NZ’s new Social Investment Fund

A quick scrape of the net

I wanted to find out about the NZ Government’s new Social Investment Fund.

So I prompted Perplexity AI to bring the salient information together. I’m sharing the results here in case they’re useful to you too. The following is a quick, lightly-edited AI dump, which I haven’t fact-checked.

Do let me know if there’s anything here that’s undercooked or just completely cooked up. As this is AI-written and not my usual style of Substack post, I’m posting it without emailing so it won’t clutter subscribers’ inboxes. I’ll just share it through LinkedIn.

The new fund

New Zealand’s government has launched a new Social Investment Fund as part of a broader $275 million, four-year strategy to transform how social services are delivered, particularly to vulnerable populations. The fund, initially capitalized at $190 million, is a central feature of the government's renewed social investment approach, aiming to achieve measurable improvements in people’s lives by focusing on outcomes rather than outputs.

Key Features

Purpose and Governance

The fund is designed to directly commission services for vulnerable New Zealanders, with a strong focus on purchasing outcomes (such as improved mental health or reduced youth offending) rather than simply funding activities (like the number of counselling sessions delivered).

It will be overseen by the Social Investment Agency (SIA), a standalone public service department tasked with leading the shift towards data-driven, outcomes-focused social service delivery.

The SIA will initially manage the fund and report to ministers on its performance, with the intention that, over time, the commissioning function could devolve to communities.

Investment Strategy

The fund is expected to invest in at least 20 social service initiatives in its first year, with the first three being an Autism NZ early intervention scheme, an Emerge Aotearoa youth offending programme, and a Te Tihi o Ruahine programme supporting families in need.

The approach is modelled to operate similarly to a traditional investment fund, maintaining a portfolio that balances innovative, experimental investments with more conservative ones.

The fund will be flexible to enable community, NGO, and iwi providers to address a wide range of needs.

Data-Driven Evaluation

A core component is the use of data, particularly Stats NZ’s Integrated Data Infrastructure (IDI), to measure the effectiveness of funded programmes by tracking outcomes such as school attendance or interactions with police.

Each investment will have evaluation mechanisms built in from the outset, allowing the government to adapt or discontinue funding for initiatives that do not deliver the desired results.

Funding and Scaling

While the fund starts with a modest budget, the government anticipates it will eventually attract co-investment from private and philanthropic organisations, potentially including the use of social impact bonds for areas like social housing and mental health.

Over time, the fund is expected to scale up and take over contracts currently managed by various government agencies, streamlining and improving the commissioning of social services.

Policy and Systemic Implications

Shift from Outputs to Outcomes

The social investment model marks a significant departure from traditional government funding, which typically focuses on outputs (activities delivered) rather than outcomes (real-world improvements). This shift is intended to ensure that taxpayer money delivers tangible benefits for individuals and communities.

Integration and Collaboration

The SIA will work closely with other agencies and is charged with setting standards for social investment, developing data infrastructure, and supporting a whole-of-government approach to social sector spending.

A ministerial group, including portfolios such as health, education, justice, housing, and social development, will oversee the broader social investment work programme, ensuring cross-sectoral alignment.

Potential for Private Sector Involvement

While the initial focus is on publicly funded and NGO-delivered services, there is scope for future involvement of private and philanthropic investors, particularly through mechanisms like social impact bonds. However, profit is not the primary motive, and there is ongoing debate about the role of private equity in delivering social goods.

Early Initiatives and Next Steps

The first three funded initiatives reflect a focus on early intervention and support for vulnerable groups, including children with autism, at-risk youth, and families in need.

The government plans to scale the fund and its approach over time, using lessons learned from initial investments to refine standards and practices across the social sector.

More details about the fund’s operations, governance, and evaluation criteria are expected as part of ongoing budget announcements and policy development.

Conclusion

NZ’s new Social Investment Fund represents a policy innovation, aiming to improve outcomes for vulnerable populations through data-driven, outcomes-focused investment in social services. Its success will depend on effective implementation, robust evaluation, and the ability to adapt and scale based on evidence.

Comments are welcome

This was an AI-generated summary. We will all learn more about the fund as it rolls out. Meantime I welcome any comments, corrections, or reflections on the above.