Through a program related investment (PRI), The Rockefeller Foundation supported the Peterborough social impact bond (SIB) pilot aimed at reducing prisoner recidivism—and now, four years later, we can point to tangible success for this new innovative finance mechanism. The first ever SIB project reduced reoffending by 8.4 percent when compared to a control group. While a reduction of 10 percent was needed to trigger immediate repayment to investors, the performance of this first group indicates that investors are on track to receive positive returns in 2016. If the reduction in reoffending remains above 7.5 percent, the Ministry of Justice will make payments to investors.
This evaluation reveals that the Peterborough SIB is effective, and Peterborough’s rehabilitation program is delivering a meaningful improvement in life outcomes for ex-offenders. While these results show the first concrete evidence that the SIB is an effective financial model, new actions by the UK government show the impact the Peterborough pilot has had on wider policy decisions. At the end of 2014, the Ministry of Justice is launching its Transforming Rehabilitation program, which will extend similar rehabilitation services to all offenders across the UK—showing the value of investing in measurable, prevention-oriented social programs to improve the lives of vulnerable and underserved populations. The new program will also include some pay-for-success funding mechanisms.
Most importantly, in just a few short years, the Peterborough pilot launched global excitement about the social impact bond model, and today’s news affirms the fact that private investment in critical social service prevention programs is not only an effective way to provide services to a vulnerable population, but is also an effective way for investors to diversity their investment portfolio to make both financial and social returns. There are now 16 social impact bonds in the UK; four in the U.S.; two in Australia; one in Canada; one in the Netherlands; one in Belgium; one in Germany; and more than 100 proposals world-wide. Developing countries are experimenting with development impact bonds, and we have noted before that there may be a strong case for resilience impact bonds.