Scotland's first social impact bond (SIB) has attracted a group of individuals and small businesses to invest in funding a Scottish charity's work with young people.
The SIB will enable the Perth-based YMCA to benefit from the new funding model, trialled in England last year, which will target the corporate social responsibility budgets of bigger companies as well as philanthropic investors and charitable trusts.
SIBs aim to ease the burden on public sector funding by offering investors returns linked to measurable social outcomes in infrastructure projects. The Perth project is one of six across the UK about to be announced by sponsoring agency the Department of Work and Pensions, a conference in Glasgow heard yesterday.
Jill McGraith, acting chief executive at YMCA, said: "We thought there would be a couple of big investors but what happened was small individuals and businesses came forward."
The conference on SIBs in Govanhill was supported by the Co-operative Bank, Clydesdale Bank and Social Enterprise Scotland.
It heard from RBS community banking director Eric Munro that mainstream banks were by far the main funding source for the third sector.
He said: "There is a need for new types of vehicle for equity investment.
"There is a massive opportunity if we can design a product we can get pension funds to buy into."
Jeremy Peat, director of the David Hume Institute, warned that the economy would emerge not from recession but from transition, and urged a move to 'pay as you go' infrastructure such as road tolls and payments for new broadband.
Mr Peat said: "I want all these innovative approaches to finance to be examined ... and a constructive dialogue about how we can achieve what we need."
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