In a First Test for Social Impact Bonds, Investors Miss the Mark for Payout
Friday, August 8, 2014
Investors in a pioneering social impact bond project in the U.K. will have to wait another two years for a return on their gamble on good.
A long-awaited study of the U.K.‘s social impact bond pilot project at the Peterborough Prison determined that the first phase of the SIB-financed recidivism-reduction program did not meet the benchmarks necessary to trigger payments to investors. The investors had covered the upfront costs of the social service program knowing that they would only be repaid if the program met certain goals in lowering reoffending rates.
The study by QinetiQ and the University of Leicester shows a fall in reoffending of 8.4 percent compared to a national comparison group. A 10 percent reduction was needed to trigger payments under the terms of the SIB laid out by the Ministry of Justice.