NCJ Number
239425
Journal
Prison Service Journal Issue: 195 Dated: May 2011 Pages: 3-8
Date Published
May 2011
Length
6 pages
Annotation
This paper discusses how the criminal justice system can benefit from Social Impact Bonds (SIBs), which are funding mechanisms that invest in social outcomes.
Abstract
SIBs have three elements: monetary investment, a program of actions for improving the prospects of a group, and commitments by local or national government to make payments linked to improved social outcomes achieved by the group. Under a SIB, a payer (usually government) agrees to pay for the measurable improved social outcomes of a project. This prospective income is used to attract the necessary funds from commercial, public, or social investors in order to offset the costs of the activity that will achieve those better results. When agreed-upon milestones are achieved (e.g., a specific percentage reduction in reoffending compared to a control group), the investor will be re-paid their original funding, with a return on investment and the knowledge that they have saved the government money, reduced crime, and made society a safer place. The case is strong for the use of SIBs in criminal justice. SIBs have potential for increasing the magnitude and quality of investment available to reduce re-offending. SIBs transfer risk from the government to the investor. If a scheme fails to demonstrate the agreed-upon results, the government is not compelled to pay out. Conversely, governmentally funded preventive work carries a risk that if it fails, the government effectively pays twice, i.e., for the failed preventive work and prison costs resulting from incarcerations due to the failure to prevent crime. Primarily, SIBs bring with them an execution risk; if the intervention does not achieve its desired effects, then the funder will not get a return on the original investment.