Funding news

Office for Civil Society pilot £40m social impact bond scheme to support 'problem families' - 26 August 2011

Nick Hurd has announced four local authorities to run pilots, offering contracts to charities and social enterprises to tackle 'the pointless cycle of crime and deprivation'.

The Office for Civil Society is to ask private and charitable investors to purchase social impact bonds worth up to £40m over a four-year period to fund new schemes to support "problem families". The OCS is not funding the projects, but has made up to £300,000 available to offer technical support to the councils in order to design the new tender documents.

The Local Authorities to run pilots are: Westminster, Hammersmith and Fulham, Birmingham and Leicestershire.

Each council will devise a contract that specifies targets for families, which might include an increase in school attendance, a fall in criminal behaviour or a reduction in drug or alcohol abuse. Charities and social enterprises will then bid for the contracts and find private and social investors to give financial backing.

If the charities meet targets specified in the contract their investors will receive a financial return. If they don’t, they may not get all their money back at the end of the investment period. Each council will work out its own system.

The pilot projects are due to start in spring 2012, and tender processes to deliver the programmes are expected to open at the beginning of that year.

For more details, see the Third Sector article.