Bill d’Apice
1 August 2011

UK Trends – Social Impact Bonds

Bill d’Apice


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A venture capitalist behind the establishment of the Big Society Bank, Sir Ronald Cohen, has advised the UK Parliament that social impact bonds will be worth “tens of billions of pounds” worldwide within the next two decades, according to the UK’s Third Sector magazine.

Social impact bonds allow investors to fund charities to carry out early interventions in fields such as crime reduction and children’s services.  If charities successfully reduce the number of people needing Government support, the Government repays the investors at a profit.

At a presentation to the UK Public Administration Select Committee, Cohen advised the Committee that the Obama administration in the US had already committed about £60 million to pilot schemes.

Cohen is administering the first pilot scheme in the UK – a £5 million project to reduce re-offending at HM Prison Peterborough.  The funding for this has come entirely from philanthropic organisations but the bond would eventually attract investments from pension funds, insurance companies and private investors.  He agreed that this form of bond might need further modification to make it attractive to commercial investors.

It will be interesting to see whether this initiative takes hold in the UK and whether it may be replicated in Australia.

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