Social Innovation Research Center

A British investment firm, Bridges Ventures, has successfully raised £25 million for investments in social impact bonds, according a report from the UK office of Third Sector (also here).

According to the story:

Antony Ross, partner and head of social sector funds at Bridges Ventures, said he expected the fund, which was oversubscribed, to give investors a financial return of more than 5 per cent a year.

The firm’s fund plans to invest in 10-15 social impact bond opportunities. It has already invested in two, one funding adoption services and another funding foster care placement.

Another British organization, Golden Lane Housing, raised £11m in another oversubscribed offer in July. According to a story in The Guardian, the organization listed its tradable “retail charity bond” on the London Stock Exchange. It would reportedly provide a 4.375% rate of return.

According to the organization, “the funds raised by the Bond will enable Golden Lane Housing to invest in buying and adapting 30 high quality homes for over 100 people with a learning disability in their local communities.”

Related

• Nonprofit Quarterly: UK Advocate of Social Impact Bonds Declares Them “Clunky” (September 15, 2014)

Legislation that would provide additional federal support for social impact bonds (SIBs) took a tentative step forward today when a House subcommittee held a hearing focused on their potential benefits and tradeoffs.

The bill being considered, the Social Impact Bond Act (H.R. 4885), has drawn bipartisan sponsorship from Reps. Todd Young (R-IN) and John Delaney (D-MD). But the spirit of bipartisanship was less evident during the hearing itself, where Democrats were generally more skeptical and Republicans more supportive of the social impact bond idea.

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The initial results of an internationally known experiment with social impact bonds being conducted in Peterborough, England are being hotly debated by critics and supporters who disagree over how successful it has been.

The program was originally intended to reduce recidivism by ex-offenders, with payments made by the British government to outside investors based on program outcomes. However, reports emerged in April that it is being replaced with a new program, called Transforming Rehabilitation, that is intended to reduce recidivism across Britain as a whole.

Opponents who argued that the decision to phase out the Peterborough experiment constituted a major retreat from social impact bonds are now pointing to new numbers that indicate that it failed to meet its initial goals for reducing recidivism. According to the National Union of Public and General Employees, “the data released this week shows the scheme will come nowhere near achieving what proponents claimed it would when the project was launched.”

In fact, the program appears to have come within 2 percentage points of its first-year target. As pointed out by an article in Next City, a study by  QinetiQ and the University of Leicester showed that the program in Peterborough achieved 142 reconvictions per 100 prisoners, an 8.4 percent reduction when compared to the control group results of 155 reconvictions per 100 prisoners.  If the Peterborough program had achieved 2 fewer reconvictions — 140 instead of 142 — it would have reached its 10 percent target.

Despite falling short of this initial goal, the reduction in reconvictions still represented an improvement compared to national trends, which actually worsened over the same time period. “Nationally, the equivalent figures show a rise of 10 per cent from 143 to 156 reconviction events per 100 offenders,” according to a report from the nation’s Ministry of Justice.

While it appears to be reworking its recidivism programs, the British government does not seem to be backing away from social impact bonds more generally. Within days of the news that the Peterborough experiment was being phased out, the British government announced a new £30m social impact bond fund to improve educational and employment outcomes for youth aged 14-24.

Related: RAND report on Peterborough program