Peterborough social impact bond investors see 3% interest
The conclusion of the world's first social impact bond (SIB) will return all of the investment as well as a one off payment described by Social Finance as "just over 3% interest per annum" over five years go to 17 social investors after outcomes were achieved. All of the investors were charities or charitable foundations.
Social Finance has announced that initiatives funded by the Peterbororugh SIB have reduced reoffending rates amongst short sentence prisoners by 9%. The target was 7.5%, meaning outcomes exceeded expectations.
Prisoners at Peterborough prison serving sentences of less than a year were offered support in two cohorts. An intervention by a consortium of social ventures focused on support in the period leading up to release and up to twelve months afterwards.
Participation was voluntary and the initiative ran between 2010 and 2015, with 2000 prisoners assessed. There was 74% initial engagement for the first cohort and 87% initial engagement for cohort two.
For the purposes of triggering outcomes payments, the reoffending rate was defined as an occasion on which an offender is convicted in court for a new criminal offence in the 12 months after leaving prison.
A frequency metric was used to record the number of reconviction events of the offenders on the programme. If there was a 7.5% reduction across the whole pilot in the number of reconviction events in the 12 months following discharge, payment would be made.
This differs from national statistics figures on reoffending (stated to be around 60% by Social Finance) which are binary – only considering whether prison leavers have reoffended or not.
Due to the terms of the contract, Social Finance was unable to say how much the scheme cost in total. Not all of the £5m raised was drawn down to fund the intervention.
Social investors profiting from the outcomes payments include the Esmée Fairbairn Foundation, J Paul Getty Jr Charitable Trust and the R&S Cohen Foundation.
Sir Ronald Cohen said: "It is very gratifying to see the world's first social impact bond do good and do well, helping released prisoners lead better lives and, as a result, paying back investors' capital with a reasonable return and saving the government money. It is the way of the future."
A Ministry of Justice final evauation into the Peterborough SIB noted: "there was no comparison site implementing a similar intervention using an alternative funding model, and since the SIB was used to fund a new service in the area, it was not possible to compare SIB-funded services with those previously funded through other means."
The Peterborough SIB was influential with more than £300m of investment having been mobilised via 89 SIBs in 19 countries since.
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