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Non-profit association – social enterprise? Icehearts is a registered association which is a common legal form of social enterprises in Finland. It started as a sports team with a social mission and has slowly grown to be a national welfare actor. The organisation is formed by the national umbrella association and local associations. The national level takes care of administrational, financial, HR and PR functions whereas the local organisations take care of the actual running of the teams. Administrative costs are funded by STEA, the Finnish Funding Centre for Social Welfare and Health Organisations Icehearts works locally with municipalities. The local social work officers point out the areas and schools where they think Icehearts could help. The arrangements in school, such as the presence of the educator at classes, are done in close cooperation with local officials. The municipality is also a partner in providing facilities for after-school activities.
Who is the customer? One Icehearts team costs about €50,000 per year. It is not very expensive compared with the savings it can offer to society, up to €857,000 per team. Still, someone needs to pay for it: the salary of the educator, facilities and equipment needed for the activities etc. A municipality can buy the Icehearts programme for their area. In this model the municipality agrees to pay for the team for a set number of years, which is usually one or two. In this case the local parliament decides annually/every two years if they will continue the agreement or not. Municipality partnerships are the primary funding model for Icehearts but are not without challenges. Municipalities usually divide their budgets into sectors such as education, health care, social services, sports etc. The Icehearts model operates simultaneously on at least three different sectors (education, social work, sports) and often the local association has to apply for funding from multiple different sectors and sometimes one sector refuses to grant funds because the same organisation can’t receive support from more than one sector. The impact of the Icehearts model is based on its duration (12 years) and widespread activities. The child in need gets support from the same, safe adult in many areas of their lives and this is a large part of the effectiveness of the model. Ironically these benefits of the model often also form the biggest challenges when it comes
to funding (from municipalities). Another branch of funding is foundations and private philanthropists who donate to Icehearts. In this model the donor can pay for anything from one year up to 12 years. In conclusion the actual “customer” who gets the service, the child in need, never has to pay for the programme themselves. Icehearts has also been a service provider in one of the first Social Impact Bonds in Finland. This is a tool of funding that you will learn more in the next page.
Social Impact Bonds (SIB) – what are they? SIBs are a form of outcomes contracting where outcomes payers, investors and service providers come together. These three (each can have one or more individual actors) groups create an impact bond where the outcomes payer (often governmental actor) identifies a thematic social issue, such as youth social exclusion, that needs tackling. In Finland SIBs have focused on preventive action among identified risk groups, so that the social issue would never even develop to a full (and expensive) social problem. Thus the outcomes payer will also calculate the cost of preventing the social problem from developing. In other words, the savings in public funds in the cost of social and health services if, for example a large group of youth in the identified risk groups would never become tax-paying citizens. The outcomes payer also defines the desired outcomes of the intervention that the SIB is going to be formed for. What needs to change in the life of the beneficiaries (e.g. the youth at risk of social exclusion)? But it is notable that the outcomes payer does not define how the outcomes should be reached. That is up to the service providers responsible for the actual intervention in the beneficiaries’ lives. This approach makes SIBs significantly different from, for example, traditional public procurement, where the public buyer describes in detail how the services should be arranged. SIB leaves a lot more flexibility and space for continuous development for the service provider – if the service model does not seem to deliver the results wanted, the service provider can make alterations and change the service, as long as the impact goal stays the same.
