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 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, the first Social Impact Bond was developed in 2010 to reduce re-offending by providing intensive support to 3,000 prison leavers from Peterborough Prison to help them settle back into the community and reduce re-offending.  Other Social Impact Bonds have followed including:

It’s All About Me (IAAM) – Adoption Bond where 18 Voluntary Adoption Agencies are funded to secure adoptions for hard to place children.

Manchester City Council – Children in Care Social Impact Bond to pilot the effectiveness of Multi-Dimensional Treatment Foster Care (MTFC) in moving children and young people from residential to family placements (either home or foster care). The focus was on 11 to 14 years with highest levels of need.

Essex County Council – Children at risk of going into care, which is targeted at children on the edge of care or custody. Multi Systemic Therapy (MST) services will be delivered to each individual in the cohort for an average of between three and five months.

Want to find out more?

Social Finance are interested in proposals for social impact bonds in other fields, including health prevention work. Contact them by telephone 0207 667 6370 or email info@socialfinance.org.uk

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