How SIBs work and differ from regular bonds

By Aunnie Patton

Peterborough – The first SIB ever

Background
Launched officially in September 2010 with the Ministry of Justice in the UK. The aim was to prevent recidivism by working with 3 000 male short-sentence prisoners leaving Peterborough prison.

The plan
UK firm Social Finance raised £5-million from 17 social investors, to be drawn over six years by various organisations supporting prisoner reintegration and support. Ministry of Justice and Big Lottery Fund will pay investors from savings due to reduced number of reoffences – but only if there is a measured reduction in reconviction events of 7.5%.

Time to market
Two years.

As we’ve begun to gather data we’ve found that if someone expresses a need to be met at the gate, they’re significantly less likely to reoffend. That’s not a statement of causality, it’s a correlation, but it has affected the way we spend our money. – David Hutchison, Social Finance UK

For SIBs to work, interventions need to be…

1 Proven to be effective, and supported by data

2 More beneficial that existing services

3 Scalable and reproducible

4 Meeting the needs of a meaningful number of people

Inside | Aunnie Patton

Aunnie_Patton

First she was an investment banker. Then she was a social investment banker. Now she’s a Dean’s Fellow at the Saïd Business School, Oxford. She’s consulted with the UK government, Big Society Capital, the Skoll Centre for Social Entrepreneurship and social enterprises the world over. In June 2013, she moved to Cape Town to be a Fellow at the Bertha Centre for Social Innovation and Entrepreneurship, Aunnie’s social investment in Africa. Read more about her work at: www.apsocialfinance.com

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It’s still early days for Social Impact Bonds (SIBs) in Africa. These financial innovations, which first piloted in the UK in 2010, use private investor capital to ...