Events in the USA and more momentum being gained on the back of very encouraging initial results for SIB programmes – a lovely series of articles to start the week!
Michigan Will Seek Investors For Social Program
The Morning Sun
Michigan plans to enlist private investors to finance a public social program, becoming the latest state government to try an experimental “pay-for-success” approach in tackling persistent problems such as homelessness or criminal recidivism.
The state will announce Monday that it is the seventh chosen through a national competition to receive technical assistance from Harvard University for a social impact bond.
Also known as pay-for-success contracts, social impact bonds work like this: Private investors — potentially a bank and a philanthropic foundation — put up money for a program with a specific goal. A contract is signed with a service provider.
If the goal is achieved, the government pays back the investors, with a profit. If not, the government pays nothing.
Initial Results Are Extremely Positive For Social Impact Bonds
Finance for Good
Structured as long-term programs, it will take years to fully understand the impact social impact bonds have catalyzed; but, initial results are extremely positive for Social Impact Bonds.
Over the past three years the market for social impact bonds (SIBs) has grown significantly, beginning with Social Finance UK’s first SIB-funded program in Peterborough. This isn’t a surprise since the social and economic benefits of SIBs are theoretically very promising. However, while over 30 SIBs are currently being designed around the globe, only six have actually been fully implemented, fewer still have had sufficient time to begin measuring results, and only two have released any public information about their results. All that to say, the dataset so far is quite small.
The goal of this post is not to talk about what we don’t know but rather to understand what can be gleaned from the information that is available. Last week, the SIB-funded ThinkForward program announced preliminary results. The program focuses on working with young people who have a high risk of becoming NEET (not in employment, education, or training). The goal of the program was to ensure 30% of its participants (at-risk young people) achieved General Certificate of Secondary Education (GSCE) scores in the A*-C range. This range, called a “Level 2” qualification, are insisted on by many employers and educational institutions, making it a key success factor for students. Within the ThinkForward pilot program, 55% of participants achieved the A*-C range. This is well abovethe initial goal, providing great promise for the future of the program.
The positive results from ThinkForward build on a similarly impressive report in June regarding Social Finance UK. In the fall of 2010, Social Finance UK launched a SIB designed to reduce recidivism rates among short-term prisoners in Peterborough. Data released from the UK Ministry of Justice suggests that their program might be working. The data noted that re-conviction rates nationally among released prisoners had increased 16% during the 2010-2012 time-frame, relative to 2008-2010. Comparatively, the re-conviction rates in Peterborough had actually declined by 6%. This 23% relative improvement is a promising sign that, once again, lends credence to the SIB model.
SOCAP13 Session Recap: Social Impact Bond Workshop: Dissecting SIB Contracts
socialcapitalmarkets.net
A choice panel of impact asset managers, researchers, and government reps laid out the latest, greatest, and not-so-greatest about the innovative Social Impact Bonds (SIBs) financial vehicle. In the United States, SIBs are new, complex, and multi-stakeholder structured deals being used to finance new recidivism, education, and health projects around the country.