise when the community sector, financial sector, governments and philanthropy work together to support evidence-based approaches to addressing intractable social problems, including homelessness.