Here at Infinite 8 Institute, we are constantly searching the world for the foremost innovation in the fields of global social impact and international development. After much studying and debating we comprised a list of 10 Social Impact Bonds (SIBs) that stood out. SIBs are a relatively new investment instrument, using private and philanthropic sector investors to front funds for promising programs that benefit society. Unlike government bonds, where a return is guaranteed, SIB investors only make a return on investment upon successfully achieving pre-agreed upon outcomes. As a result, the state saves tax-payer dollars by only paying for what works. The variety of SIBs and the enthusiasm they have garnered in recent years has made them a hot topic in legislative chambers, board rooms, and community meetings around the world.
Yet, why analyze SIBs or give them weight at all? In light of the heightened attention, it seemed justifiable to further analyze each of them, and categorically contemplate them, in an effort to seriously consider the overall importance and potential of each to create maximum social impact. The categories we chose to minimize consideration to include: current stage, social issues, initial costs, duration, outcome payments, as well as metrics for the convenience of the reader. Although each of the current SIBs currently being considered around the world are all addressing worth-while societal problems, these ten we felt were the most promising.
10. South Africa, Capetown – Alternative Dispute Resolution
South Africa is currently considering the implementation of an SIB to address the cost inefficiencies in the nation’s criminal justice system. The Impact Trust and Khulisa are working to design such an SIB to raise investment capital to fund holistic intervention in the criminal justice system through the provision of an Alternate Dispute Resolution (ADR). Benefits of ADR’s include reducing court backlogs, shortening or avoiding pre-trial prison-stays for petty offenders, while achieving cost-savings and bureaucratic efficiency. There are currently three pilot programs being considered for testing and scalability. According to BD Live, the National Treasury of South Africa, is also conducting a feasibility study as well.
- · Stage: Design
- · Social Issue: Criminal Justice
- · Up-front Costs: N/A
- · Duration: N/A
- · Outcome Payments: N/A
- · Metrics: N/A
9. Israel – Workforce Development for Arab Citizens of Israel
The Israel Arab Workforce Development SIB is currently in the development stage and being facilitated by Social Finance Israel. The SIB aims to increase employment opportunities for Arab citizens of Israel. The Arab population of Israel is expected to constitute 20% of the total population of the state by 2020. Of the significant proportion, 50% of Israeli Arabs live in poverty, compared with 20% of all Israelis. The SIB also seeks to increase the rate of workforce participation among women. The SIB will go toward providing capital for non-profit organizations who are able to increase employment rates among the identified target populations. The societal issues associated with successfully and equitably integrating immigrant and minority populations, has proven to be an essential problem on a global scale, with ethnic clashes in the Middle East, Africa, and more recent the United States to name a few.
- · Stage: Design
- · Social Issue: Workforce Development for Arab-Israeli Citizens
- · Up-front costs: N/A
- · Duration: N/A
- · Outcome payments: N/A
- · Metrics: Increased employment rates
8. UK, London – Homelessness
Launched in 2012, by the Greater London Authority, St. Mungos and Thames Reach are delivering an SIB to improve the outcomes of 831 of London’s persistently “rough sleepers”. The SIB seeks to reduce the size of the initial cohort over a period of 3-4 years. In 2012 there were 6,437 homeless in London, showing a strong need for improved services and outcomes among the homeless population. Thus far, service providers have more recently improved by meeting targets after showing initial struggles to do so. With more than 100 million people estimated to be homeless around the globe, we believe the UK’s SIB is deserving of a place on the list.
- · Stage: Implementation
- · Social Issue: Homelessness
- · Up-front Costs: ₤2.4 million
- · Duration: 3-4 years
- · Outcome Payments: ₤5 million
- · Metrics: Reduced number of rough sleepers each quarter; entry into non-hostel tenancy and sustained for 10 months; confirmed re-connection outside of the UK; sustained volunteering, PT, or FT employment; and reduction in accident or emergency episodes.
7. UK, Essex County – Fostercare
In 2012 the Essex County Council became the first county to launch an SIB to improve outcomes for young people and their families on the edge of care or custody. The SIB will provide Multi-Systematic Therapy (MST) to 380 young people and their families, who are at-risk of entering care over an 8-year period. With an estimated total of 153 million infants, toddlers, and young people orphaned around the world, and with that number only set to increase with war, epidemics, and natural disasters, we believe keeping young people out of systematic custody is a global issue deserving of attention.
- · Stage: Design
- · Social Issue: Fostercare
- · Up-front Costs: ₤3.1 million
- · Duration: 5 years
- · Outcome Payments: ₤7 million
- · Metrics: Reduction in average days spent in care
6. India, Rajasthan – The Gender Gap in Education
India is currently considering an SIB aimed at educating girls while addressing high drop-out rates and poor education quality. India’s large gender gap in education hinders its economic development, with over 60% of out-of-school children being girls. Of girls who dropped out, 42% say they did so because their parents told them to quite. As a result, 47% of children in grade 5 cannot read a paragraph in their own language. The problem is concentrated in Rajasthan, which has 9 of the 75 worst districts. The goal of the SIB is to educate girls while addressing high drop-out rates and poor education quality. According to the World Economic Forum, India Ranked 114th out of 200 countries overall for gender disparities and 126th for the gender gap in education. Therefore the gender gap in the education sector is a significant societal issue to address.
- · Stage: Design
- · Social Issue: Gender Gap in Education
- · Up-front Costs: $238,000
- · Duration: 3 years
- · Outcome Payments: N/A
- · Metrics: Increased enrollment of girls in school; increased attendance in school and continued enrollment over several years; and improvement in learning and test scores.
5. Colombia, Medellin – Teen Pregnancy
The Company Instiglio, is currently exploring, designing, and potentially implementing an SIB to reduce teen pregnancy rates in Antiquia, Colombia. In Colombia, over 16% of girls 13-19 have been pregnant or are mothers. Each year in Medellin, girls aged 10-19 give over 20,000 live births, coming out to 38 births per 1,000 girls. Often serving as a critical road block for the development and prosperity of young women, addressing teen pregnancy is critical, especially among developing nations. With the world set to approach 10 billion people by 2050, it is imperative to discover productive methods for balancing global birthrates, and Colombia’s SIB could very well be a step in the right direction.
- · State: Design
- · Social Issues: Teen Pregnancy
- · Upfront-costs: N/A
- · Duration: 4-5 years
- · Outcome Payments: N/A
- · Metrics: Reduction in teen pregnancy rates; increased educational outcomes among girls
4. US, Chicago – Early Childhood Development
This past year Chicago announced the launch of an SIB aimed at improving outcomes for at-risk youth. The State of Illinois, collaborating with a coalition of Chicago-based social service agencies, seeks to reduce the number of children who end up in special education, as well as in group homes, or as wards of the state. Initial funding will pay for roughly 2,600 low-income 4-year olds to attend child-parent centers that provide preschool, support services, and strong parental engagement. With the United States, for example, spending roughly $77.3 billion public dollars alone during the 1999-2000 school year on special education, in addition to the method of starting with a child as early as possible to achieve positive outcomes, we decided that the Illinois SIB belonged among the top five.
- · Stage: Design
- · Social Issue: Early Childhood Development
- · Up-front Costs: $17 million
- · Duration: 16 years
- · Outcome Payments: Up to $30 million
- · Metrics: Based on number of participants using special education services.
3. Uganda – Access to Quality Secondary Education
Uganda introduced free universal education in 1997, exploding net enrollment in primary schools to 97% in 2011. In 2007, it became the first Sub-Saharan African country to introduce universal secondary education, free to any child who passes the PLE, or Primary Learning Exam. However, there is still a lack of schools, and limited infrastructure, meaning that an estimated 75% of secondary-aged children in Uganda are not enrolled in secondary school. Additionally, with the population of African youth projected to double by 2045, and the increased quality of education and student outcomes being vital toward the future stability, economic growth, and security of Africa, we chose Uganda to come in third.
- · Stage: Design
- · Social Issue: Quality in Secondary Education
- · Up-front Costs: ₤23 million
- · Duration: 10 years
- · Outcome Payments: up to ₤35 million
- · Metrics: Increased number of secondary school places resulting from SIB investment – linked to school attendance and potentially verified through unannounced school visits by an independent evaluator; and Level of UCE (lower secondary) exam results in SIB funded schools achieved, relative to historical district-level performance.
2. Swaziland – HIV/TB Prevention
According to UNAIDS, world-wide there were an estimated 1.5 million AIDS-related-deaths in 2013, and the epidemic continues to spread globally more quickly than it can be contained. Swaziland has the highest HIV prevalence in the world, with 26% of the population aged 15-49 infected. Swaziland also has the world’s highest Pulmonary Tuberculosis (TB) rate per capita (1,317 cases per 100,000). Combined, taking a total of roughly 3 million lives per year, comprising the two most deadly infectious diseases in the world, Swaziland’s HIV/TB Prevention SIB came in a close second.
- · State: Design
- · Social Issue: HIV/TB
- · Up-front costs: $10 million
- · Duration: 3 years
- · Outcome Payments: N/A
- · Metrics: Increase the proportion of HIV-positive individuals alive and on antiretroviral treatment and ultimately to reduce HIV incidence; the model will also take into account indicators linked to impact on transmission including: uptake of HIV testing, acceptance of ART, retention of individuals in care, and viral suppression.
1. UK, Peterborough - Recidivism
In the UK, the first-ever SIB was created to reduce reoffending through preventative social programs to improve the lives of under-served populations. The results of the four-year project have come back positive, reducing the reoffending rate by 8.4 percent when compared to the control group. Following the release of the results, the Ministry of Justice plans to extend similar rehabilitation services to all offenders across the U.K. As a result of sparking a global movement, in addition to the achievement of positive outcomes, the Peterborough SIB is our top pick among the worlds existing SIBs.
- · Stage: Implementation/Scaling-up
- · Social Issue: Recidivism
- · Up-front Costs: ₤5 million
- · Duration: 8 years
- · Outcome Payments: Up to ₤8 million
- · Metrics: Number of re-conviction events during the 12 months following release
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Ean Garrett, J.D., is the author of two books, "Rebirth of a Dream" and "The Immovable Race", as well as the Chief Innovation Officer of the consulting firm, Infinite 8 Institute, L3C, specializing in education and social innovation. Follow him on Twitter & IG: @eangarrett