According to St Mungo’s, a well known British charity name, Social Impact Bonds are transforming Britain’s homelessness. A perfect example of the SIB advantage…
Social impact bonds help charity tackle homelessness
forumforthefuture.org
A new kind of payments by results scheme, funded by private finance, is transforming the lives of homeless people in the UK.
The journey into a home, employment and good health is frequently long and tortuous for the growing number of people living on Britain’s streets. An innovative financing mechanism, which rewards positive outcomes for individuals, could make a difference.
The London-based homelessness charity St Mungo’s is among the first UK organisations to raise external social investment to deliver positive outcomes commissioned by a public body. Its Street Impact programme, which aims to help over 400 homeless people rebuild their lives, has been granted a three-year ‘payment-by-results’ contract. It was commissioned by the Greater London Authority (GLA), with its upfront costs financed through £650,000 of external investment arranged by Triodos Bank.
The arrangement is possible thanks to a new type of contract called a social impact bond (SIB). These are novel because they require the use of private finance to tackle social issues on the government’s behalf. The borrower, who provides the service, is paid according to the success of its interventions. As such, payment by results contracts change the focus from what is done to what is achieved. Government bodies hope they will bring new impetus to solve intractable problems. The first social impact bond was launched in the UK in 2010, and the form is still evolving. Triodos Bank and CAF Venturesome, a social investment fund which invested in the St Mungo’s SIB, are both helping the UK Government to draft template contracts; similar work is underway in the US and Australia.