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Non-profit association – social enterprise?

to funding (from municipalities).

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 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.

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

The last part of the trio are investors that provide Benefits from the SIB model funding for the service provider. The return on the investment is based on whether the desired outcomes are achieved. The investors can be foundations, NGOs, banks, corporates or other private investors. In Finland the first SIBs have been mainly foundations and large corporate funders. If the desired outcomes are achieved, the outcomes buyer, in the Finnish case the public sector, pays return on investment to the investor. In the end, the public sector will save money in the cost of social and health services that will not be used because of the intervention. SIBs are especially useful in supporting preventive action. Preventive services, that usually intervene in a very early stage of the possible development of a social problem, are traditionally not seen as very attractive investment targets. Traditional investors might be seeking a short-term profit or predictable return on investment. An SIB is a good option for an investor seeking social return on their investment and who is interested in the actual impact their money will help produce.

In Finland, SIB as an instrument of outcomes contracting has been tested in two projects, one for promoting occupational wellbeing in the public sector and the other for the rapid employment of immigrants. Projects currently underway focus on providing access to employment for the long-term unemployed, on preventing the placement of children For the service provider SIB helps control the financial risks because in this model the provider does not have to carry all the risks if the desired outcomes are not achieved. SIB is a great way of funding for especially social enterprises that work with preventive services and are willing to work on impact development and modelling. in foster care, and on preventing the exclusion of For the outcomes payer, in Finland the public sector, young people.6 Icehearts is one of the service SIB is a great way to buy outcomes and increase the providers in the SIB for preventing the placement of impact of public procurement. SIB is also a tool to children in foster care. increase the amount of private equity in the social business field.

 Ministry of Economic Affairs and Employment of Finland

Icehearts uses team sports as a part of the support system offered to the participating children and youth