What are Social Impact Bonds?

Social Impact Bonds are designed to increase funding for preventative services that improve social outcomes.

A Social Impact Bond is a contract with the public sector in which it commits to pay for improved social outcomes. 

On the back of this contract, investment is raised from socially-motivated investors.  This investment is used to pay for a range of interventions to improve the social outcomes.  The financial returns investors receive are dependent on the degree to which outcomes improve.

If outcomes do not improve, then investors do not recover their investment.  The public sector pays if (and only if) the intervention is successful.

The social impact bond was developed by Social Finance, an organisation that works to develop the social investment market.

Have any services been funded through this yet?

Yes, in 2010 Social Finance raised £5m from Big Lottery Fund and a number of private charitable trusts to fund the first Social Impact Bond (SIB) called the One* SIB. 

One* SIB is being piloted with the St Giles Trust on preventative work with offenders.  The contract is with the Ministry of Justice.  The pilot will see St Giles Trust providing intensive support to 3,000 prison leavers from Peterborough Prison over a six year period to help them settle back into the community and reduce re-offending. If the pilot reduces reoffending by 7.5% or more, the investors will receive a share of the long term savings.

Social Finance see social impact bonds as helping to develop an outcomes-based social economy and helping people to understand the potential of social investment.

Want to find out more?

Social Finance are interested in proposals for social impact bonds in other fields, including health prevention work.  Further information is on their website: http://www.socialfinance.org.uk/sib  

Social Impact Bonds, and social investment more generally, are being looked at increasingly by Government as a means of supporting the work of the voluntary and community sector.  Keep an eye on the Cabinet Office website under ‘Big Society’ for further developments, http://www.cabinetoffice.gov.uk/big-society  

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