The government has today announced £23m of funding to not-for-profit organisations to combat homelessness, part of which will fund up to seven new social impact bonds.
The new Fair Chance Fund, which was announced today, is a £15m fund which will pay for sustained housing, employment and educational support for homeless 18 to 24 year olds with investors putting in money now on a “long-term payment by results basis”.
An additional £8m has also been made available from the Help for Single Homeless fund which will support around 22,000 single homeless people around the world.
Seven projects have been awarded a share of the Fair Chance Fund money over three years from January 2015. Those projects are expected to be run as social impact bonds. If this is the case, this will increase the number of SIBs in the UK from 17 up to 24.
The funding comprises £10m from the Department of Communities and local Government, and £5m from the Cabinet Office’s Social Outcomes Fund.
A SIB is a type of payment-by-results contract in which a charity agrees with a commissioner to deliver an outcome. The charity receives social investment which it uses to pay for the service. If the outcome is achieved the investor makes a profit. If the outcome is not achieved the commissioner makes no payment and the investor loses out.
Outcome payments will be made according to whether young homeless people with complex needs can sustain settled accommodation for 3 months, 6 months, 12 months and 18 months, as well as achieve National Vocational Qualification equivalent qualifications. Other conditions are that young people can maintain volunteering and sustain work for between 6 and 26 weeks.
Local authorities will be responsible for referrals to the Fair Chance Fund schemes, ensuring that young people with the greatest need are prioritised.
Rob Wilson, minister for civil society, said: “I am really pleased to be backing the Fair Chance Fund. It is a great example of how innovative social investment has the potential to achieve great things for people whom traditional funding cannot reach. This will give voluntary sector organisations the freedom to do what’s needed, when it’s needed.”
Conditions for providers claiming outcome payments include young people being aged between 18 and 24 (or 21 and over if they are care leavers) who are not in employment, education or training and a priority for local authority support but unable to be accommodated in a supported housing scheme.
Bridges Ventures, a specialist fund manager dedicated to sustainable and income investment, is investing £1.5m across three of the social impact bonds. These are those won by DePaul UK, St Basils and Fusion Housing.
Martin Houghton-Brown, chief executive of DePaul UK, said: “We are delighted to have been selected as one of the providers for the innovative Fair Chance Fund. Depaul welcomes this important new resource that will provide support to those young people who might otherwise be left out.
“As we embark on this challenging and exciting project, we are delighted to be working in such close partnership with local authorities to ensure we meet the needs of every young person. Working closely with our new social finance partners is an exciting opportunity for DePaul and will enable us to reach out to even more young people for an even longer period of time.”
The winning Fair Chance Fund bids are led by:
DePaul UK – working in Greenwich, Manchester, Oldham and Rochdale
Fusion Housing – working in Kirklees, Calderdale and Wakefield
Home Group – working in Newcastle, Northumberland, South Tyneside, North Tyneside, Gateshead, Durham and Sunderland
Local Solutions – working in Liverpool and Knowsley
P3 – working in Gloucestershire, Tewkesbury, Forest of Dean, Stroud, Cheltenham, Gloucester City and Cotswold
St Basils – working in Birmingham, Coventry, Solihull, Walsall and Wyre Forest
The Y – working in Leicester, Leicestershire, Derby and Derbyshire