Publications

The concept of commissioning by outcomes is becoming central to efforts to make radical improvements to public services in an era of enormous social and economic change.

Social Impact Bonds (SIBs) are one of a range of mechanisms to enable public commissioners to focus service delivery on achieving specific outcomes.
At its most fundamental, a SIB is an outcomes-based contract between a public sector commissioner and an investor/group of investors. Success within SIBs is measured by changes in social outcomes. A crucial stage in the development of SIBs is the selection of outcomes and the measurement and metrics used
to evaluate success. It is at this point that turning the theory into practice can present a range of technical challenges. This guide has been produced to help organisations considering outcomesbased commissioning to overcome these technical challenges.

This guide is part of a series of SIB Technical Guides produced by Social Finance. These are intended to accompany the journey an organisation may take when developing a SIB; and it is important to note that outcomes selection and measurement is not usually the first step in this process. To find out more about the Social Impact Bonds and how they work, please refer to our previous Technical Guide ‘Developing Social Impact Bonds’.

This feasibility study suggests that a Social Impact Bond (SIB) could be used to fund a Housing First (HF) intervention that aims to improve the lives of homeless individuals with mental illness.

Homelessness is a major issue in Canada, affecting 200,000 people every year and costing $7 billion to the economy. The prevalence of mental illness within the homeless population is higher than in the general population: 50% of homeless individuals have some form of mental illness, compared to 20% of Canadians. Homelessness and mental illness are closely linked and around 120,000 Canadians are simultaneously affected by both conditions. If we include people who are vulnerably housed (unstable, poor quality housing, couch surfing) as many as 520,000 Canadians lack safe, affordable and supportive housing.

Encouraging developments in addressing the homeless population have taken place in Canada over recent years. Nevertheless, many of the available responses to homelessness remain focused on emergency services and crisis management, which lack attention to preventative measures and breaking the negative cycle. HF is a model that has demonstrated positive housing stability outcomes by providing immediate access to housing coupled with wraparound support services.

The At Home/Chez Soi (AHCS) pilot is an evidenced-based HF intervention holding promise to significantly improve the lives of homeless individuals with mental illness. Backed by the largest randomized controlled trial for an HF intervention, the rich data and related research from the AHCS pilot has allowed us to confidently assess the costs
and projected outcomes for the program.

AHCS data reveals that HF results in public sector cost offsets, specifically from a reduction in public sector usage across the shelter, health and justice systems. For members of the population who are high users of public services, HF results in substantial net cost savings.

Funding broader implementation of HF using a SIB would share the implementation risk associated with replication, scaling and modification from governments with investors, and would establish a rigorous performance measurement framework focused on outcomes.

In September 2013, The Bertha Centre (located within University of Cape Town’s Graduate School of Business), Genesis Analytics and Social Finance formed a research coalition and were awarded a grant to explore the applicability of Social Impact Bonds (SIBs) as a financing instrument in South Africa. In particular, the initial scoping study sought to assess issues relating to the design of, and gauge the level of interest of key stakeholders in, a SIB providing business development services (BDS) to small and medium enterprises (SMEs) so as to generate economic growth and job creation.

During the course of the research, the coalition held discussions, interviews and workshops with (i) local business development service providers; (ii) national, regional and local authorities; (iii) community groups and NGOs interested in facilitating SME growth; (iv) potential investors; and (v) potential outcomes funders. Additionally, the coalition brought together a broader group of stakeholders in an African Social Impact Bond (ASIB) Advisory Group with representation from: (i) provincial and national government departments; (ii) the financial sector; (iii) business organisations and/or; (iv) international funders. Workshops and interviews with these stakeholders and the Advisory Group comprised a significant portion of the project and their feedback is incorporated throughout this document.

This report presents our hypothesis on how a Social Impact Bond (SIB) could help improve outcomes for those suffering from drug and alcohol addiction. Social Finance worked with Dr Samantha Gross and Professor John Strang from the National Addiction Centre to understand how recovery from addiction could be measured as part of a social investment contract. This report sets out ways of measuring successful recovery from substance addiction. Each measure of success needs to reflect the end goal of sustained recovery over the long term.

A Social Impact Bond is a contract in which government commits to
pay investors if there is an improvement in social outcomes (such as
a reduction in offending rates). Investors receive returns if, and only
if, these social outcomes are achieved. Investors’ money is used to pay for a range of services to help people recover from their addiction. If outcomes are improved and more people recover, investors receive
payments from government.

For success to be paid for, it must first be defined and measured. This report offers thoughts on what those measures of success should be. It aims to provide the starting point for a discussion of potential outcome metrics to structure an investment proposition.

Be Active is a scheme provided free of charge to all Birmingham residents who live within the Birmingham City Council. The aim of the scheme is to tackle health inequality and associated deprivation levels, by offering access to free physical activity sessions for all 1.1 million citizens of the city. Participants can take part in free swimming, exercise classes or the gym at any Council-run leisure centre during off-peak hours, which vary according to each centre and some community based activities.

The current economic climate means that demonstrating that Be Active represents value for money is an imperative if it is to continue to be funded. The purpose of this research was to provide answers to the following questions:

• Does Be Active represent value for money?
• Would it be economically feasible to fund Be Active by means of a social impact bond (SIB)?

The launch of the first Social Impact Bond (SIB) in Peterborough in September 2010 generated an overwhelming public response. The six year Peterborough project has now come to the end of its first year. The most pressing question – have we reduced reoffending sufficiently to generate a return to our investors – will only be answered in Year 4. We are measured against a very clear metric. The number of reconviction events of our cohort compared to a similar group of short sentenced male prisoners across the UK drawn from the Police National Computer. Against this objective measure, investors will either gain a return or lose their investment. What can we report after one year? We have over 500 individuals on our watch in the community. While engagement in the One* Service is purely voluntary, the proportion we are working with pre and post release is encouragingly high. There is clear evidence of an unmet need. The enthusiasm for this project from criminal justice experts and practitioners harbours well for its success. Peterborough Prison has aligned some of its services for male prisoners with our programme and has moved to adopt some of our interventions for its female prisoners. The value of a programme which is funded for over six years is tangible both for our service delivery partners and other stakeholders. It enables them to plan and build around it. We are hopeful that not only will this project succeed but that it will encourage others to be bolder in their approach to reducing reoffending in their communities.

An overview of the potential applications of Social Impact Bonds to reduce crime and offending.