Preventing young people entering unemployment after leaving education can save substantial money from a reduction in the use of benefit pay-outs. Actions that turn people towards a healthier lifestyle both benefit health outcomes and long term NHS expenditure. Yet 'prevention' is often a low priority in public services, with other organisations left to pick up the tab for the consequences of failure at a later date.

Social Impact Bonds (SIBs) are a new financial mechanism to overcome such problems. Investment from a range of potential sources is invested in a package of interventions or services to tackle a priority issue. Key success criteria are agreed between funder and payer, relating directly to desired improvements. If these are met, then the payer remits an amount equivalent to the cost of the initial investment, plus a rate of return.

The Young Foundation is advising a number of organisations on implementing SIBs. Our main areas of interest are:

• Criminal Justice. Preventative action for those serving short term prison sentences has great potential to reduce crime and save money.

• Youth Unemployment. Investment at key transition points, such as the point of disengagement at school, can make a huge difference to life chances and costs to society.

• Health Care. Innovative cost-saving measures are often overlooked due to the complexity of joint working and a lack of incentives to do so. The Young Foundation is exploring the feasibility of using Social Impact Bonds to fund programmes of action for those with rare conditions, such as sickle cell anaemia and multiple sclerosis.

Key reading:

• Social Impact Investment: the opportunity and challenge of Social Impact Bonds. A ground breaking paper on issues facing implementation of SIBs and how they can be overcome.

• Social Impact Bonds in Health. This short paper outlines the potential role for change that SIBs could create in the health sector, and some of the issues that need to be considered for implementation.

Blogs:

• Social Impact Bonds and Social Value. A blog post outlining the case for social investment and SIBs, and how we can learn from past experiments to ensure success.

• What does Ken Clarke's Rehabilitation Revolution mean for justice innovation? Discussion of Ken Clarke's rehabilitation revolution, and how SIBs play a key agenda.

• Preventing Youth Unemployment. This blog entry outlines the strong business case for using SIBs to prevent youth unemployment.

• Prevention is better than cure: whether overseas or in the UK. A blog post on how Social Impact Bonds carve a niche in preventative investment market, and their international application.

• Social Impact Bond Briefing Briefing on the potential of Social Impact Bonds and social investment, highlighting the need for governmental commitment.

External reports:

• Social Impact Bonds in Criminal Justice: from interesting idea to business as usual. This article explains the economic case for SIBs in the Criminal Justice System, describing their main technical features, while critically reflecting upon their strengths and weaknesses.

• Center for American Progress on Social Impact Bonds. A new report in the US analyses the potential of SIBs, looking at the barriers and challenges that face this promising new model for government financing. The report is part of the What Works programme at the Centre for American Progress (CAP), which is run by Jitinder Kohli - a Young Foundation Fellow.

• The New South Wales Social Impact Bond. This report includes learning from The Young Foundation on a wide ranging SIB for the New South Wales Government in Australia.
• Social Impact Bonds.