© Social Finance, Social Impact Bond EUROPEAN OFFENDER EMPLOYMENT FORUM 24 th March 2011 Janette Powell – Social Finance Colin Lambert – St Giles Trust Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No:

© Social Finance, Who are Social Finance? Social Finance was formed with an overriding purpose – to connect investment with need in a way that supports social progress Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Our aim is to make more non-governmental money available reliably and quickly to those who need it. By making more financial resources available for intelligent interventions, we hope to enable better social outcomes. We believe that the market and society need each other and can work more closely together. We develop structures that enable investors to fund social progress and receive returns that can be invested again in society. In this way we make more money available, more sustainably, to address entrenched social issues. Social Finance is an FSA regulated, nonprofit organisation. 2

© Social Finance, What is a Social Impact Bond? 3 A Social Impact Bond is a contract with the public sector in which it commits to pay for improved social outcomes. On the back of this contract, investment is raised from socially- motivated investors. This investment is used to pay for a range of interventions to improve the social outcomes. The financial returns investors receive are dependent on the degree to which outcomes improve. The Social Impact Bond Model

© Social Finance, Why do we need a SIB? 4 At risk of offending Receive police caution Serve community sentence Serve prison sentence Social Impact Bond Cycle of re-offending The Social Impact Bond enables a shift in focus from crisis provision to preventative spend Transfer of resources catalysed by Social Impact Bonds

© Social Finance, Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Public Sector Service Users ££££££££££££ Social Impact Bond – Criminal Justice System

© Social Finance, Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: SIB Delivery Agency InvestorsPublic Sector Service Providers Service Users £ £ £ ££ £ ££ £ SIB – Criminal Justice System On going operating funding Money drawn down evenly over project life Host prison - HMP Peterborough operated by Sodexo Justice Services

© Social Finance, Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: SIB Delivery Agency InvestorsPublic Sector Service Providers Service Users SIB – Criminal Justice System IA

© Social Finance, Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: SIB Delivery Agency InvestorsPublic Sector Service Providers Service Users £££££££ £ ££ ££ £ ££ ££ £ ££ SIB – Criminal Justice System Financial returns dependent on outcomes Make payment based on defined outcomes Improved social outcomes Reduced public sector costs Wider benefits to society IA Reduction in re-conviction

© Social Finance, How do you get paid? 9 The payment structure is crucial to ensuring that the Social Impact Bond encourages and enables quality services to achieve outcomes and address the most deep-seated problems Price per outcome The price should be value rather than cost-based. This encourages the development of more cost- effective outcome delivery models. e.g. the price should be based on the value to the government per reduced re-offender not the on the cost of services delivered Pricing structure The pricing structure should be designed to encourage service providers to work with the entire target population rather than focus on quick wins. Also ensures that investors are rewarded for all the value they create. e.g. if the payment is based on reduction in re-offending then it is more “profitable” to work with a low level offender and stop him offending than invest in effectively resettling a frequent offender. However, if the payment is based on a reduction in conviction events the perverse incentive is removed. Payment timing The payment is received when the outcome is achieved and measured e.g. rather than receiving government funding to deliver the service government only pays when the outcome is achieved.

© Social Finance, Cost of intervention is smaller than public sector savings The cost savings accrue within a relatively short time horizon The cost savings are cashable (particularly in the current economic environment) There are good outcome metrics on which to base a contract Preventative interventions have been shown to improve the outcome Can it be used anywhere? 10 This model does not apply to every social issue and is only one of a range of funding options Traditional funding streams will still be critical in funding many services When Social Impact Bonds Apply

© Social Finance, Example – The One Service The service is funded by investment raised through a Social Impact Bond. Interventions are delivered by a number of social sector providers with a proven track record, united under the brand “One” to provide a co-ordinated service to prisoners. Financial returns to investors are funded by the Ministry of Justice and the Big Lottery Fund and are based on improved reoffending rates. If reoffending rates do not improve, then investors will receive no recompense. 11

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Multi-agency Interventions Peer Volunteers Bail Support St Giles Trust Prison Staff St Giles Trust STG Mentors STG /Mentors Ormiston Volunteers Ormiston Volunteers Community STAGE 1STAGE 2STAGE 3STAGE 4 BAIL in Community PRISON INDUCTION ONE ASSESSMENT HOUSING DRUG TREATMENT GYM EDUCATION WORK FAITH HEALTHCARE etc DAY OF RELEASE HOUSING DRUGS FAMILY MEDICATION MENTAL HEALTH BENEFITS DEBT EMPLOYMENT etc HOUSING DRUGS DENTIST MENTAL HEALTH EMPLOYMENT FAMILY LIFE SKILLS BUDGETING etc TENANCY SUPPORT ATTITUDES COUNSELLING TRAINING FAMILY FAITH GROUPS FRIENDS etc HEALTHY LIVING COUNSELLING WORK FAMILY VOLUNTEERING VOTING HOBBIES COMMUNITY GROUPS etc Example offender journey 12 months support post release Ormiston

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Where do St Giles fit in? First agency involved Helped mould the project We are delivering the ‘through the gates’ element of the service Why us?

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No:

TTG Family Tree Housing Advice and NVQ in IAG in Wandsworth Straight to Work The Model Borough Project Probation Through the Gates Inside Out Bexley and Redbridge IOM Peterborough Project Equal Engage OLASS SOS Youth Services Meet at the Gates

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No:

The Proof:

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: NVQ 3 in IAG in the prison Through the gates workers Resettlement Support Other agencies in the community and volunteers to help keep people out of trouble for 12 months after release The Peterborough Project

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Serving prisoners trained as peer advisers using NVQ 3 in Information, Advice and Guidance Pre release assessments done by TTG workers or Peer Advisers Work begins on planning for release, make referrals Links made with in-prison services In prison

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Met at the gates Taken to key appointments Accommodation found – often temporary Support given by paid TTG workers and volunteers, some of whom have come from Peterborough prison and gained the NVQ On the day of release

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Work on permanent housing Ensure benefits claimed Refer into other services – subs use, MH Refer into ETE Support around staying out of trouble Lots of hand holding First 3 months post release

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Lighter touch support Low level monitoring for one year Referral onto community mentoring Be available if there are wobbles Need early warning system This is the ‘new’ bit When stabilised

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Case Study 28 years old First offended at 13 Been in prison every year since 17 Diagnosed with schizophrenia, Class A drug user, PPO Now out of prison for 4 months, longest period in his adult life 24

Social Finance is Authorised and Regulated by the Financial Services Authority. FSA No: Overall Aim The only thing we are measured on is whether we can reduce re-offending What we deliver is a classic menu of practical help with housing and other services and support to move away from offending. Because these are the things we know work 25

© Social Finance, Questions?