“SIBs were born out of the need to overcome structural barriers that prevent important social services from reaching marginalized populations and communities” (Donner & Huang, 2017, p. 1).
Peterborough Social Impact Bond, UK
The first institution to create them was the Social Finance UK, established in 2007 with a singular goal that later expanded to other countries and flows of thinking, exploiting untapped opportunities that lie in the relationship between social progress and capital markets. (Donner & Huang, 2017, pp. 1 – 2)
After understanding that scarce resources were the reason for governments to stop funding innovative social programs as well as the evaluation of methodologies and outcomes from the previous programs implemented, the government created in the city of Peterborough, UK, the first official SIB designed to reduce local cyclical recidivism patterns. It was planned for a total 3000 short sentenced ex-offender from the city with the objective of providing them rehabilitation services to reduce the recidivism rate. (Donner & Huang, 2017, p. 2)
“In 2010 Social Finance raised £5 million from trusts and foundations to launch the first ever Social Impact Bond to reduce reoffending among short-sentenced offenders leaving Peterborough prison” (Social Finance, 2017, pp. 1 – 2). The money funded an umbrella organization called One Service specifically designed to respond the complex needs of offenders and break a vicious cycle of re-incidence into the illegality. During five years, the One Service offered support to a total of 1000 short-sentenced male up to 12 months after the release, the engagement was voluntary but the whole cohort was included as a measure in the final results (Social Finance, 2017, p. 2).
The situation of many of the clients of One Service was what they had re-offended before, and for many, could not advocate a custody as a deterrent. The needs were identified and precise, a high proportion suffered from mental health and substance abuse challenges. Some others had the need for a house, didn’t have access to money/funding or were in debt. (Social Finance, 2017, p. 2).
“The One Service was delivered by St. Giles Trust, Ormiston Families, Sova, MIND, TTG Training, YMCA and John Laing Training, and managed by Social Finance” (Social Finance, 2017, p. 2). During the whole curse of the operation, it was an integral part of the Saint Peterborough Partnership and worked at all time closely with the police department, probation, integrated offender management teams, the prison, the local authority, local statutory providers and the voluntary sector, sooner than later it was a part of the environment of Saint Peterborough. (Social Finance, 2017, p. 2). The results were clear at the end, it reduced the re-offending of short-sentenced offenders by 9% overall compared to a national control group. The original target was set at 7.5% set by the Ministry of Justice, as a result, all the investors (17 in total) in Saint Peterborough Social Impact Bond received a single payment representing their initial capital plus an amount that will represent a return of just over 3% per annum for the period of investment. (Social Finance, 2017, p. 1)
Donner B., & Huang, C.-C. (2017). Social Impact Bonds: A potential Innovative and Effective Solution for Social Problems (Vol. Research Report #34). New Jersey, United States of America. Retrieved February 17, 2018 from https://socialwork.rutgers.edu/sites/default/files/report_34.pdf
Social Finance. (2017). World’s 1st Social Impact Bond shown to cut reoffending and to make impact investors return. London, United Kingdom. Retrieved February 20, 2018, from http://www.socialfinance.org.uk/sites/default/files/news/final-press-release-pb-july-2017.pdf