The Social Impact Bond: A win-win-win solution

By Matilda Macduff 13 September 2010

Last Friday saw the official launch of the Social Impact Bond, a new scheme aimed at driving significant non-government investment into addressing the causes of deep-rooted social problems. NPC have been big fans of the scheme for a while, highlighting it in our Manifesto for Social Impact back in March, and we hope that the overwhelmingly positive response to the first Bond signifies a golden future for the scheme.

Amongst all the talk of public sector spending cuts, the Social Impact Bond is being heralded as the answer to the Government’s woes – no government investment needed upfront with charitable funders providing the capital, and a ‘payment-by results’ repayment plan. The first Bond issued will see £5million of private investment directed towards tackling short-term reoffending, which according to the National Audit Office costs society up to £10 billion per year. The pilot scheme, focussing on 3000 inmates in Peterborough prison, will pay a dividend to investors provided reoffending falls by at least 7.5%.

To spare repeating what’s already been written, we’d just like to point our readers in the direction of two links. The first is a guest blog from Social Finance’s Toby Eccles, written back in March, explaining the development of the Social Impact Bond:

‘One question that we get asked regularly is ‘This looks like a really good idea, why hasn’t it been done before?’ Social Finance has certainly been aided by the financial crisis and the expectation of budgetary pressure. This has led to a greater willingness to do things differently and take risks that might not have been contemplated in easier times.’ Read the full post >

The second is a longer piece from the June issue of our quarterly magazine, Giving Insights, where we heard how government and charities can benefit from working together in such schemes.

The Social Impact Bond seems like a ‘win-win-win’ solution for charities, funders, and government. And society stands to benefit from reduced rates of reoffending, thereby saving taxpayers’ money. We’ll be reading about the progress of the first Social Impact Bond with interest, and keeping an eye out for the issue of the next!