|SOCIAL IMPACT BONDS||
PRISONER RECIDIVISM (UK)
Social Finance UK launched the world’s first Social Impact Bond in September 2010. The UK based organisation raised £5 million from 17 private investors to fund a comprehensive rehabilitation programme, the One service, for short-sentenced prisoners leaving Peterborough prison over a six-year period. Prisoners serving sentences of less than a year typically receive little support upon release; they often leave with just £46 in their pocket and no housing, job, or family support.
Consequently, over 60 percent become repeat offenders within one year of release. The SiB contracts organisations, including the St Giles Trust, Ormiston Children and Families Trust, the YMCA, and SOVA, to provide tailored wrap-around services to 3,000 prisoners before and after their release to facilitate successful reentry into the community.
Of the seventeen investors who purchased the Peterborough SiB, most represented philanthropic sources of capital, including the Rockefeller Foundation, the Barrow Cadbury Charitable Trust, and the Esmée Fairbairn Foundation. The Ministry of Justice and the Big Lottery Fund have agreed to repay these investors if one-year post-release reconvictions decrease by at least 7.5 percent, relative to a comparison group.
Because SiB performance is measured by the number of times ex-offenders are reconvicted, and not simply whether or not they reoffend, providers are encouraged to work with all prisoners leaving Peterborough, including the most prolific reoffenders. The Social Impact Bond has an eight-year term, with capital drawdowns made annually in years one through six. Payments to investors, if they become due, occur in approximately years four, six, and eight. Returns are commensurate with social outcomes and will range between 2.5 percent and 13 percent