Social impact bond helps shelter London's homeless
While the majority of us recover from the over-indulgence of the holidays, and ease ourselves back into a work routine, for society's least fortunate, sleeping rough outside under cardboard, resuming normal life means the pop-up Christmas soup kitchens have been packed away for another year.
But 2013 may well be a happy new year for a group of destitute individuals trying to keep body and soul together living on the mean streets of London. Leading homelessness charity, St Mungo's, has succesfully secured working capital of £650,000 to implement its "Street Impact" programme via an innovative social impact bond (SIB).
According to Mike McCall, Executive Director of Operation at St Mungo's, it is an opportunity to make a real impact on the lives of some of the most disadvantaged people in London, helping them rebuild their lives away from the streets.
Said McCall: "The social impact bond is a new way of working for us, but we have been helping people with complicated alcohol, drug, mental or physical health histories to get their lives back on track for many years, and we know that personalised long-term support is what makes the difference."
The pioneering scheme partners the charity with socially-minded investors and the Greater London Authority in a three-year payment-by-results contract secured through Triodos Corporate Finance.
Commented Dan Hird, head of Corporate Finance at Triodos: "We are privileged to have worked on this deal with St Mungo's whose incredible activities on the ground help to transform the lives of homeless people. We are also pleased to have achieved a good blend of institutional and private social investors in this deal which we see as important if future social impact bonds are to address social problems at a meaningful scale."
The SIB is one of the government's preferred new social funding models. The lead institutional investor for this latest one is CAF Venturesome, which takes up a board position with the Street Impact project.
Stephanie Poole, Director of Social Investment at CAF, said: "Since the contract is on a payments-by-results basis, St Mungo's will only be paid once it achieves certain goals, so CAF Venturesome stepped in to suppport this project with the up-front investment needed to get this exciting and innovative project underway. We are delighted that several individuals have chosen to support the project alongside us."
The bond has attracted two leading UK institutional social investors in addition to attracting funds from private investors and will pay a return of 6.5% per annum if the project is successful.
It is a model being pioneered in the UK. The first SIB was launched here two years ago at Peterborough prison aimed at reducing reoffending rates, and another in Essex is designed to help adolescents taken into care.
The contract can earn St Mungo's a potential £2.4 million for achieving prescribed targets with a group of around 400 named rough sleepers in central, north and west London. The goals include achieving sustained accommodation; reducing visits to hospital A&E departments; supporting people into volunteering or work; or reconnecting them to their homes overseas.
The bond forms a core part of the Mayor of London Boris Johnson's pledge to end homelessness in the capital. He commented: "The commitment shown by Triodos Corporate Finance is a fantastic example of a private company working with the voluntary sector and not-for-profit CAF Venturesome to help get people off the streets and into the services they need to turn their lives around. As we push on with the challenge of ending rough sleeping in the capital, it will be forward thinking innovative partnerships such as this which will play an increasingly important role in achieving this goal."