SIB project paves the way for young people’s education and employment with the support of investors2.1.2024
A SIB project in Tampere called Nuoret – meaning Young People in Finnish – has adopted new methods for preventive child welfare work. The project is financed through impact investing, where funds are collected from investors into a Social Impact Bond (SIB) fund. In this initiative, the City of Tampere and the Wellbeing Services County of Pirkanmaa only pay for the actual results achieved in the form of higher rates of education and employment for young people transitioning from foster care.
This is the first Social Impact Bond procurement in Tampere. Social Impact Bond (SIB) refers to a results-based financing agreement, a form of impact investing. In this model, funds are collected from public and private investors into an SIB fund, which is then used to finance activities that enhance societal well-being.
One of the SIB model’s benefits is cost savings, making it particularly suitable for preventive actions. In Tampere, the focus is on young people. In this SIB project, support is provided to young residents of Tampere born between 2003 and 2006, who have been placed away from home and are about to enter adulthood. The goal is that 80 per cent of the young people participating in the project will achieve at least a secondary education, and 80 per cent will be either employed or studying further by the age of 25.
On average, only about half of young people placed in care complete post-primary education. There is, therefore, a significant gap to be bridged to reach the goal.
The school dropout rates among young people placed away from home are a consistent phenomenon across various Nordic countries. In Finland, additionally, a distinctive feature is the weaker integration of placed youth into the workforce, explains Esko-Pekka Järvinen, special planning officer at the Nuoret SIB Tampere project.
The long-term project, which began in 2021, will continue until 2030. Young people can join the initiative as it progresses.
The accumulative impact of timely support
In the SIB model, the public sector pays only for the realisation of the goals defined in the agreement. In other words, when the objectives are achieved, and cost savings occur, the city and the wellbeing services county pay a portion of the saved costs to the fund.
This is all about purchasing impact, says Leena Viitasaari, planning director of the City of Tampere.
The practical work is carried out by the selected partners responsible for the implementation of the Nuoret SIB project; the Vamos of Deaconess Foundation and SOS Children's Villages. They provide, among other things, peer support, coaching and a ‘Special Companion’ service (Rinnallakulkija in Finnish), which has received particularly positive feedback among the young people. The flexible availability of services is crucial for the success of the project.
Timely support significantly saves costs. For example, if a young person struggling with mental health issues receives prompt support to cope with the pressures of education, they might be able to complete their education, and the impact can accumulate well into the future, says Esko-Pekka Järvinen.
Addressing societal challenges
Impact investing is suitable for investors who are interested in long-term investments and solving societal challenges. The major investors in the Nuoret SIB project are LähiTapiola, Sitra, Tradeka and S Group. The project fund is managed by S-Banks’ capital fund.
As this is the first time the financing model is being used in Tampere, the project was carefully planned. The goals of the project, the metrics and the implementation method were precisely defined.
The result-based model must be profitable, and cost benefits must be expected. The project has to be impactful and attractive to investors, summarises Viitasaari.
The metrics monitored in the project include secondary education attainment and taxable income at the age of 20–25. When evaluating impact, it is also crucial to monitor the effects of the initiative on the use of social and health services as well as employment services. Additionally, the project tracks the young people's self-assessments of their well-being. All monitoring is done with the consent of the individuals involved. The data is compiled for the Finnish Institute for Health and Welfare for long-term research. Besides Tampere, eight other municipalities are involved in the nationwide project.
The project is still in its early stages, so there is a journey ahead before we achieve the overall goal. However, the positive changes in the lives of these young people have already been quite significant. They have reported, among other things, a stronger trust in the future. The most recent notable change was a decrease in addictive behaviour, Esko-Pekka Järvinen rejoices.
Read more about the project (in Finnish): https://www.tampere.fi/nuoret-sib