Social Impact Bonds as an instrument for controlling incarceration costs and supporting societal positive change

One of the most debated issues, by researchers, policy makers and the general public, is related to the costs of incarceration and, specifically, to reducing the costs of incarceration. The rising costs of incarceration, limited successes in implementing alternatives to incarceration and mixed results of programs aimed at reducing recidivism have maintained this issue as a public policy priority and stimulated the governmental agencies to pilot novel approaches to mobilize resources in order to increase the efficiency of the penal system. After the financial crisis of 2008 efforts were made to identify solutions to fund public services in order to improve social outcomes. In 2010 a new project was piloted in the Peterborough Prison (United Kingdom), the first Social Impact Bond. This project sheds new light on reoffending, it moves the center of focus from a financial burden on the shoulders of the government to an investment opportunity for the private investors. The costs of reoffending represent an opportunity that could be valued through appropriate investments. The lessons learned from this initiative helped to identify best practices, contributed to a nationwide change in regards to the prison system and represented a starting point for numerous other Social Impact Bond programs worldwide.