Social Finance Israel (SFI) suggests a revolutionary concept for tackling social challenges in Israel, by turning them into Impact Investments with potential for economic gain.
The “Idan Hadash” project, launched recently, offers private investors to purchase Social Impact bonds for reducing loneliness among the elderly. The money raised will fund a comprehensive program, aiming to help alleviate participants’ sense of loneliness and encourage them to re-engage with their community. Investors will be eligible for a return on their investment based on a graduated rate of success – the greater the level of social impact generated and/or public costs saved, the higher the bond yield.
In this way, SFI proposes creating a mechanism of sustainable social services, blending public and private sources of funding, while the return money the investors receive able to be used for other similar investments. However, these investments also carry a risk, as if no success is achieved, investors will completely lose their investment.
In Israel, the number of elderly citizens characterized as “lonely” stands at approximately 300-500K. Loneliness among the elderly is a widespread phenomenon, greatly exacerbated by the COVID-19 epidemic, which has forced elderly people to stay away from family members and avoid leaving their house.
Loneliness significantly impairs the quality of life of the elderly, has been found to affect their physical and mental health, and as a risk factor for illnesses such as dementia, depression, stroke, and heart disease. Moreover, these ramifications burden health and welfare services, as well as the community.
SFI, in cooperation with the Municipality of Tel Aviv-Jaffa and the Tel-Aviv Foundation, with an investment by the Menomadin Foundation, launched a pilot offering private investors to purchase Social Impact bonds directed to reduce loneliness among the elderly in Tel-Aviv. The pilot will include 200 senior citizens, residents of Tel Aviv, aged 65 and over, who have been defined as “lonely” by the Municipality’s social services, with about 20% of them homebound. The bonds will be used to fund a social intervention program, with measurable social impact components. The refunds paid by the city of Tel Aviv to the investors will be determined depending on the level of its success.
The program combines volunteer and professional team involvement with the use of a unique digital platform. This platform enables participants access to an easy-to-use operating system, specialized to encourage social interactions. The system will enable daily virtual visits to a regional senior citizen day club, video calls to family members, interactive live leisure broadcasts, easy connection to a call center and proactive conversations. Participants will be able to keep this system for the rest of their lives, even if they drop out of the program, at no cost.
The investment was set for a period of two and a half years, about six months after the end of the project, to ensure that the participants got the tools they need to alleviate loneliness in the future.