Life Chances Fund

Life Chances Fund
Name	Life Chances Fund
Type	Philanthropic investment fund
Founded	2016
Founders	Big Society Capital; Impetus; Social Finance
Location	United Kingdom
Focus	Social impact bonds; outcomes-based financing

Life Chances Fund

The Life Chances Fund is a UK-based philanthropic investment vehicle focused on outcomes-based financing and social impact initiatives, established to scale interventions addressing disadvantage across the United Kingdom. It operates by blending charitable capital with payment-by-results contracts to fund services delivered by third-party providers in partnership with local authorities, commissioners, and national agencies. The fund’s model draws on precedents from social impact bond pilots, venture philanthropy experiments, and outcome contracting frameworks developed in the United States and Europe.

Overview

The Life Chances Fund was designed to test and expand outcomes-focused commissioning models pioneered by organizations such as Social Finance, Big Society Capital, and Impetus, working alongside public bodies including Department for Education, Ministry of Justice, and local authorities like London Borough of Lambeth. Its purpose is to enable service providers — ranging from charities like Barnardo's and Children's Society to social enterprises such as Shaw Trust — to scale evidence-based interventions that target cohorts identified by commissioners including NHS England and Public Health England. The initiative sits within broader policy debates influenced by reports from think tanks like Institute for Fiscal Studies and Resolution Foundation.

History and Development

Conceived after the proliferation of early social impact bond projects such as the Peterborough Prison SIB and pilots in Essex County Council, the fund launched following coalition discussions involving Cabinet Office officials and leaders from Nesta and Joseph Rowntree Foundation. Initial capital commitments were mobilized from philanthropic foundations including Paul Hamlyn Foundation, Big Society Capital, and private donors influenced by models tested by New York City Social Impact Bond experiments and outcome payment pilots in New South Wales. Early deployments targeted youth employment, preventative health, and criminal justice diversion programmes, informed by longitudinal studies from UCL Institute of Education and evaluations by What Works Centre for Local Economic Growth.

Structure and Funding Mechanism

The fund operates as a pooled philanthropic vehicle that provides upfront investment to service providers via intermediary organisations such as Social Finance (US) affiliates and impact intermediaries like Access — The Foundation for Social Investment. Repayments are contingent on achieving pre-agreed outcomes measured against baselines established with commissioners such as Department for Work and Pensions or local authority partners like Manchester City Council. Financial structuring borrows from impact bond frameworks used in projects involving Goldman Sachs-supported investments and outcome payments coordinated with bodies like Cabinet Office and HM Treasury. Risk is shared between philanthropic investors, outcome payers including NHS England and local commissioners, and service providers including Turning Point.

Investment Criteria and Portfolio

Life Chances Fund investments target interventions with evidence from randomized controlled trials or quasi-experimental evaluations produced by institutions such as University of Oxford, London School of Economics, and University College London. Portfolio selections emphasize measurable outcomes in areas aligned with agencies like Department for Education, Home Office, and Department of Health and Social Care. Examples include programmes addressing youth unemployment in collaboration with Prince's Trust, early-years prevention associated with Early Intervention Foundation, and recidivism reduction linked to organisations formerly involved in the What Works Centre for Crime Reduction. The portfolio has included contracts with social providers such as Catch22 and Revolving Doors Agency.

Partnerships and Stakeholders

Key partners encompass philanthropic investors like Paul Hamlyn Foundation, intermediaries such as Social Finance and Impetus, commissioners including Greater London Authority and county councils, and evaluation partners such as Institute for Fiscal Studies and NatCen Social Research. Stakeholders also include service delivery charities like Barnardo's and justice partners such as Victim Support, working alongside funders influenced by outcome-focused initiatives from Nesta and international collaborators from World Bank outcome finance advisories. Political oversight has involved ministers from Department for Education and scrutiny from select committees in the House of Commons.

Impact Assessment and Outcomes

Evaluations of Life Chances Fund-backed projects have been carried out by research bodies including Institute for Fiscal Studies, National Institute for Health and Care Excellence, and What Works Centre for Children's Social Care. Reported outcomes encompass reductions in unemployment, lower rates of reoffending, and improved health metrics measured via administrative datasets from HM Revenue and Customs and Ministry of Justice records. Findings have been discussed at conferences hosted by London School of Economics and published alongside analyses by Joseph Rowntree Foundation and New Philanthropy Capital.

Criticism and Controversies

Critiques of the fund echo broader debates about outcomes-based financing raised by commentators at The Guardian and think tanks like Institute for Public Policy Research, centering on issues of attribution, measurement, and the potential for perverse incentives noted in analyses from House of Commons Library. Concerns have been raised about administrative burdens for small charities represented by National Council for Voluntary Organisations and about austerity-era commissioning contexts discussed by Resolution Foundation. Legal and contractual disputes over payment thresholds have involved scrutiny from parliamentary inquiries and debates within House of Commons Committee of Public Accounts.

Category:Philanthropic organizations Category:Social impact investing