#YouthChoices - QLD's first social bond that seeks to reduce reoffending by young people

Queenland's Palaszczuk Government has recently announced its second social impact investment initiative, the #YouthChoices Social Benefit Bond (SBB), which aims to reduce the current 80% recidivism rate for young offenders in the QLD region. The Bond, arranged by NAB, will fund a therapy program to be delivered by one of Australia's largest social purpose organisations, Life Without Barriers. With investments due to close in just under two weeks, Industry Moves caught up with James Waddell, Director for NAB's Capital Financing Product Group and Brad Swan, Executive Director, Strategy and Engagement at Life Without Barriers, to find out a little more.

(Left: James Waddell. Right: Brad Swan.)

James Waddell and Brad Swan on the #YouthChoices Social Benefit Bond.

Why did you choose to set up a social benefit bond that focusses on recidivism rates in young offenders?

Brad: When the Bond was announced, Life Without Barriers explored a range of options and the focus on reducing recidivism was chosen given the evidence behind the Multi Systemic Therapy program. The initial work outlined the program and anticipated performance levels linked with investor returns. After the Queensland Government announced the successful organisations, Life Without Barriers entered into the Joint Development Phase with the Queensland Government to work through the model, finances, performance measures and outcomes as well as investor returns.

What kind of research did you conduct prior to setting up the bond?

Brad: Life Without Barriers has experience in supporting and delivering the Multi Systemic Therapy program and the program is evidence based. Therefore putting forward this program was appropriate for a Social Bond where Outcome Payments are linked to performance.

What has been the uptake from investors so far?

James: The response from investors has been positive, many love the idea of putting their capital to work for a great cause and getting a return. They [the investors] recognise that repeat youth offending imposes significant financial, social and economic costs on governments, individuals and communities. The 30 years of accumulate evidence which supports Multi Systemic Therapy has clearly demonstrated to those interested investing that the program is effective.

In what ways will the Multi Systemic Therapy (MST) program aim to reduce recidivism rates in young offenders, which is currently sitting at 80% for people aged between 10-16?

Brad: The program aims to reduce reoffending by at least 25% by measuring the average number of charges per month, pre and post involvement in the program, over an 18 month period and comparing this to the historical baseline of young people involved in the juvenile justice system. The program also aims to reduce the seriousness of offending. The program works with the whole family and wider community surrounding the young offender to address the multiple factors connected with the offending behaviour. The program is delivered by highly-trained Multi Systemic Therapy clinicians in the young person's home at times that suit the family.

"The response from investors has been positive, many love the idea of putting their capital to work for a great cause and getting a return - James Waddell"

What is the life-span of this bond and do you have an idea of how many young people might go through the MST program?

James: We expect the bond will run for 6.75 years and help up to 600 young people, specifically high risk youth aged between 10-16 years in Brisbane and surrounding areas including: Caboolture, the Sunshine Coast, Ipswich and the Gold Coast.

What will the evolution of the bond look like once it reaches maturity?

James: From a financial perspective we expect that investors will get a great return on their investment from both a financial and social impact perspective.

Who is in charge of the data collection in order to gauge the success and returns for investors?

Brad: The data is collected through government systems and the measurement and outcome payments will be verified by an Independent Certifier.

What are the expected returns for investors?

James: Investors will receive a minimum yield of 3% which will rise to at least 7% once the program reduces offending behaviour by 25% or more. The more Multi Systemic Therapy reduces offending the higher the returns but subject to a cap of 12%.

"Investors will receive a minimum yield of 3% which will rise to at least 7% once the program reduces offending behaviour by 25% or more - James Waddell."

How can investors track the effectiveness of the program?

James: An annual report produced by Life Without Barriers will be the sole means of tracking the progress of the Multi Systemic Therapy program in Queensland. The level of detail presented in the report will provide investors with significant detail regarding the program's effectiveness.

Brad, can you tell us about your experience working with NAB to bring this SBB to market?

Brad: NAB have been a great partner and are highly supportive. NAB have bought a keen interest in the program as well as expertise to develop the financial model and advice on experience from other work with Social Bonds. Our partnership with the NAB is ensuring the strong financial foundation required to provide Multi Systemic Therapy is squarely in place as we begin to deliver this exciting and important program in South East Queensland.

To find out more about the #YouthChoices Bond or for information on how to invest, you can click here.