Dr Chih Hoong Sin, Chairman at Traverse, has been advising the Abu Dhabi government on the use of social impact tools. In the latest of his series of blogs, he explores how a social incubator function can support outcomes contracting and investment.
The emergence of social incubation and acceleration in Abu Dhabi
Against the backdrop of phenomenal economic growth since the 1970s, Abu Dhabi has been devoting more attention to the social development agenda.
The Department of Community Development (DCD) identified provision gaps in key social policy areas, with limited government provision in some instances while the social sector’s role in service provision is patchy, at best, and non-existent in many cases. Abu Dhabi is attracted to the potential presented by social entrepreneurship, supported by social incubation and acceleration, as a means of growing social service provision while presenting new opportunities for social investment.
What makes it noteworthy here is the deliberate connection with outcomes contracting and social investment as a means of overcoming a number of barriers confronting the sustainability of such entities.
A unique approach towards social incubation and acceleration
Ma’an – the Authority of Social Contribution, was established in February 2019 by the DCD to deliver solutions for social challenges. Ma’an supports the DCD’s central role, by organising and coordinating contributions made by individuals, government entities, non-government organisations and private corporations. It does so through five ‘pillars’ of work, namely:
Social Incubator and Accelerator
Social Impact Contracting
The Ma’an Social Incubator and Accelerator (MSIA) function is devoted to encouraging innovation and entrepreneurship to develop solutions to social, cultural, or environmental challenges; and to empower existing social enterprises to achieve business growth and upscaling of impact. MSIA offers the following, tailored to the specific needs of each entity being incubated or accelerated.
Workshops & training: Get immersed in hands-on and fully customized workshops geared towards scaling your business and validating your impact focus
Mentorship & coaching: Learn from the best coaches, mentors, in-house entrepeneurship leaders, and external industry experts worldwide
Market & network access: Access a global network of private and government partners to pilot your technology and explore other forms of deals and partnerships
Access to investors: Get introduced to a diverse group of local and global investors
Office space: Secure access to office spaces for 1 year through Ma’an
Funding: Become eligible to apply for grants of up to AED 200,000 each. If selected, grants will be disbursed based on clearly highlighted milestone achievements over a period of 1 year
Post-program support: Get inducted into startAD, the Abu Dhabi based global startup accelerator at NYU Abu Dhabi and receive alumni benefits
Source: Ma’an – the Authority of Social Contribution
To ensure the sustainability of the social enterprises they incubate, MSIA have adopted a number of key elements into their approach:
1. Building on evidence
Ma’an helped produced the Social Entrepreneurship Report, contributing towards the Global Entrepreneurship Monitor (GEM) UAE Special Report. The findings resonated with the international literature, finding that social entrepreneurs are highly innovative, highly engaged, have strong commitment to social purpose, and require a range of support over and above financial injection.
In an important nuance, entities in Abu Dhabi are keen to explore more innovative methods of fundraising, including various forms of impact investment, influenced by the Islamic practice around giving and doing good.
MSIA thus positions itself as the intermediary to help social entrepreneurs and not-for-profit entities build and grow their solutions, with an eye on creating an investible pipeline into the future.
2. Focusing on strategic priorities
As I’ve explained in a previous blog, the Abu Dhabi ecosystem is structured to align public sector entities to work in partnership in tackling the DCD’s identified social priorities. Increasingly, this has attracted private sector partners to align their activities – such as service provision and Corporate Social Responsibility – with these strategic priorities to optimise collective impact.
‘Collective impact’ equally underpins MSIA’s approach towards growing the social sector. To date, each of the 5 cohorts of social enterprises and non-profit entities incubated and accelerated have been themed to align with DCD’s strategic priorities, such as the inclusion of people of determination (or disabled people); improving mental wellbeing; improving family cohesion; improving environmental sustainability; and improving the inclusion and wellbeing of seniors.
3. Focusing on outcomes
As I described previously, the public sector in Abu Dhabi is leading the charge to become more outcomes-focused. The support offered through MSIA, for example, helps entities articulate their theories of change, and clarify and evidence outcomes. This orientation towards, and commitment to measure, outcomes equip the social enterprises and not-for-profit organisations with key foundation blocks to engage with the outcomes agenda championed by the Government.
4. Creating a virtuous cycle
The unique structure of Ma’an means that there are synergies unleashed across its five pillars, enabling close coordination and the amplification of impact.
MSIA contributes towards the growth and upscaling of social enterprises and non-profit organisations that present as a pool of potential providers from which social contracting may draw upon, enabled by the fact that all pillars of Ma’an are working to the same social priorities.
This is, in fact, beginning to happen. For example, a social enterprise incubated as part of MSIA’s third cohort is in the process of being appointed the service provider in a new Social Impact Bond (SIB) to be launched later in 2022. Ma’an’s Social Impact Contracting team is also in the process of designing outcomes contracts that do not involve social investment, thereby creating further opportunities for engaging in different forms of outcomes contracts, beyond SIBs.
Ma’an’s Social Fund is also building up a network of investors and an investment fund that are primed to provide other forms of social financing, over and above investment in SIBs. Furthermore, Ma’an recognises that investment may not be appropriate in all instances and that grants can play an important role. Its Social Grant function can disburse performance-based grants to encourage this consistent focus on outcomes through funding, rather than investment, channels.
Abu Dhabi presents an intriguing approach towards overcoming some of the challenges confronting the longer-term sustainability of social incubation and acceleration; aligning their focus to national priorities while equipping the social enterprises and non-profit organisations with strong outcomes orientations. These constitute investment-ready or grant-worthy propositions that are connected to the pipeline of different forms of outcomes contracting being developed, which are also aligned to the same national priorities.
Lubricating this conveyor belt is the pooling of different sources of capital for easy draw-down. The linchpin in all this is Ma’an, a government entity that coordinates and is effectively the platform through which demand- and supply-side actors are brought together to reduce transaction costs and attrition, while amplifying impact.