Investors who backed a pay-for-success program in London have been alerted that the “success” part has panned out.
The “social impact bond,” or SIB, raised £900,000 ($1.4 million) to boost at-risk youth employment. It was backed by UK’s Department for Work and Pensions. Now that the program has met its outcomes targets required, the agency will repay the two private investors, Big Society Capital and Impetus-Private Equity Foundation. How much the two equal-share investors will make on the deal won’t be known until 2016, however.
The results add another data point about SIB performance as results come in from early initiatives finance through the innovative structure. In early October, Goldman Sachs received its first payout for an early childhood education SIB in Utah while three other SIB’s commissioned by the same UK Department for Work and Pensions fund started making early payments this summer.
Others SIBs have not fared as well. Another Goldman-backed program to curb criminal recidivism at New York’s Riker’s Island jail failed in July. Meanwhile, the initial results last year from the archetypal SIB at Peterborough prison in the UK were promising, but not good enough to win early payments to investors. Results are not yet in for more than 30 other SIBs globally.
The youth employment SIB, launched in 2012, backed a youth coaching program called ThinkForward in 14 schools in East London. The intent was to prevent students from becoming “NEET” (not in education, employment or training). The results showed that more than 90 percent of the 1,050 students engaged continued along one of those three paths. They also grabbed the attention of Prime Minister David Cameron, who noted in a speech in September that the program saved the State more than £40,000 per student.
This post was originally published on ImpactAlpha.com
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