I’m delighted that we today announced the ThinkForward Social Impact Bond (SIB) has become one of the first in the world to successfully complete. This is a truly fantastic achievement for the young people we support and we are proud to be one of the first charities to successfully use this model of social investment to tackle the issue of youth unemployment in the UK.
I first got involved back in 2010, when Impetus – The Private Equity Foundation carried out some research into the challenges young people faced in the school-to-work transition. At that time one million young people were not in education, employment or training (NEET) and we were trying to work out how to prevent young people from being unemployed in the future. The main finding of our research was that while there were often lots of services for young people, they were simply not reaching or effectively engaging the young people who needed them the most.
We identified the need for ‘Super Coaches’, who would work with schools to identify the young people most at risk of dropping out, build trusted relationships and then provide support over a sustained period of time. To test this approach Impetus-PEF launched ThinkForward as a small pilot project in north-east London.
The pilot showed some good results and by the end of 2011 we were ready to expand. By helpful coincidence, at that time the Department for Work and Pensions launched the Innovation Fund, which employed social investment partnerships to work with disadvantaged young people aged 14 years and over to prevent future youth unemployment. We were successful in securing a payment-by-results contract that enabled us to scale the programme up to over 1000 young people across 14 schools.
Small charities like ThinkForward couldn’t usually engage in a payment-by-results contract, as we don’t have either the cash flow or the ability to access traditional lending opportunities. The programme was made possible by a SIB; a form of social investment where charities work with commissioners and investors to resolve enduring social problems. Initial capital from Impetus-PEF and Big Society Capital enabled us to get delivery started and then the Innovation Fund made payments directly linked to young people’s success, which both met the delivery costs and enabled a small return to investors.
We have had some amazing results and you can read more about it here. Ninety percent of our participants aged 18 and over have progressed into further education, employment or training. These are remarkable achievements, given that many of the young people we support have few or no positive role models in their lives and were predicted to drop out of education or become unemployed. Instead, they have overcome their difficult personal circumstances and are making their first steps into their working lives.
As the first SIB addressing youth unemployment to complete, we hope this success paves the way for future use of social investment to build sustainable solutions to tackle the needs of disadvantaged young people in the UK. For investors, SIBs offer a valid investment vehicle that can deliver both a sound financial and social return. For charities, SIBs offer long term funding, allowing them to focus on delivering consistent results to those that need help the most. Over the next week I will be blogging on the lessons learned from our experience, how we should measure the impact of SIBs and my reflections on what we need to develop more of them.
(Click on the image to view infographic enlarged)