Essex Social Impact Bond

The Essex Social Impact Bond (SIB) represents a pioneering outcomes-based contract designed to reshape the financing and delivery of social services. Launched in 2013, it was the first SIB commissioned by a local authority in the UK, a landmark achievement developed by Social Finance in partnership with Essex County Council. The initiative was a response to the rising number of adolescents in the care system and aimed to support vulnerable young people aged 11-17 who were at risk of entering care or custody. The core of the program was the implementation of Multi-Systemic Therapy (MST), an intensive, evidence-based family therapy model. This service was delivered by the national children's charity Action for Children. The financial structure of the SIB is its defining feature. Socially-motivated investors provided the upfront capital required to fund the MST service, shouldering the initial financial risk. In this case, a consortium of eight investors, led by Bridges Ventures, provided £3.1 million over five and a half years. The public sector client, Essex County Council, was obligated to repay the investors only if the program achieved its predetermined, measurable social outcomes. This model aligns the incentives of all parties—the council, the service provider, and the investors—toward a common goal: improving the lives of children and families. The key performance metric was the reduction in the number of days children spent in care compared to a historical baseline. This outcomes-based payment structure incentivized working with even the most challenging cases, as success was measured incrementally rather than by a simple binary outcome. The program, which ran until December 2018, successfully reached 389 families and resulted in a significant 43-percentage-point reduction in care days, saving the council an estimated £26.2 million. A special purpose vehicle, Children's Support Services Limited (CSSL), managed by Social Finance, was established to oversee project operations and manage the flow of funds. Keywords: Social Impact Bond, outcomes-based financing, public-private partnership, social investment, children's services, edge of care, Multi-Systemic Therapy, youth services, Essex County Council, Social Finance, Action for Children, impact investing, preventative services, social innovation, family support, reducing care placements, performance-based contracts, social outcomes, venture philanthropy, community welfare