Social Impact Investing

SOCIAL IMPACT INVESTMENT: BUILDING THE EVIDENCE BASE
release help to around 2000 short-term prisoners aiming to reduce re-offending rates (by at least 7.5%) by
the end of the pilot scheme. If the pilots are successful, outcome payments can reach USD 12.2 million
from a total USD 7.6 investment. If social outcome thresholds are not met, investors will lose their cash.
The initial results of the evaluation of the Peterborough SIB have recently been released and are described
in Box 7.1 below.
Box 7.1. First Peterborough SIB outcome results
On August, 2014 the U.K. Ministry of Justice (MoJ) released the first results of the Peterborough SIB programme.
This evaluation focuses on the outcome results of the SIB designed to meet pre-determined targets in terms of reconviction
rates.
The Government alongside the Big Lottery Fund (SIB commissioners) agreed to pay investors back their capital
plus a return on their investment if there was an improvement of re-offending rates. These payments may reflect a
proportion of the savings to the Government and wider benefits to the society that result from interventions by nongovernment
delivery organisations and investors.
The measurement of the Peterborough SIB outcomes is designed around two cohorts of adult male offenders
discharged from Peterborough prison. The first cohort includes individuals released between 9 September 2010 and
1 July 2012 after serving sentences of less than one year. The second cohort opened in July 2012
The Peterborough SIB foresees that investors receive an outcome-based payment if one of the following
scenarios materializes:
1) A reduction of 10% in the frequency of re-conviction events in each cohort of around 1 000 prisoners (from
the baseline generated by a matched comparison group);
2) A reduction in re-conviction events of 7.5% or more detected across all 2 000 offenders in both cohorts,
when measured against a matched comparison group.
The 10% and 7.5% thresholds were calculated, based on sample sizes and historical data, to ensure that any
observed differences in re-offending rates between matched samples would be statistically significant. A statistically
significant difference implies that outcomes payments are made for changes as a result of the SIB intervention and not
due to unrelated factors.
The results of the first Peterborough cohort show a 8.4% reduction in terms of frequency of re-conviction events.
This is below the required 10% reduction under condition 1) above, thus no payment is made to investors. However,
the outcome result is above the 7.5% threshold under condition 2) above. Therefore, should the second cohort yield
similar results, investors will be paid an agreed fixed sum per reduced re-conviction event.
Propensity Score Matching was used to calculate the percentage reduction in reoffending rates resulting from the
Peterborough SIB approach. The cohort of 936 discharged offenders from Peterborough was matched against a
national control group control group of 9 360 matched re-offenders discharged from other 34 male local prisons during
the same period. The pre-matching samples included 31 207 observations from other prisons and 945 for
Peterborough. The matching was done based 36 out of 38 demographic and criminal history variables such as
offender age, ethnicity, nationality, number of past convictions or type of offence. The analysis was done based on
detailed individual data provided by the MoJ and further information made available by Social Finance (the
Peterborough SIB intermediary). Jolliffe and Hedderman (2014) provide further details on the data and methodological
approach used.
Source: MoJ (2014) and Jolliffe and Hedderman (2014).
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