A4e Insight wins contract to investigate effectiveness of social impact bonds

With £300,000 from the Office for Civil Society, the research company will examine whether bonds meet the needs of four councils and investors seeking returns

A4e Insight
A4e Insight

The Office for Civil Society has awarded £300,000 to A4e Insight, the research and consultancy arm of the company A4e, to investigate how social impact bonds could work.

The bonds have been hailed as a new way of funding charities that tackle social problems, but uncertainty over how they work and the potential returns for investors has hampered their progress.

Under the scheme, investors pay charities and social enterprises to provide services on a payment-by-results basis. If the charities meet their targets, their investors receive a financial return. If they do not, they might not get all their money back.

A bond scheme is being used to fund a reoffending scheme run by the charity St Giles Trust at Peterborough prison.

Last month, the OCS announced it wanted to pilot similar schemes in Birmingham, Leicestershire, Westminster and Hammersmith and Fulham that could be worth up to £40m in total.

The OCS funding will enable A4e Insight to work with these councils.

Edward Hickman, director of A4e Insight, said the project would look at other methods of payment by results, besides bonds, and would run until about March.

Hickman said the goal was to find a mechanism that met the needs of the four councils to provide services for problem families and the needs of investors seeking returns.

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