Case Study: Peterborough Prison - Cambridgeshire, United Kingdom

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In September 2010, Social Finance UK launched the world’s first Social Impact Bond. The objective was to reduce reoffending by short sentenced prisoners released from Peterborough prison.

The Model

Social Finance UK, a nonprofit intermediary that coordinated the partnership, signed a contract with the Ministry of Justice. In this contract, the Ministry agreed to pay for an outcome: the reduction in reconviction events among Peterborough prison leavers.

Social Finance UK contracted four nonprofit organizations – St. Giles Trust, Ormiston Children and Families Trust, YMCA and SOVA – to deliver core activities to address immediate needs of an offender and his family before and after he is released from prison. These needs include accommodation, medical services, family support, employment and training, benefits and financial advice. Participation from prisoners is voluntary. In total, Social Finance UK coordinated the delivery of tailored, individual service to three cohorts of 1000 unique short sentenced male prisoners from Peterborough prison.

Social Finance UK used its contract with the Ministry as collateral to raise £5 million from 17 investors, which it is using to pay the four nonprofit service delivery partners. Those 17 investors anticipate repayment, along with a financial return, if outcomes are achieved.

Social Impact Measurement

The success of this Social Impact Bond will be measured by a reduction of reconviction events by all of the short sentence prisoners from Peterborough prison, regardless of whether or not they engage with the service.

Each cohort will be compared by an independent assessor to a similar group of prisoners across the UK from the Police National Computer. The comparison will be anchored on a frequency measure (the combined number of reconviction events) rather than a binary measure (whether the offenders reoffend). This encourages the service providers to work with all clients, including those who are the most prolific re-offenders.

Key Benefits

  • Flexibility and innovation – the flexibility of the funding structure allows the program to consider the client as an individual with multiple needs, and there is also more room for innovation in solutions and partnerships since the evaluation is based on outcomes (rather than activities or outputs).
  • Bigger picture focus – since the program does not have its own set of output related “tick boxes”, clients can progress in their own way at their own pace and are supported by a range of providers. The focus is shifted away from who has the greatest impact along his journey towards the outcome that he succeeds. This helps foster a culture of collaboration among the service providers.
  • Longer funding horizon– the SIB model provides long-term funding prospect for community organizations. The available working capital for the entire duration of the SIB program reduces the financial risk for service providers.

Key Success Factors

  • Flexibility – the funding, governance and management of the operational delivery have to ensure the right level of flexibility to achieve outcomes.
  • Confidence and reputation – the voluntary participation of prisoners hinge on the reputation of the service in the community and amongst clients in the prison.
  • Coordinated case management – a key part of the value of the program is derived from the data it collects. A case management system was developed to allow all partners to input information so that the best course of action for the client can be offered.

Key Development Activities and Milestones


                                  Key Milestone


Social Finance UK:

  • Engaged civil servants with concept and on issues such as government accounting treatment, value for money, business plan development, ministerial engagement and support. Gained support from the criminal justice leadership in Peterborough and Cambridgeshire.
  • Identified intervention programs that could be funded in this model.
  • Developed legal structure with law firm Allen and Overy.
  • Held discussions with potential investors and developed term sheet for investors.
  • Review service delivery landscape and conduct due diligence on nonprofits.
  Ministry of Justice and Social Finance UK finalized contract terms; contract signed March 18, 2010.

Social Finance UK secured investment commitments and finalized subscription agreements.

  St Giles Trust carried out a scoping exercise to establish their operating model with the prison and local prisoners.

Ormiston Children and Families Trust commissioned to delivery a family support intervention.


Service implementation: first prisoners released to One Service intervention on September 9, 2010.

  SOVA and YMCA commissioned to deliver volunteering service.

Financial Figures and Timelines

The investors will receive their full investment back if the number of reconviction events among Peterborough prison leavers, triggered by offences committed within 12-month period following release is reduced by 7.5% or more. If the Social Impact Bond delivers a drop in reoffending beyond 7.5%, investors will receive an increasing positive return of up to 13% per year over an eight-year period.


Social Finance UK. Social Impact Bonds. The One* Service. One year on.