DEVELOPING A SUCCESSFUL SOCIAL INVESTMENT APPROACH:
Supercharging social investment in Aotearoa
New Zealand
The Ākina Foundation
FOREWORD
Aotearoa New Zealand’s societal challenges are not only stubborn, they are increasingly complex and multifaceted. Many are being exacerbated by the current economic downturn and the fiscal belt-tightening accompanying it. As we grapple with these economic headwinds, new and innovative approaches will be required to find sustainable solutions to these challenges and keep our efforts and resources appropriately focused on the wellbeing and prosperity of our people.
Social investment is a way to place positive social outcomes at the heart of our financial decisionmaking and done right, could be an effective tool in sustaining important social initiatives that foster greater social cohesion, with both far-reaching, and long-tailed impacts.
This Government has taken bold steps into the realm of social investment as it seeks to deliver the most bang for its buck for the $70 billion invested in social services each year. This approach is to be data-led, ensuring that evidence underpins the good intentions of policy-making to make effective investment decisions for the public.
In addition to data analysis, Ākina maintains that Aotearoa New Zealand will benefit from ensuring social proximity by design; that those communities targeted by central policies are tangibly connected to the decision frontier, be it design, implementation or evaluation.
By nature, social investment demands a decentralised method of delivery, with services and interventions informed by policy settings but delivered by the communities that will experience the impact and the organisations that best understand it.
Ākina promotes a collaborative approach that leverages both public and private resources to create sustainable and impactful solutions for the most pressing social issues in our communities. This requires us to approach these societal problems differently, and the Government holds a pivotal role to embed a sense of collective purpose and impact.
This white paper is the culmination of extensive research and dialogue with thought leaders and practitioners in the field of social investment, and approaches the subject in a manner that acknowledges the unique Aotearoa context, while taking lessons from other jurisdictions where social investment has been successfully implemented. It highlights successful case studies from within New Zealand, identifies emerging trends, and presents a set of best practices that can be adapted to our unique context. Our goal is to provide the Government with a practical toolkit that supports effective decision-making and enhances its ability to drive sustained social change.
Te Pūoho Katene, Chair, The Ākina Foundation (Ngāti Toa, Ngāti Whātua, Ngāti Tama)
FROM THE ĀKINA CEO
In October 2022, a year out from the general election, Hon Nicola Willis, now National Party deputy leader and Minister of Social Investment, delivered an impassioned speech at Victoria University, announcing the National Party’s intention to develop a comprehensive social investment policy.
At The Ākina Foundation, we have long recognised the potential of social investment within New Zealand, and so I have closely followed the developments in this space.
Ākina prides itself on being a true intermediary. We are a connector, a change-maker, an advocate. Social Investment is about investing in outcomes. Financial outcomes that reduce fiscal dependence and ensure that Aotearoa is getting the most bang for its buck out of its social programmes, and social outcomes that result in a more prosperous and inclusive society for everyone.
Historically, government and its agencies have struggled to focus on outcomes, with many promising social programmes struggling from inertia or funding uncertainty. A fear of failure has held other programmes back, but we must be bold in our approach and accept the possibility of failure as a reality.
The conversation around social investment needs to be broader than what we have heard to date, and I
am delighted and proud to publish this contribution –Developing a Successful Social Investment Approach.
There is some trepidation from within the social sector about how social investment will be defined and implemented. The Ākina whitepaper provides three key recommendations, which we hope will catalyse a conversation about what good social investment looks like. Bringing together case studies and experts working in the field of social services and investment has been an insightful and inspiring journey. We must do better. We can do better.
We look forward to the Social Investment Agency providing greater clarity on the Social Investment framework and funding approach. Done well, a new social investment approach will be bold, apolitical and focused on delivering positive outcomes. Ākina is here to help.
Nicola Nation | Chief Executive Officer The Ākina Foundation
INTRODUCTION
The Ākina Foundation (Ākina) is privileged to support, measure and uplift the impactful work making real change in our communities everyday.
The announcement that the Government will utilise social investment as the policy framework for its approach to the funding and delivery of social services is a massive opportunity for that inspiring work, the people it serves, and Aotearoa. We are at a junction where, if done right, the delivery of social services could be revolutionised.
At Ākina we are deeply privileged to have played a role in accelerating a number of these programmes already. We’ve championed programmes delivering deep social impact. We’ve learnt along the way and, as the Government presents our first Social Investment Budget in 2025, it is incumbent on us to share our voice. The following document presents our view on what is needed to supercharge social investment for the benefit of all New Zealanders.
The social investment approach seeks to identify, fund and scale system level interventions that will have the greatest positive, long-term impact on people.
Ākina has seen social investment play out in a range of ways. It is a funding approach that considers data and evidence in making decisions about where the best dollar can be spent to improve the lives of our most vulnerable New Zealanders. In many cases the recipients of that investment are those who may have been failed by, or struggled to engage in, mainstream social services. Those New Zealanders who miss out on the opportunity to reach their full potential go on to live costly lives in the system, often coming into contact with our healthcare and justice systems, relying on social welfare and state housing, and having less opportunity for positive net contributions to our tax base. Non-fiscal impacts include challenges with mental health and social isolation which increase barriers to changed lives. When this happens, we all lose.
The Integrated Data Infrastructure is a powerful tool that follows a person through the government system and tells us, amongst other things, where a person’s life
might be heading, whether interventions are needed and whether they are effective. We argue that with this information, we have a moral obligation to do something. Given social services are going to be provided to people anyway, let’s invest effectively and early to give our people the best shot at living productive and equitable lives. That’s what social investment is all about. Similar ideas have been presented in previous research into social investment in New Zealand, including Jonathan Boston and Derek Gill’s 2018 book, Social Investment: A New Zealand Policy Experiment. In speaking with Jonathan Boston in developing this white paper, he highlighted that the buck does not stop with Government when it comes to social issues:
“Of course we shouldn’t be relying on governments to do everything. I’m very supportive of [other] organisations participating in this space. The Government must be absolutely realistic about how tough some of these issues are, and it needs to be realistic about what progress is likely. It can be optimistic, but it must also be realistic. If it invests enough in evidence-gathering and research and evaluations, that means it can draw on good data about what’s working and what’s not.”
-Jonathan Boston
The social investment approach seeks to identify, fund and scale system-level interventions that will have the greatest positive, long-term impact on people. Alongside seeking beneficial societal outcomes, this model also considers the investment in terms of the Social Return on Investment (SROI) – the economic ‘value for money’ balance between positive outcomes and cost of investment.
Good social investment includes:
• An early intervention approach with clearly defined outcomes supported by an impact model
• The best outcomes per dollar spent, supported by robust measurement
• A long-term investment horizon
• A bipartisan, apolitical approach
• Targeted and community-led solutions focused on outcomes
• A three-dimensional investment focus where returns are measured in social outcomes or impact outcomes, as well as financial returns and risk.
SOLUTIONS can take the form of numerous investment models:
• Social impact bonds: Where private investors provide upfront capital to implement social initiatives aimed at
improving outcomes, with the Government offering a return, when predefined social outcomes are achieved.
• Co-funding models: When government, private investors, and community groups jointly fund social initiatives to leverage their resources and expertise to address social issues more effectively.
• Impact investing: This involves investing in companies, organisations, or funds with the intention of generating social and environmental impact alongside a financial return.
• Community investment: This focuses on providing financial resources to underserved communities, often through local banks or credit unions, to support small businesses, affordable housing, and other community projects.
• Philanthropic lending: Foundations or individuals might lend to social enterprises or nonprofit organisations that aim to address specific social issues.
While the primary goal is to create positive impact, social investments can also offer financial returns, making them appealing to mainstream investors. Think of social investment like planting a tree. When you plant a tree, you’re doing something good for the environment (cleaner air, more shade in the short-to-medium term) while also hoping that it will bear fruit (financial return) in the future. Social investment aims to achieve both—a better world and a return on investment. This is a mindset that needs to be mainstreamed for a sustainable future.
RECOMMENDATIONS
Recommendation 1
Involve the expertise of the community and those experiencing the change in developing this approach.
In order for social investment to be successful, the Government must ensure that its direction setting incorporates the voices of those already delivering social returns in our communities, alongside the vulnerable New Zealanders they serve. Our community has deep experience in designing and delivering solutions to gnarly issues. The people who experience the challenge, and the change, should be at the heart of how social investment decisions are designed and made.
Recommendation 2
That Government partner with external funders including community and iwi trusts, private capital, and philanthropic organisations. Government should look to supercharge investment through collaboration with other funders – including private sector, philanthropic and community trust funders. This will enable the entire social sector to achieve consistent outcomes for the same vulnerable communities.
Recommendation 3
That the approach must be apolitical and adopt a longerterm horizon to seeking outcomes.
Achieving intergenerational social change takes time and requires patient capital. A successful social investment approach will require taking a long-term view of success.
We need broad consensus on what we are trying to achieve through a social investment approach and a consistent measurement framework. Using qualitative and quantitative impact data, the government must ensure any social investment approach is substantive and enduring. This requires an apolitical approach and a time-horizon that spans political cycles.
CHAPTER THE COMMUNITY HAS THE SOLUTIONS
Recommendation:
Involve the expertise of the community and those experiencing the change in developing this approach.
New Zealand is hugely fortunate to have a deep and capable not-for-profit sector that for many years has worked in partnership with government to achieve better social outcomes for our most disadvantaged. For social investment to be successful, we must ensure that policy is set in a way that incorporates their voices and expertise, and the experiences of the communities they serve. At the end of the day, it’s their programmes the government wishes to scale up and see do the greatest good.
Grounding the system in the community
Social investment programmes are intended to address specific social challenges within communities, which can only be truly effective if we understand why those communities have been failed in the first place.
Our leaders in the community - in the not-for-profit, and community sectors and iwi hold a great deal of insight and capability in tackling these issues — because they’ve been at it for years. Many have seen successive governments come and go and yet the same wicked problems remain. They understand that these challenges require serious ongoing policy interventions and direct investment in order to turn lives around. They welcome a focus on robust and consistent measurement of outcomes.
“The challenges both previous governments and the current Government wish to address in the broad social domain include issues that have arisen from intergenerational deprivation and disadvantage, poor mental and physical health, alienation and disaffection, and low skills and limited employment opportunities.”
- Jonathan Boston
Our community leaders know the unique cultural, social, and economic dynamics that influence how communities and individuals interact with government services. They are our key to developing an investment approach that is equitable and inclusive, reduces the risk of marginalising certain groups, ensures the greatest uptake in programme participation and improves the potential for positive social outcomes.
The people they work with are where the greatest insights lie. Those whose lives were turned around by a targeted community intervention, often as a result of extensive relationship building from people embedded in communities who earn and enable the trust of vulnerable communities. Community leaders can assist to identify successful interventions. By including their voices, policy makers can ensure policies are grounded in reality and that resources are allocated where they will make the greatest impact.
Establishing the right outcomes
By involving a wider range of voices, the Government can design enduring solutions for those most in need.
“The challenges both previous governments and the current Government wish to address in the broad social domain include issues that have arisen from intergenerational deprivation and disadvantage, poor mental and physical health, alienation and disaffection, and low skills and limited employment opportunities.”
– Jonathan Boston
Outcomes must be established early in the policy process alongside community groups through impact mapping, modelling and stakeholder validation, to ensure investment is directed to the best outcomes. Meaningfully involving the community can also help government in understanding social outcomes that are less tangible —
these are outcomes that may not have a measurable financial return but are very much important aspects to the social investment model1
“At the moment the singular, dominant logic underpinning our approach is economic growth, which doesn’t, in itself, take our economy to a more sustainable and inclusive place.” - Jamie Newth, CEO, Soul Capital
Let’s also keep in mind that many of these community organisations are to adapt quickly and effectively to changing circumstances, ensuring that interventions remain relevant and impactful.
It’s about more than just data
Hard data and rigorous evidence is at the core of the social investment model. Previous iterations of social investment in New Zealand have gathered data and evidence through the likes of Statistics NZ’s Integrated Data Infrastructure. The data is then analysed through the Treasury’s CBAx cost-to-benefit tool which helps to consistently compare programmes and providers to ensure that a long-term and broad
view of societal impacts is measured alongside the known investment cost of implementation.
While data and evidence are critical in ensuring effective and impactful outcomes, Ākina believes that this data-driven approach must also incorporate the on-theground insights and perspectives of community providers and stakeholders. These are the people who are often the frontline witnesses to the social challenges facing our communities. They are critical to the feedback loop of how implemented social investment programmes are progressing. They can highlight emerging trends and identify unmet needs of the investment programme before and during its implementation. These community organisations and those they serve possess invaluable knowledge and nuanced understanding of local contexts that quantitative data alone may not capture.
The role of Trusts and Foundations
A short cut to success is the involvement of community trusts and family foundations, who have been
1 Examples of this are seen in the Acoron Neurodiversity and Waka Aronui case studies
charged with these sort of investment and assessment responsibilities for decades. Community foundations such as Foundation North, Rata and The Tindall Foundation possess intimate knowledge and established networks, meaning they work with community providers who understand the lived experience of people in our communities. In many cases, Governmental co-funding or co-investment will be able to inject capital into well-established programmes that are already delivering on their intended impact outcomes.
The way forward
How do we harness this collective expertise and lived experience? To be successful the Government must collaborate with and learn from community leaders and service providers. We recommend an independent Board including the not-for-profit and community sectors, and iwi is established for the design and implementation of any social investment fund. Ākina stands ready to help.
THERE’S
PLENTY OF CAPITAL KEEN TO MAKE CHANGE
Recommendation:
Government should partner with external funders including community and iwi trusts, private capital, and philanthropic organisations.
Government-led social Investment provides an exciting opportunity for the wider investment community, so let’s be ambitious about bringing their capital onboard.
By focusing on both social good and financial gain, social investment attracts people who want their money to contribute to a positive change in the world while still growing over time. At Ākina we have found there is a growing community of investors eager to do just that. The Government should look to seed an investable fund which is attractive to private investment, philanthropic funds, Superannuation schemes, iwi capital, family foundations and community trusts.
The most effective way to achieve scalable impact is by drawing commercial capital markets into sectors where the Government aims to make a difference but lacks sufficient funds to do so alone. To accomplish this, many investors will need to be offered an appropriate financial return.
That looks like being open to all sorts of ways investments could play out, be that social investment bonds, co-funding arrangements, or direct
impact investment.
“A social impact bond is framed around an innovative intervention to solve a problem that has a clear social cost. This intervention’s outcome is externally validated for its efficacy and then the difference, the benefit, determines the cost to the government. Investors only receive a return to the degree the innovation is effective, and this is essentially a mechanism to derisk innovative government spending as they only pay based on outcomes..” -
Jamie Newth, CEO, Soul Capital
An investment community eager to do good
External funders will want to see alignment between their funding objectives and the objectives of government. By creating a larger pool of capital through working with other funders, social investment programmes can amplify the impact of each dollar invested, allowing for more comprehensive
and sustainable support for organisations that are able to deliver the right outcomes. Such funds can scale more efficiently and more effectively, allowing successful initiatives to be expanded and replicated in other regions or communities.
A Social Investment Fund that is easy to engage with and contribute to, that starts small and scales up over time - as the approach and measurement framework become better understood, will naturally start to attract other sources of capital. In fact, as data and evidence is gathered, and social outcomes are measured, community and social providers should be able to challenge government agencies for funding if they can prove that they will deliver greater returns on the same investment.
Different funding models will attract different investors, be that through a simple co-funding model or as a wholesale investable fund aimed
at providing both financial and social returns. Each model would cater to different purposes and attract various types of funders. For example, the Big Society Capital fund in the UK has successfully implemented a wholesale impact investment fund, investing £2.6 billion from over 200 co-investors into more than 3,500 enterprises across the UK. Both co-funding and co-investment models are viable within the New Zealand context, and there are already existing impact investment funds in New Zealand that the Government could collaborate with.
Rigour in impact assessment and governance
“Ideally, the Government should look to find ways to derisk the investment for other investors. That could be through the Government acting as first-loss capital, or through some other means of cushioning the risk/guaranteeing the returns.”
– Alastair Rhodes
Investors will want to look at the measurable outcomes of their investments. This could include metrics such as the number of jobs created, reduction in greenhouse gas emissions, or improvement in community health metrics. In the Community Trust and Philanthropic space, this same need for accountability is reinforced by incentives such as funding renewals, grants, and public support, which are contingent upon demonstrated positive impact and integrity.
To attract additional capital, government will need a governance structure that is best practice and truly independent with its own mandate, and that is focused on both social and financial returns. This will require experienced governors who have already worked alongside institutional commercial investors and philanthropic investors, and governors who have experience in establishing impact investment funds. Large investors, such as Kiwisaver funds, will want to see a track record of funds being established, alongside a track-record of providing both a financial and impact return before they invest.
Government takes the lead
The Government needs to recognise that it can and should take on the role of lead investor, as its cost of capital is significantly lower and it often reaps the greatest benefits (such as reduced hospital admissions through investments in healthy housing).
“Ideally, the Government should look to find ways to derisk the investment for other investors. That could be through the Government acting as first-loss capital, or through some other means of cushioning the risk/guaranteeing the returns.” -Alastair Rhodes, Chair, Impact Investment Network
CHAPTER
There is immense potential for Social Investment to deliver meaningful, sustainable outcomes. This can only be achieved if the Government is successful in standing up an apolitical, or at the least a multi-partisan approach. In its early inception, this is building a system that will endure. While quick wins and runaway success stories make great headlines, what will make the biggest difference in the lives of our most vulnerable, is an investment approach that is there for generations to come.
“Consensus is needed across the political community, so that we don’t have successful policy interventions being undermined by a change of government. Even changes in terminology across political lines can be frustrating.”
- Jonathan Boston, Emeritus Professor of Public Policy, School of Government, Te Herenga Waka—Victoria University of Wellington
In it for the long term
Social issues are not things to be solved over a shortterm, five-year horizon. It requires a longer-term horizon of 10-, 20-, and 50-years. The longer the investment, the greater the chance of a self-sustaining social investment — outcomes that endure long after investment has played its part.
“Social investment is not an expenditure framework, it’s an investment framework. That speaks to a long-term
duration where intervention, design, and delivery are matched up over an investable timeframe” - Helmut Modlik, Tumu Whakarae, Te Rūnanga O Toa Rangatira
The best leadership is that which gives certainty. We must build a broadly accepted consensus on the way of doing things - what social investment is and importantly what it isn’t, how we want to measure it, and what community organisations can come to expect of the Government’s role in funding programmes delivering better outcomes.
Accountability in the not-for-profit sector, as with other service providers such as iwi organisations, is multifaceted, involving transparency to donors, stakeholders, and the communities they serve. They often operate under stringent accountability frameworks that require detailed reporting on the use of funds and the outcomes achieved. If the Government is
seen as unreliable as a partner, they will get on with the programmes at a micro level, forgoing the possibility of achieving a greater impact as a result of having the Government as a social investment partner.
Developing a common assessment tool
A consistent approach and framework for impact measurement that we all agree on – with a common language – will be welcomed by the sector who spend precious time and resources reporting to Government already. Let’s set clear timeframes to assess and reassess what success looks like.
Alongside the development of a common assessment tool, ensuring an effective change management process within governmental agencies will be crucial to the success of the Government’s proposed social investment model, to achieve consistency in the implementation of new policies and practices. Moving to a social investment model will involve a fundamental shift in how social services are delivered, funded, and evaluated. In particular, this is likely to involve a shift from direct service delivery, to co-funding, and co-development and delivery of programmes with third parties.
“Let’s build resilience into the system through an openness to receiving results that you don’t like, because there will be failures or things that haven’t worked as well as was hoped.”
– Jonathan Boston
Let’s not be afraid of change
It also involves fostering resilience within the system by embracing the likelihood that some of the programmes funded may deliver unexpected results. Like any investment portfolio, not every programme will deliver sky high returns, be that socially or fiscally. What matters is that all partners have an appetite for risk and a willingness to fail fast.
“Let’s build resilience into the system through an openness to receiving results that you don’t like, because there will be failures or things that
haven’t worked as well as was hoped.” - Jonathan Boston
Moving forward
The introduction of Social Investment will involve engaging stakeholders at all levels, from government officials to community members. Engaging these stakeholders early and often helps build support and mitigates any institutional resistance, ensuring a smoother transition to the new social impact model. Buy-in at all levels of this process requires twoway engagement, not top-down communications.
We would recommend to anybody who wishes to stand this up that they be clear about the outcomes they wish to achieve and in what areas. It’s very important that intended outcomes are tracked from day one. It will also be important for the Government to do its homework upfront around its Theory of Change — what it’s trying to impact, and what outcomes it’s looking for, and to then find aligned projects and investments. The Government should assess whether its partners have the capacity to achieve the desired outcomes, as well as the resources needed to measure and report on progress.
CHAPTER WHERE TO FROM HERE?
The best time to plant a tree was 20 years ago. The second-best time is now.
All sides of politics and social services agree we need to be doing better by our most vulnerable people.
Ākina is excited by the opportunity for creating an enduring social investment approach that will foster positive social outcomes across a multitude of social challenges to achieve better outcomes for atrisk New Zealanders and their families and create intergenerational change.
In developing a successful model, the design phase will be absolutely critical to its success.
Ākina believes this looks like an approach that:
• engages the voices of community
• invites alternative capital to the table
• measures outcomes, and
• is here for the long-run.
Over the coming months, Government must focus on building a common measurement tool based on quantitative and qualitative measurement, one that will provide the certainty that will attract social partners to the table, alongside investment from private capital and philanthropic funders.
We are encouraged by the government’s recently announced commitments and we look forward to building a successful partnership to deliver equitable outcomes for all New Zealanders.
Social impact in practice: Acorn Neurodiversity
The Growing Up in New Zealand longitudinal study identified 15% of 8 year old participants as neurodivergent.
Already at 8, this neurodiverse group has significantly higher depression and anxiety and lower school satisfaction and quality of life scores than neurotypical children. A 2018 report from the Office of the Prime Minister’s Chief Science Advisor identified 20% of youth offenders as having a learning disability, and 92% of young people in youth justice residences showed significant difficulties in at least one area of educational achievement.
Acorn Neurodiversity (Acorn) supports children and young people with a range of neurodivergent conditions. Acorn provides multidisciplinary services from early childhood to adolescence and into the early twenties, with a highly skilled team providing holistic services including speech and language therapy, occupational therapy, and psychology services.
Acorn fills the gaps left by public sector services, with a core belief that every child is capable of learning and reaching their potential when given the appropriate tools and support. By focusing on early intervention and ongoing support, Acorn aims to ensure that children with developmental challenges receive timely and effective assistance, which is crucial for their long-term development.
Challenges
Acorn received 701 referrals in the last fiscal year, and its 20 service
providers assisted 199 families.
One of the significant challenges Acorn Neurodiversity faces is the high cost of providing individualised, evidence-based services. The organisation’s model relies primarily on fee-for-service funding, supplemented by philanthropy to offer subsidised or free services to families that cannot afford to pay for its services.
The fee-for-service model covers approximately 75% of Acorn’s operational costs. Acorn has no substantial government contracts and depends on grants from foundations and charitable trusts to meet their shortfall. This funding model creates financial instability, as despite its impact, the charity must constantly seek new sources of support to sustain its operations and expand its reach.
Impact and Outcomes
Acorn Neurodiversity’s impact is evident through the measurable progress of the children it serves. The organisation utilises standardised assessments to track developmental milestones and improvements in areas such as communication, emotional regulation, and self-help skills. These metrics demonstrate significant progress in the children’s abilities, validating the effectiveness of the services provided.
In collaboration with Ākina, Acorn Neurodiversity is working to refine its impact measurement tools. While Acorn has highly granular data available on an individual basis, this partnership aims to develop broader metrics to capture overall improvements in well-being and engagement, providing a clearer
picture of the long-term benefits of their interventions.
Social Investment and Future Vision
Acorn’s proactive approach benefits individuals and families and also contributes to broader societal savings. It exemplifies how early intervention through investing in targeted, multidisciplinary support can significantly improve outcomes for neurodivergent children and young adults. With appropriate investment much more can be achieved.
Acorn’s work aligns with the principles of social investment, which emphasise early interventions to reduce future costs to social services, the health system, and the justice system. By investing in early childhood development, the organisation is making significant progress to reduce the prevalence of issues such as disengagement from education, youth offending, costly out of home care, welfare dependency, and long term care for adults with disabilities. Through Acorn’s integrated approach and commitment to evidence-based practices, it provides a valuable service that addresses a critical gap in the public sector. With greater investment and support, Acorn Neurodiversity has the potential to expand its impact, ensuring that more children receive the early intervention and support they need to thrive. The result will be a more responsive social and healthcare system, and more efficient economic outcomes, as has been seen internationally.
Social investment in practice: Waka Aronui
Currently in the final year of a three-year pilot in south Auckland, Waka Aronui is a programme that enables fair access for low-income families and whānau to the leasing of safe and environmentally friendly vehicles.
Many low-income families grapple with costly, highinterest vehicle finance, often leading to unsustainable levels of personal debt. The Waka Aronui pilot, spearheaded by the Ākina Foundation and the Manukau Urban Māori Authority (MUMA), has provided whānau with access to insured, maintained and serviced vehicles, coordinated through MUMA, the trusted community partner.
Waka Aronui shows social investment principles in practice, with The Tindall Foundation an investor in the programme, providing the vehicle finance to catalyse the pilot. The programme is designed by the community and supported by aligned government and private sector partners. Waka Aronui has demonstrated improved financial and mental wellbeing, created community connection and delivered emissions reductions.
Fuel savings of between $20-$150 per week have been achieved, with 95% of respondents reporting lower levels of stress relating to their vehicle. Additionally, 85% of participants believe the programme positively impacted their ability to provide necessities for their whānau.
The power of partnership
Ākina was the project intermediary; convening a partnership between MUMA, Toyota New Zealand, The Tindall Foundation, Auckland Council, MBIE and NZTA Waka Kotahi to distribute an initial round of 20 cars to whānau in Manukau and Te Tai Tokerau (Northland) communities. It was a partnership requiring expertise in community engagement and cultural understanding to ensure the programme met the needs of local communities.
“What Waka Aronui has achieved would not be possible without incredible partnerships - comprising local and central government, philanthropy, business, and community organisations. We are grateful for this collective effort.” - Programme Participant
Recognition of unique cultural and social dynamics
Platforming the voice of Māori communities in an authentic way required establishing a trusted partnership and ensuring we understood the specific issues affecting the local communities. The design approach was tailored to the community ensuring participants felt comfortable sharing their experiences. An impact model and measurement framework were critical to the success of the programme, as they ensured its outcomes were clearly articulated and had a set of supporting measures to capture data on the social, economic, and environmental outcomes. The tools were designed using a Te Ao Māori perspective, recognising the importance of such an approach in successfully engaging with the unique cultural dynamics of a Māori audience, providing whānau with both an understanding of the impact and a mana-enhancing experience.
Next steps
With the support from BNZ Foundation, Ākina is undertaking a feasibility study to provide an evidencebased roadmap to scale the programme nationally, as well as identifying opportunities to incorporate additional mobility solutions, such as vehicle sharing. This programme is ready for social investment.
OTHER VOICES
Jonathan Boston
Emeritus Professor of Public Policy, School of Government, Te Herenga
Waka—Victoria University of Wellington
There are some significant opportunities in re-approaching social investment. We’ve had improvements in data in New Zealand through, for example, the expansion of the household economic survey, as well as developments that have occurred with respect to the integrated data infrastructure (IDI). Arguably, we are in a better position now in 2024 to explore the relative merits of various kinds of policy interventions than we were six years ago.
However, the success of social investment is contingent on a long-term approach, and this speaks to the need for an apolitical, or at the very least bipartisan or multipartisan approach. Consensus is needed across the political community, so that we don’t have successful policy interventions being undermined by a change of government. Even changes in terminology across political lines can be frustrating.
If we can build a consensus on the way of doing things, the tools and enablers that we should use, the institutional apparatus that’s appropriate, the appropriate accountability frameworks with respect to monitoring and reporting and holding people to account with regard to performance; if we can build a cross party consensus on the broad structure of the relevant programs that are designated as social investment, that would engender a greater chance of success.
This sort of approach is in the best interests of the people who need the social interventions that we’re talking about. The challenges both previous governments and the current Government wish to address in the broad social domain include issues that have arisen from intergenerational deprivation and disadvantage, poor mental and physical health, alienation and disaffection, and low skills and limited employment opportunities. All these things require serious ongoing policy interventions
that build the capability and capacity of those running the programmes. They are not solvable overnight. Such an approach would provide the kind of certainty that attracts private sector engagement, and provide a lasting legacy. Not only that, but if the Government wishes to design and implement policies that are going to be effective, it will take time. A three-year electoral cycle is not enough time to set up a comprehensive framework for social investment, and the Government needs to be thinking about five- to 10-year timeframes, if not longer, in some cases.
Of course we shouldn’t be relying on governments to do everything. I’m very supportive of organisations like The Ākina Foundation participating in this space. The Government must be absolutely realistic about how tough some of these issues are, and it needs to be realistic about what progress is likely. It can be optimistic, but it must also be realistic. If it invests enough in evidence-gathering and research and evaluations, that means it can draw on good data about what’s working and what’s not. For that, of course, you need to invest in expertise, people with the relevant analytical skills. It also means building resilience into the system through an openness to receiving results that you don’t like, because there will be failures or things that haven’t worked as well as was hoped.
Helmut Modlik, Tumu Whakarae
CEO and Executive Director, Te Rūnanga O Toa Rangatira
We haven’t seen the detail of the social investment framework the Government has proposed, but what we’re looking for, to move forward, is to engage on the idea of the pursuit of mauri ora in a multifactorial, holistic sense, and to agree with National a set of arrangements that enables us to deliver our set of interventions in an appropriate timeline, and in an appropriate, investable frame. We are familiar with a social investment framework. We are a major shareholder in a merchant bank, through which we have our own ESG investment fund, and in addition to that we have recently begun investigating the potential of issuing an environmental impact bond.
I liken the nature of the task to having a leak in your laundry. When that occurs, you’ve got two jobs. Firstly, you need to mop, because you don’t want to live in a mess. Secondly, you need to find the leak and turn it off. If you don’t, you’re going to be mopping a very, very long time and eventually you’ll run out of mops and moppers. Most public policy interventions focus almost entirely on mopping up the mess. But mopping is a short-term solution, targeted at solving a short-term risk. To date, what we’re offered are one-year contracts to mop, then an invitation to try again next year for funding to mop some more.
Social investment is not an expenditure framework, it’s an investment framework. That speaks to a long-term duration where intervention, design, and delivery are matched up over an investable timeframe, not a shortterm consumption and expense timeframe. It speaks to complexity, and it speaks to the core issue of identifying root cause and intervening to find the leak and block it. We need to do both. We have all the moppers we need: we need plumbers and funding to fix the leak.
The value in social investment is to move away from a short-term, symptom remediation model to focus on root cause identification and investable, medium- to long-term activity that you can monitor, measure, and ultimately achieve what the government calls positive social outcomes, or what we’d call mauri ora. An issue is
that it’s tough to measure the trajectory of impact that isn’t linear. You must invest heavily at the front end to establish the infrastructure and get initial traction. It’s not entirely predictable where it will end up because this is the most complex public policy domain that exists—dealing with the root cause of deep, multifactorial social trauma. It will take courage, and I applaud the Government for that, but it also takes proximity to design and deliver.
One of the logical flaws in the current design is the centralised, top-down approach that focuses on trying to impose change. How did that work the last time you tried that with your teenagers? Forget it. All you can do is be an empathetic, wise, patient, and a persistent agent of change. That is the nature of social investment activity. To be a catalyst for change among people who need it, it’s the people who are most proximate, who are already bearing the price, and have access to the timeliest information, that will have the greatest impact. It cannot be delivered by a top-down approach. The approach needs to be decentralised so that we can have a flexible approach for micro- and macro-outputs. We need agility and we need flexibility. To do this, the Government must engage with a community who are all-in, who know and love the people that need to be supported, and then agree an appropriate, comprehensive, and holistic medium- to long-term intervention.
OTHER VOICES
Jamie Newth
CEO, Soul Capital
The social investment approach proposed by the government is about how it makes public expenditure decisions, as distinct from investment decisions made by impact investors.
There are a range of policies or policy settings that could sit under a social investment approach. Some of those would support impact investing activity, where investment provides a financial return for the investor and a measurable, intentional social and environmental impact, where other policy settings would not.
Firstly, there is the optimisation of the public dollar in government spending, which can be given expression through standard policies in health, education, or other areas where the government seeks an enhanced social outcome. This is a policy-led approach that should be evidence-informed and focused on a more systemic approach to government spending for social outcomes. The form that is perhaps most immediately interesting to impact investors like Soul Capital is two-fold.
In simple terms, the first form is the social impact bond (SIB) concept that had a trial run under the previous National government. An SIB is a ‘payment for outcomes contract’ that is framed around an innovative intervention to address a problem that has a clear social cost. This innovation’s outcome is externally evaluated for its efficacy and then the impact, the increased outcome relative to the status quo, determines the cost to the government. SIB investors receive a return to the degree the innovation is effective, which derisks innovative government spending as they only pay based on outcomes achieved, and investors are able to invest for social outcomes in issues where there are otherwise no market mechanisms to do so.
The second is a policy framework that could support impact investing as a sector in New Zealand, which
could drive our economy towards a more sustainable and inclusive place.
This would involve the development of a wholesale fund similar to Big Society Capital in the UK (and others around the world) which other impact investment funds can utilise as a source of capital. At a minimum, this would need to be in the vicinity of $100 million to be meaningful. The government already does this for mainstream venture capital via NZ Growth Capital Partners and its Elevate NZ Venture Fund. An impact investment fund could be similarly structured to drive social/environmental outcomes alongside economic growth.
All three of these approaches would be a good idea: being data-informed and more considered in our approach to fiscal spending is obviously advantageous. What I wouldn’t encourage is for that to be a different way of pursuing a political ideology: social investment is not exclusive to any particular political ideology, and shouldn’t be used as an argument for governments doing more or less per se
The way we approach economic development, and in particular the development of an entrepreneurial ecosystem should have a direction. At the moment the logic underpinning our approach seems solely about economic growth, which doesn’t take our economy to a more sustainable and inclusive place. The priority for a social investment should be innovative new initiatives, rather than a justification for the retreat from government-funded service provision.
Social investment in practice: The Westpac Government Innovation Fund
The Westpac Government Innovation Fund (WGIF) was established in 2016 as a platform for innovation, governed by Westpac and the New Zealand government, with a total investment of $10 million. With 18 months remaining, WGIF engaged Ākina to measure the effectiveness of its funding, aiming to provide an independent view, share insights with stakeholders, and communicate the value created.
This work highlights how government, intermediaries, and private partners can work together to deliver impact through investment, and to measure outcomes.
WGIF invests in community, government, and business innovators, maximising impact by reducing barriers to innovation. Funding contracts are outcomes focused and offer flexibility in how milestones are achieved, unlike traditional service contracts.
Ākina designed an impact measurement process that centered around funding recipients, ensuring that their voices and perspectives drove impact measurement; demonstrating the changes they observed in their communities as a result of the funding. This process allowed WGIF to understand the true value of their investments across social and economic domains, and to tell a story that resonated with all their key audiences and stakeholders.
Measuring impact of innovation
The fund, occupying a unique niche in innovation funding, collaborated with Ākina to define impact measurement metrics. Ākina guided the fund in understanding its distinct position and establishing metrics in line with industry standards and public expectations. The
collaboration was described as strong and effective.
The WGIF Impact Report emphasised the qualitative nature of the fund’s impact, focusing on stories, experiences, and systemic impacts as well as quantitative metrics. 80% of surveyed funded partners said they had progressed their initiative faster than they would have without WGIF support.
Over eight years, the fund invested in a diverse spread of impact areas, including quality housing, decarbonisation, supply chain transparency, the future of work, financial well-being, and improving the public sector.
The WGIF Impact Report affirmed a shift in the fund’s focus towards societal change. The impact assessment influenced the way the fund perceived itself and communicated its value and it contributed to a shift in narrative and stakeholder engagement.
94% of surveyed funded partners said they have been able to achieve more positive social, environmental and/or economic impact because of WGIF support.
The focus on quantitative as well as qualitative measurement empowered the fund to articulate its journey and contributions effectively, conveying the fund’s impact beyond financial investments.
Conclusion
Robust impact measurement of the Westpac Government Innovation Fund, including the voices of those experiencing the change has conveyed the fund’s impact beyond financial investments and the legacy it leaves behind. The demonstrated success of this fund could be successfully transferred to other social investment programmes that require interaction between public and private partners.
Alastair Rhodes OTHER VOICES
Chair, Impact
Network
Investment
It’s not entirely clear to me what the National-led coalition means by social investment. Generally social investment refers to investing to get both a financial return (including getting your original investment back), together with a social return. However, currently it appears that the Government is more focused on using big data to make better funding decisions. Based on my experience, the Government should look to seed an investable fund which is to attract more capital into that sector from philanthropic funds, Kiwisaver funds, or commercial capital.
Traditional investments focus on risk and return, however social and/or impact investments are threedimensional: where returns are measured in social outcomes or impact outcomes, as well as financial returns and risk. The best way to truly achieve scalable impact is by attracting commercial capital markets into sectors where the Government wants to make an impact and where it does not have sufficient funds to do this alone. To achieve that, there must be an appropriate financial return to the investors. Institutional investors are not going to be attracted by concessionary returns and there is only a limited amount of philanthropic capital that can invest in this way. The Government needs to understand that it can and should take the role as the lead investor — because its cost of capital is so much lower and generally, they are the ones that receive the most benefit (for example, through reduced hospital admissions by investing in healthy housing). Ideally, the Government should look to find ways to derisk the investment for other investors. That could be through the Government acting as firstloss capital, or through some other means of cushioning the risk/guaranteeing the returns.
To attract additional capital, my view is that they will need a governance structure that is best practice and truly independent with its own mandate and that is focused on both social and financial returns. That will require experienced governors who have already worked alongside institutional commercial investors and philanthropic investors, and governors who have experience in establishing impact investment funds. Large investors, such as Kiwisaver funds, will want to see a track record of funds being established, alongside a track-record of providing both a financial and impact return before they invest.
If the Government wants to establish a true social investment structure, they need to be asking how they can develop investable propositions, where they encourage capital investment, whether private of philanthropic, in organisations driving social or environmental outcomes.
Social investment in practice:
The Ministry for the Environment Jobs for Nature funding programme
The Ministry for the Environment’s (MfE) Community Investments Team, Whakamanahia te Hapori, administered over $400 million in Jobs for Nature funding. The Jobs for Nature programme focused on critical projects like riparian planting, wetland restoration, and freshwater farm plans.
Challenges and opportunities
Successive Governments acknowledged that high levels of government funding support through Jobs for Nature was unsustainable and prompted MfE to seek a strategic partner in Ākina, who was appointed to develop financial sustainability plans and innovative revenue strategies for pilot organisations. While financial sustainability was important to partner organisations in an ongoing capacity, a focus on long-term partnership would be preferable in a social investment setting.
Forging a multifaceted approach
Together with MfE, a multifaceted approach was taken. This included the development and application of a Financial Sustainability Assessment Framework, workshop facilitation, and the development of financial sustainability plans for partner organisations. Working with local environmental organisations required a nuanced approach which accounted for their unique challenges and barriers. The workshops were designed to explore and prioritise revenue generation opportunities, allowing the participants to be less reliant on grant funding in the future.
Navigating distinct journeys
The implementation process saw pilot organisations such as Para Kore and Environment Hubs Aotearoa (EHA), embarking on distinct journeys. Para Kore addressed operational issues identified during the implementation process and enhanced its project management systems. For EHA, Ākina facilitated strategic sessions for board members and staff that aligned to a rebrand and the development of a pitch deck for future investors.
Shifting from operations to strategic planning
After 12 months of implementation, the pilot organisations reported the value of the project in enabling them to shift their focus from day-to-day operations to progressing intentional and strategic planning. Across participants, the collective rating for the programme was 8.6 (rated on a scale of 1 to 10).
Lessons learned
The collaboration identified that financial resiliency work takes time, both for pilot projects to find suitable contractors and for embedding the work into operations. The Government, in determining which projects are appropriate to receive social investment, should ensure appropriate time is spent on developing financial resilience of its service providers.
As a result of this work, MfE has developed an understanding of funding recipients’ needs to support a transition away from Jobs for Nature funding. The approach was supported by more strategic and purposeful thinking amongst high-impact providers of critical environmental services in Aotearoa.
While the approach was successful, a critical learning for the purposes of developing a social impact approach is to focus less on project-based funding or investment and look at the long-term financial sustainability of recipient organisations from the outset to foster growth and long-term self-sufficiency.
Tēnā rawa atu koutou to the expert voices that contributed to this social investment white paper.
Me mahi tahi tātou mo te oranga o te katoa.
Let’s work together for everyone’s wellbeing.