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CERTIFIED MANAGEMENT ACCOUNTANTS | BRITISH COLUMBIA20 CMA UPDATE SPRING 2013
It’s 2013 and I’m sitting by my fire-
place on a cold February night typing
about a revolution. Valuenomics is about
to change the public and private sector.
Like the long list of “-nomics” such as
genomics, infonomics, economics,
reaganomics or freakonomics, value-
nomics is a concept – one that seeks to
ensure all parties achieve or receive value
in any business deal or transaction. No
one loses out; value can be measured
and attributed quantitatively or qualita-
tively to everyone involved. In the public
sector, the greatest potential for its appli-
cation lies in social entrepreneurship and
social impact bonds.
Across the pond, in Dickens’ “twin
city” of London, lies the hotbed of
social entrepreneurship – which can be
defined as an approach to identifying and
addressing social problems using market-
based strategies and business models.
It can be traced back as far as Florence
Nightingale – founder of the first nursing
school; however, the term is relatively
new in literature and has only grown
ubiquitous in the last 25 years. Specific
case studies are increasing across the
globe, with the U.K. widely recognized
as leader.
Social finance is a concept within social
entrepreneurship that has also entrenched
itself in the U.K. Simply put, it involves
managing money to deliver a social benefit;
an example is the use of social impact
bonds in the public sector. The social
impact bond is a contract between private
investors and public sector organizations
in which government pays for improved
social outcomes. It allows funds to be
Valuenomics
Creating value for everyone
through social impact bonds
By BERNARD ACHAMPONG, CMA
everal years ago, in a quaint area of Paris they call Marais,
I was lounging in the terrace of an elegant cafe, a glass in
hand, soaking in the Parisian sun. There was a lot to see –
beautiful buildings, vibrant people, cars, bikes, pigeons ...
And yet my eyes were fixated on a non-descript billboard
that read “Valeur pour tout le monde” – value for everyone. In the
land of “Liberté” and “Égalité,” those five simple words took hold
of my imagination.
S
raised from socially interested investors.
This investment capital is used to fund
service providers, and the government
pays returns to investors based on a
portion of the projected cost savings and
the success of the intervention. In truth,
though called a bond, the social impact
bond mechanism is more closely related to
a debenture that is contingent on revenue,
or a performance bond.
The most likely investors for social
impact bonds are socially motivated
investors seeking minimal financial
returns. The conditions that are critical
for social impact bond success include
the presence of a high public cost of
intervention combined with the poten-
tial for significant net benefits through
a social service program intervention,
i.e. quantifiable savings to government
and measurable outcomes. Essentially,
the savings associated with the outcome
must be higher than the costs of
delivering the outcome. The four primary
stakeholders in the social impact bond
model are:
In British Columbia, the Downtown
Eastside’s Potluck Café and Catering
– which hires Downtown Eastside
residents to provide thousands of
free meals, while making profits by
catering gigs for corporate clients
– is a good case study in social
entrepreneurship.
p20-22_Valuenomics & Social Impact Bonds.indd 20 13-04-12 9:14 AM

2. SPRING 2013 CMA UPDATE 21CERTIFIED MANAGEMENT ACCOUNTANTS | BRITISH COLUMBIA
■ Service provider – delivers the
program to the specified target
population
■ Investor – provides upfront capital
for program delivery
■ Government or other private
investor – guarantees a rate of return
for the investor if social outcomes
are met
■ Intermediary/facilitator – manages
contract; assesses impact of interven-
tions; manages ongoing performance,
e.g., acts as body where funds are
flowed through
A case study of social impact bonds
started the same year I sat in that Paris
cafe. The Peterborough social impact
bond – the first of these bonds – was
launched about three years ago to
reduce repeat offenders in Peterborough,
England, where approximately 60 per cent
of prisoners re-offend within the year
they are released, resulting in significant
social and community costs from crime,
policing and incarceration. Approximately
£5m was raised from 17 social investors to
fund a program with 3,000 male, short-
sentence prisoners leaving Peterborough
prison. Experienced service providers
were given the £5m to deliver programs
that provided intensive support to
prisoners and their families, both inside
prison and after release, to help them
resettle into the community. The investors
will receive a return if re-offending among
the prison-leavers falls by 7.5 per cent
or more compared to a control group
of short-sentence prisoners in the U.K.
Should the social impact bond deliver
a drop in re-offending beyond 7.5 per
cent, investors will receive an increasing
return capped at a maximum of 13 per
cent per year over an eight year period.
For example, a 10 per cent reduction in
re-offending would result in a 7.5 per
cent annualized return. There is value for
society and government per benefits if the
program is successful. Likewise, investors
benefit if the program is successful as per
agreed upon success indicators.
Valuenomics ensures all participants –
program users or clients, service providers,
investors, government or other guarantors,
and intermediaries or facilitators – maxi-
mizetheirquantitativeandqualitativevalue
or benefits. Social entrepreneurship, social
finance or social impact bonds can be done
without valuenomics; however, applica-
tion of the valuenomics concept maximizes
benefits for all and fosters increased utility
and sustainability of social impact bonds.
Now let’s examine how the concept
could be applied a bit closer to home – say,
to address a social issue facing Aboriginal
youth in Northern B.C., where unem-
ployment among persons aged 20-30 is
significantly higher than anywhere else
in the province. Once again, by applying
valuenomics to a social impact bond, a
program could be designed to reduce
youth unemployment in the north by
moving more young people into Northern
B.C.’s thriving and sustainable oil, gas and
mining industry. The primary participants
will be (illustrated per figure 1):
■ Target population of Aboriginal
youth aged 20-30 years
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p20-22_Valuenomics & Social Impact Bonds.indd 21 13-04-12 9:14 AM

3. CERTIFIED MANAGEMENT ACCOUNTANTS | BRITISH COLUMBIA22 CMA UPDATE SPRING 2013
■ Aboriginal/First Nations and catchment area
communities where we find the target population
■ Service providers (delivery agency and applicable
sub-contractors) with relevant expertise (e.g.
experience with a BladeRunners-type program)
to deliver a program aimed at youth
■ Investor from the oil, gas and mining industry to
fund or provide upfront investment through the
social impact bond
■ Guarantor/payer, either from the federal or
provincial government or a foundation, that
enters into a contract with the investor and guar-
antees a return only if the program is successful
■ Facilitator who connects all the participants,
manages the contract and ongoing performance
Applying valuenomics means Aboriginal youth
maximize benefits through sustainable employment
and connections to their community. The communi-
ties they reside in gain quantitatively and qualitatively
from tax revenue, consumer revenue and reduced
crime and reliance on social assistance. The non-profit
service providers gain additional revenue, strategic
expansion of services and synergies with existing
services that generates cost efficiencies and improved
profitability. The guarantors or payers such as govern-
ment gain from tax inflows, higher productivity and
spending, reduced government transfers and higher
savings from unemployment transfers. Finally, the
investor gains from reputation and image, portfolio
diversification and financial returns if the program
is successful. The facilitator gains revenue from
services provided; and the investor, payer, guarantor
or government, and the oil, gas and mining sector gain
from improved recruitment, hiring, training costs and
a more skilled workforce.
A $4M investment could mean employment for
approximately 500 newly trained workers in the oil,
gas and mining sector in Northern B.C. This could
translate to approximately $19.5M annual income
and a total of $4.12M in annual income taxes to both
federal and provincial governments. The $4M is paid
for within two years. The return to the private investor
could be approximately $600K (based on a 15 per
cent return) plus the original $4M investment if the
program is successful. In short, optimum quantitative
and qualitative value for all parties.
Valuenomics applied to social impact bonds
maximizes benefits for everyone involved, while
utilizing private investment for sustainable social
good. Without question, it’s a concept primed to
change how we deal with complex social issues –
both at home and across the globe. Value for everyone,
indeed. ■
BERNARDACHAMPONG,CMA
isaseasonedseniormanager
andproactiveleaderwith
broadexperienceinprogram
development,designand
implementation.Heis
passionateaboutmakinga
differenceintheprovisionof
effectivesocialprograms
nationallyandglobally.
Figure 1: Social Impact Bond (using valuenomics)
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SUB-
CONTRACTOR
SIB FACILITATOR
COMMUNITY
IMPROVE SOCIAL
OUTCOMES
PAYER/
GUARANTOR
FINANCIAL RETURNS
CAPITAL INVESTMENT
(WORKING CAPITAL)
WORKING CAPITAL
INTERVENTIONS
ECONOMIC
AND SOCIAL
■ STRATEGIC VALUE PLANNING
■ PERFORMANCE MANAGEMENT
■ FINANCIAL ANALYSIS
■ SECURITY STRUCTURING
■ COMMUNITY ENGAGEMENT
■ SYSTEMS MODELLING
■ PROGRAM DEVELOPMENT
■ PROCUREMENT AND CONTRACT
MANAGEMENT
■ PROJECT MANAGEMENT
DELIVERY
AGENCY
PRIVATE
INVESTOR
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