Could social finance be the future of restorative justice?

I recently had an informal meeting with the Cabinet Office to discuss social impact bonds. It was purely an exploratory discussion, as part of our work to help the restorative practice field develop and grow.

Social impact bonds, for those of you who have not come across them, enable funding to be brought in from investors to support the delivery of a service. The investors take the risk and only see a return on their investment if the service is successful. For those delivering the service it’s payment by results with someone else’s money. Commissioners only need to pay out if the service delivers on their desired outcomes. If the service works, everybody wins. If it doesn’t then the investor loses but the commissioner hasn’t had to pay for a service that hasn’t delivered.

In an environment where funding is getting tighter, could this be a new source of investment for restorative justice?

There is potential to establish a social impact bond based on the known impact of restorative justice on reoffending rates. Reducing reoffending leads to savings to the public purse. It’s measurable, there’s a wealth of administrative data already available, and the impact of restorative justice is well documented.

It’s far from straightforward, however. Work with offenders is already delivered on a payment by results basis by the new community rehabilitation companies (CRCs). If an offender who had gone through restorative justice delivered by an independent provider as well as other CRC-funded activities does not go on to commit a further crime, who gets the credit? What about other agencies or organisations working with the offender – maybe those who help the offender get a job under the work programme? It would be very difficult to say whose intervention made the difference.  And commissioners won’t want to pay several times over for the same outcome.

Potentially more interesting would be to focus on victims. If restorative justice improves victims’ wellbeing, who benefits? Reducing post-traumatic stress disorder would benefit local health services. So maybe they would pay. Health and wellbeing boards, with their responsibility to improve the health and wellbeing of their local population, could have an important role to play.

Where else might a social impact bond be useful? Could, for example, a new source of funding enable care homes across a county to implement a restorative approach? This could both reduce the number of placements that are unsuccessful and reduce police call outs to deal with violence and criminal damage. If this was the case, might the police and crime commissioner and local authority consider jointly commission a social impact bond? Maybe.

Whether or not social impact bonds are the right mechanism to fund restorative practice, across the public sector the slow move towards payment by results continues. So it is likely that there will be, even with grant funding, a greater focus on outcomes. Restorative justice providers will therefore need to be confident that they can show not just what they have done but what impact it has had. And if they can, then could social impact bonds be a way to attract new investment for much needed restorative services if other sources of funding dry up?