Australian Government principles for social impact investing


Social impact investing is an emerging, outcomes-based approach that brings together governments, service providers, investors and communities to tackle a range of policy (social and environmental) issues. It provides governments with an alternative and innovative mechanism to address social and environmental issues while also leveraging government and private sector capital, building a stronger culture of robust evaluation and evidenced-based decision making, and creating a heightened focus on outcomes.

The Principles acknowledge that social impact investing can take many forms, including but not limited to, Payment by Results contracts, outcomes-focused grants, and debt and equity financing1.

As articulated below, the Principles reflect the role of the Australian Government as an enabler and developer of this nascent market. They acknowledge that as a new approach, adjustments may be needed. They also acknowledge and encourage the continued involvement of the community and private sector in developing this market, with the aim of ensuring that the market can become sustainable into the future.

It is important to note that social impact investing is not suitable for funding every type of Australian Government outcome. Rather, it provides an alternative opportunity to address problems where existing policy interventions and service delivery are not achieving the desired outcomes. Determining whether these opportunities exist is a key step in deciding whether social impact investing might be suitable for delivering better outcomes for the Government and community. Government agencies involved in social impact investments should also ensure they have the capability (eg, contract and relationship management skills, and access to data and analytic capability) to manage that investment.

Finally, the Principles are not limited by geographical or sectoral boundaries. They can be considered in any circumstance where the Australian Government seeks to increase and leverage stakeholder interest in achieving improved social and environmental outcomes (where those outcomes can be financial, but are also non-financial).

Accordingly, where the Australian Government is involved in social impact investments, it should take into account the following Principles (which are explained in more detail below):

  1. Government as Market Enabler and Developer
  2. Value for money
  3. Robust outcomes-based measurement and evaluation
  4. Fair Sharing of risk and return
  5. Outcomes that align with the Australian Government’s policy priorities
  6. Co-design

The Australian Government's six principles for social impact investing

The Principles

Government as Market Enabler and Developer

Reflecting its role as an enabler of a new market, where possible, the Australian Government will work with stakeholders to address regulatory barriers that impede the continued development or sustainability of the social impact investing market.

Social impact investments made by the Australian Government should be ready to leverage additional private capital or other investment opportunities, as appropriate, and help to grow the social investment market in Australia.

Value for money

Social impact investments should only proceed where they are reasonably expected to offer a net benefit, and represent a cost-effective delivery mechanism for the Australian Government to deliver on intended outcomes.

Robust outcomesibased measurement and evaluation

Social impact investments should be made only where there is agreement between co-investors and their service delivery partners on the social or environmental outcomes to be achieved.

Ongoing outcomes-based measurement will be used to monitor the progress, risk and returns of the investment, allowing for the investment to be refined as appropriate.

Having regard to the nascent stage of the social impact investing market, ongoing outcomes-based measurement will be used to inform a robust and transparent evaluation to determine the investment’s impact and efficacy in delivering on outcomes.

Fair sharing of risk and return

Opportunities to invest in social impact investments, and the risks and returns of those investments, should be fairly shared between parties to the investment (including, the Australian Government, investors and service providers).

Outcomes that align with the Australian Government’s policy priorities

Social impact investments should have a well-developed case for being able to successfully address social and/or environmental issues which are priorities for the Government.


To encourage better outcomes in social service delivery and provide for innovation, social impact investments made by the Australian Government should be designed in collaboration with a broad range of stakeholders, including subject matter experts, and the communities and stakeholders who will implement them.

1Where a social impact investment is achieved through government procurement, then the Commonwealth Procurement Rules would still apply.