5. Social Impact Bond and Its Funding Mechanism - Taipei 2023

[Music] hello good morning everybody my name is e I'm in finance like kind of odd to be here but uh actually whatever we do we need money and the money comes from different sources and in different ways now I try to explain what we can do with my background in finance how to get more money to like a prepare the uh uh advancement of various social and environmental issues okay as we know funding options for public issues can go from the left very traditional way of giving money and then moving to the right until we do uh donations ever in the middle there's a big gap the Gap is whether we can do from traditional moving to be responsible sustainable then impact investing talking about the term impact we have two s for you for people who are not so familiar with so the first s is sustainable we need to do things that will last long and uh strong and then the second s is scalable we want it to grow and we want to replicate everything and we want to expand the coverage in terms of geographical locations different group of people Etc so those two assets will be essential for our uh sharing uh from now on and uh impact investing is that we can use different means to do impact first thing is that we want to identify the organizations doing a very good job in each and every of their specific area there could be people doing social issues could be environmental could be for uh Dropout students from high school could be for young kids could be for youth employment could be for elderly care and that is very important because each of the specific issue I mentioned will require very devoted dedicated effort and with each of their experty is usually taking people five 10 or even more years to be very good very experience and deliver very good performance in the area they do so if is not easy however we don't expect people to start from scratch I want to do some youth employment I want to do some ay care it doesn't work at all so I'll first identify the good organizations good group of people doing that and then what we like to give them money give them human capital give them Tech technology and Etc so that's the way we will focus on impact investing and moving forward impact first investing we would like to identify uh good source of money that be dedicated in this uh specific issue and then uh Venture philanthropy and the donations so as you can see that there are are four major participants in the loop first one starting from investors why they want to give money to what we care we are concerned about that's because we have a very uh philanthropic heart we are heart touching to devote our effort and money particularly to each of the issues we are concerned about and we need people to do things so that's the service provider as I explained earlier we want to identify the good uh performance and then the service recipients when we have successful results the government will be the end payer that's the usual way going without the investors from the private however here for talking about social impact Bond where do three count concept first one they pay for success in the past we do a lot of projects government is giving the money however they look at the kpis kpi doesn't guarantee success but right now in order to attract private money into this game we want the private investors they are mostly uh project success driven we want to see good results that's why pay for success is the top one priority and it's not easy whenever we do something what is the definition of success we need to ask this for example what is the success if we talked about youth employment what is the success if we talk about elderly long-term care what is success says when we talked about environmental or Forest protection what is that definition when we have that definition is usually usually in one sentence not to make it very rhetoric not two lengthy statement one short clear definition of success that's the key if we get this success then we can have a good communication among this group of people everybody agrees on what is success then move together toward. go second one is private public partnership in the past the government is driving everything however the private sector is very experience in doing all different kinds of work now we like this two to work together the private money comes first do the work hire the organizations doing good job then deliver service and is if proven successful then the government will be the end payer paying out at the end and third multi-stakeholders partnership here the uh service providers they are not doing the work all along whenever necessary they will invite they will invite the Consultants outside uh helps to participate to join Force into the the process that is the numbers 2023 issues of social linked bonds that is Bond we have a very big number 36 billion USD and sib the social impact Bond accounts for 500 million that is substantially lower because that's the first launch of sip in the UK in 2010 about 13 years ago now years pass we have currently 253 sibs in 40 countries covering many different issues including social Environmental now we have different names for the PFS pay success the most traditional the original one works like this the investors they pay first and they hire the service providers and there will be beneficiary when the success that is set up up front is reached then and the government the end payer will pay the money so private pay first people do the work then public the government will pay at the end that is a reverse of the the pro process we we all know and the important thing is there will be an intermediary we need P we need people to be in the center like a project manager something like that to drive this thing along now the next model comes from this the very original one that is the social impact guarantee this being seen in Singapore there's a team of people that's Tri sector they do it differently because for some of the government or public sector they are not used to pay at the end they would say there are many considerations what if my party doesn't win my promise may not be realized and many different other considerations so the public the government will pay a front and what if the success wasn't reached then the guarantor the people or region said I would devote my money and time into this project they will provide guarantee if is not successful so this goes other way around and that's a a very good uh Innovation as we see it and then the third type is social impact amplifier because for this type of project to run it usually will have high overhead it takes a lot of time and the negotiation and the Contracting other than this there are still other hurdles to overcome so therefore we need as long as there's one successful project then what why don't we run the second run to the third extend ET so that is why the name amplifier so in this way we have sib si si a and on top of this there's s a fun the fun sole purpose is to give money to various sib siia Etc so with this kind of uh uh uh Innovation it is B to connect the social money there's a huge amount of private money and there are people with good heart they want to devote their money into solving social and environmental issues allog together therefore a good partnership between the private and partner and uh and the public is uh achieved and what can we do think about this we have different issues and we have very different technology background I've been promoting this guess how many years nine years and we are still here without one single project of sip in Taiwan so I think I better switch track come to you guys and probably we together can achieve something much better much quicker and with high impact that's why you see a very strange guy coming standing in front of you talking about this kind of stuff so you are more familiar with the procedures it comes from one what issue we are concerned about what issue so we can do all kinds of things to come up with good issues that is one second then we can have a good definition a clear goal to achieve that's success if we Define nicely success then we probably can get good amount of money the amount of money we're talking about will range from the community based community base that is small amount of money like a three 500,000 that is okay USD or sometimes if we want a bigger much bigger project then we are talking about 3500 million USD that's a wider coverage so either way it's a small amount of money or bigger commun Community or a wider range of uh people we can all do use either sip or Community Based IP and we also have the smart Sip tokenizing sib and uh this is with higher divisibility for uh splitting complex contracts into smaller ones and you are a much a better expert than I am in covering this kind of things so at the end what I'm saying is that we should join force and try to things to make things happen either for social or for environmental whatever issue people are concerned about let us know and then what define success and then get the money with uh TR transparency decentralized and tractable uh features to make the world a better place thank [Music] you