The Genesis Youth Trust has been selected to pilot a ground-breaking social investment bond.
The trust, which is the country's largest police-affiliated youth development programme, is the first registered charity to venture into this new way of funding social services by the Government.
Targeting the most prevalent at-risk youth from areas of high need within Auckland, they have been operating since 2000.
This bond will be the second pilot run by the government after it was announced the last year 1700 mental health patients in South Auckland were to pilot for the Government's first social bond.
Social bonds are a way for private and not-for-profit organisations to partner with investors to deliver better social outcomes and be rewarded by the Government.
The way the pilots are designed is that the government only pays for outcomes once outcomes are achieved.
Chairman Dr Stuart Crosbie of Genesis said in its 2017 annual report that the bond will allow it ‘the luxury of working at least twice as long’ with 1000 of their offending youth.
He said the Trust, will have a more enduring impact on youths lives and will now be able to improve the likelihood of them ‘breaking the cycle of intergenerational crime’.
Genesis will have to reduce re-offending levels on average by at least five percent for clients enrolled in the first two years, to receive incentive payments and by ten percent on average for clients enrolled in the last three years.
"Bigger reductions will result in bigger payments".
Genesis stated in its Annual report that the Board had been focussed on diversifying its funding away from dependence on Government contracts.
In 2013, they set themselves the policy of having no more than 25% of their revenue from a single source. They had been unsuccessful in reducing it below 80%.
When the Ministry of Social Developments ‘high trust’ contracts were replaced by alternative funding arrangements, it left Genesis’ future in doubt.
The completion of the Social bond has provided six years of certainty and empowered it to grow. Genesis’ funding challenges are not unique. According to the New Zealand Treasury, the Government spends over $30 billion on social services and welfare a year.
It's unclear what beneficial impact the spending has on those recipients.
The advantage of social impact bonds and other impact based contracts have, is that they pay based on measured performance.
The Government has established the Social Investment Agency to address that lack of measurability.
While there is a political debate on the use of social impact bonds, there is no doubt measurement of social impact will be part of the Government’s agenda for delivering social services.
The United Kingdom's, City of London Corporation recently released a report showing how its Social Investment Fund has changed the lives of thousands of people including ex-offenders, homeless and those with disabilities.
The social bond came at a controversial time. Last year, the government's first social bond collapsed, after negotiations broke down when the provider Wise Group backed out of the scheme.
A Government review blamed a lack of commercial expertise by Public officials for the breakdown.
As an initiative of the National party since 2013, the initiative was criticised by critics such as Labour party’s Anne King, for having millions of dollars of set-up costs when social services were under budget restraints.
King said last year; it was “a shame that the $1.9 million earmarked for social bonds was not spent on bridging the funding gap for mental health”.
She also claimed social bonds covert “privatisation” of the sector and said when things went wrong, taxpayers would suffer.
Green Party's social development spokesperson Jan Logie said: “Social bonds are a continuation of the Government’s attempt to privatise public services, which will always see the most vulnerable left out and National’s mates better off”.