Three interesting articles on the general theme plus about the risks of SIBs which is a good well-thought piece (complete with good graphic I have pinned on Pinterest) although I would contend surely the problem that has led to SIBs is not partly government cutbacks but the fact that government overspent in the first place? Small bickering perhaps, there is some good reading today:
Can Social Impact Bonds Unlock Private Money For Public Goods? Innovation In Pay-for-Success And Social Finance
Roosevelt Institute
For years, scholars and practitioners have grappled with the problem that governments, for a number of political and fiscal reasons, do not always make cost-effective investments in prevention. Recently, some have looked to enlist private sources of capital to underwrite preventative programs in return for payment out of the cost savings if the intervention is successful. This is the basic idea behind the social impact bond (SIB).
The first SIB was piloted in 2010 in Peterborough, England, where philanthropies have underwritten services to reduce high rates of recidivism. In 2012 in New York City, the Bloomberg administration teamed up with Goldman Sachs to pilot the first American SIB, and now several cities and states (and governments across the globe) are exploring SIB potential across a range of human service areas.
This policy note explains what SIBs are and how they fit into the larger “pay-for-success” and “social finance” frameworks, and explores their promise and limitations as instruments of public finance.
Investment focus: Midlands Together CIC – Social Impact Bond
FairInvestment
With so little in the way of positive news coming from the economy and investment landscape, it is good to know that there are still new and innovative investment opportunities available if you look hard enough. We take a look at a new Bond Issue which is designed to combine fixed investment returns with making a social impact. There is also the option to benefit from a relatively uncommon tax break called Community Investment Tax Relief, eligible against income and corporation tax liabilities.
Social Impact Bond Offers up to 15.1% p.a. using tax breaks
Socially responsible investment and competitive returns are not always phrases that are found in the same sentence, but a recently launched new investment opportunity may be an exception. Launched in partnership with ethical bank Triodos, under the leadership of CEO Richard Nicol, the Midlands Together Community Investment Company (CIC) Bond aims to address some of the obstacles faced by ex-offenders when seeking employment after the end of their sentence. The money raised will be used to provide training and employment opportunities in the Midlands to some of the 58.2% of adults serving short-term prison sentences who go on to reoffend upon release (source – www.tridos.co.uk 30/07/13).
A worthwhile investment
Many ex-offenders lack training, experience and skills to enter the workplace, as well as facing social and personal challenges to gaining employment. With the odds stacked against them, many ex-offenders find it all too easy to drift back into their previous lifestyle on leaving prison. Midlands Together aims to provide paid work for ex-offenders and equip them with the skills they need to secure permanent jobs, helping them break out of the cycle of reoffending.
The estimated £3m raised from the bond will enable Midlands Together to purchase over 70 derelict properties in the West Midlands, train ex-offenders in the skills needed to renovate them, and then sell them at a profit. One of the main social impacts is the employment, training and mentoring of ex-offenders in the repair and restoration of the properties since at least £2m is intended to cover the cost of up to 150 ex-offenders over the five-year period of the bond. As well as having the potential to change the lives of ex-offenders, this investment will help to restore local communities and provide housing by making good use of properties that are currently unoccupied and unusable.
The Risky Business Of Social Impact Bonds
Russell Webster
What is a Social Impact Bond?
Social Impact Bonds were pioneered by Social Finance with the best known example being the ONE project set up to reduce the reoffending of prisoners leaving HMP Peterborough.
Typically, under a SIB, an investor takes some financial risk for achieving outcomes and distributes the upfront investment for project-specific purposes (although often this is done through an intermediary). The provider of the capital is separate from the delivery organisation. Investors receive a return on their investment via a reward payment from the commissioner only if certain outcomes have been met.