social costs impact investing

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New guide to drive better understanding of cost of social issues

15 February 2016: When it comes to complex social and environmental challenges and programs, and investment to fund them, the social services sector increasingly needs to be able to demonstrate what outcomes are being achieved and what it costs to deliver better solutions.

Against a backdrop of many organisations struggling to define those outcomes, and even fewer knowing if they are successful, a new guide has been launched to help them better uncover and understand the true costs of social services, help identify patterns of need and, ultimately, develop, fund and deliver superior outcomes for people and communities.

A practical guide to understanding social costs: Developing the evidence base for informed social impact investment has been developed by Deloitte Access Economics in association with Australian Advisory Board on Impact Investing.

Lynne Pezzullo, lead report author, and Lead Partner of Health Economics and Social Policy at Deloitte Access Economics, said: “The difficulty in advancing impact investment is centred on understanding the true cost of social issues.

“This guide shares practical tools for organisations to work through what can often be a daunting task of calculating the cost of particular social issues so that a better understanding can be developed regarding the willingness to pay to address these issues.

“Without a shared understanding of the true costs of a social issue, we can’t begin the conversation about how to best direct investment, prevent poor outcomes and save significant costs into the future, including to governments and private investors.”

The guide, which includes two applied examples across teen motherhood and homelessness, can be applied in a number of ways, including:

  • To understand the social cost of a particular issue to inform realignment of investment to achieve more optimal social outcomes for that issue or problem, e.g. by intervening earlier
  • To understand where the greatest costs are incurred across a range of social problems.

Deloitte Access Economics’ pro bono work has been done at the invitation of the Australian Advisory Board on Impact Investing, as part of the Board’s strategy for growing the market for investments that deliver a measurable social impact in addition to a financial return.

“Impact Investing Australia welcomes this guide which is a terrific step in building understanding of the cost of complex social challenges” said Rosemary Addis, Chair of the Australian Advisory Board on Impact Investing and Chair of Impact Investing Australia.

“We hope it will contribute to greater openness about the costing of social issues to enable more focus on investment in more innovative, efficacious and preventive social and environmental programs.”

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About Impact Investing Australia

Impact Investing Australia was established in 2014 to grow the market for impact investing for the benefit of all Australians. Impact Investing Australia was created in response to an industry identified need for dedicated leadership, facilitation and capacity building. The organisation provides a focal point for market development, collaborating with and bringing together leaders in the field to build the infrastructure needed for impact investing to thrive.

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