100+ social impact bonds raise $400m worldwide since 2010 launch
Social impact bonds have now reached ‘global mass’, according to the organisation that pioneered the first one in Peterborough in 2010.
The Social Finance Global Network, which incorporates operations in the UK, the US and Israel, announced on 30 January that there are now 108 social impact bonds in 24 countries listed on its global database.
Collectively, the bonds have raised $392m in capital to reach more than 700,000 people.
David Hutchison, CEO of Social Finance UK, said: “I am delighted that the model we developed in Peterborough has gained so much traction. We are now seeing it adapted to support migrants in Finland, cancer survivors in the Netherlands and newborns in South Carolina and India.”
Social impact bonds enable national and local governments to use private finance to fund projects to tackle social issues. If the project achieves its aims then the investors get their money paid back to them by the government plus a return for the financial risks they took. But if the aims are not met, the investors lose their money.
Social impact bonds now support migrants in Finland, cancer survivors in the Netherlands and newborns in South Carolina and India
The first, the Peterborough social impact bond, raised £5m from charitable trusts and foundations with the aim of reducing reoffending among 2,000 ex-offenders. A variety of organisations were involved to help ex-offenders with challenges they faced, such as homelessness and unemployment.
In summer 2017, it was announced that the social impact bond had reduced reoffending by 9% and investors were repaid in full with a 3% return.
According to the Social Finance Global Network, nine countries launched their first social impact bonds in 2017 and the US saw the largest market growth in 2016-17.
“The market is at an important juncture,” said Hutchison.
Social impact bonds are gaining popularity in low-income and developing countries, including Congo, Mali Nigeria and Cameroon. New social impact bonds are set to be launched in Mexico, Brazil and Argentina during 2018.
Ten social impact bonds to date have reported a full capital return to investors.
The UK’s previous civil society minister, Rob Wilson, was a keen advocate for social impact bonds. Opinions are, however, divided in parliament. A report from the House of Lords select committee on charities published in March 2017 argued: “The expectations placed upon social impact bonds have yet to materialise and we believe the government’s focus on them has been disproportionate to their potential impact.”