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First cross-border SIB in the world

Social impact bonds - Start Foundation
Social impact bonds – Start Foundation

The Dutch independent venture philanthropy fund Start Foundation is launching a unique new Social Impact Bond in partnership with Enschede local authority and co-investor ABN AMRO. Unique, because it is the first cross-border SIB in the world.

So-called Social Impact Bonds (SIB) made their appearance a number of years ago. A SIB is an experimental financing system in which private funds are used to tackle social issues. The first SIB in the world was established in the UK, where this SIB helped give young former offenders a second chance. There are now 60 Social Impact Bonds in 15 countries across the world. Most SIBs have been arranged in the US and the UK. The Netherlands currently has eight SIBs. Germany has one. Start Foundation has financed six of the eight Dutch SIBs.

The SIB is aimed at matching jobseekers in Enschede with German employers. Via this SIB, Enschede local authority, Start Foundation, ABN AMRO and BOAS Werkt aim to provide intensive support to 138 jobseekers in finding available jobs across the border. This cross-border partnership represents a world first for both countries. Jos Verhoeven, Director of social investor Start Foundation (Eindhoven, the Netherlands): “We are literally expanding the horizons of the labour market as well as the SIB instrument. We are creating employment opportunities in Germany for the long-term unemployed from the Netherlands with this cross-border SIB.”

Ample employment opportunities across the border

The unemployment rate in Enschede is 8.5%[1]. There are ample employment opportunities in the German North Rhine-Westphalia region: the rate of unemployment there is below 3%. The number of unfilled vacancies is expected to rise in the coming years. Large groups of German employees will reach pensionable age in the not too distant future. Jobseekers in Enschede still appear to find it difficult to access the German labour market. The local authority of Enschede, Start Foundation, ABN AMRO and BOAS Werkt are addressing this social issue by means of a SIB. The SIB is aimed at the 7,000 households in Enschede that currently receive unemployment benefit.

Social Impact Bond, a social investment
A SIB is a new way of collaboration between the government, private investors and agencies to tackle social projects. Start Foundation and the ABN AMRO Social Impact Fund are providing the pre-financing for BOAS Werkt: 1.1 million Euros. Social entrepreneur BOAS Werkt is financing 5% itself, thus reinforcing its commitment. BOAS Werkt will use these funds to help at least 138 jobseekers from Enschede find employment in Germany over a period of 2.5 years. If the strategy is successful, the jobseekers will find permanent employment with German employers. The local authority will then save on unemployment benefits. These savings will enable the local authority of Enschede to repay investors. The financial risk of this programme is borne primarily by the investors, not the local authority. Kennispunt Twente will measure the results.

BOAS Werkt’s strategy
Job seekers participating in the programme will first attend four weeks of training with Kreish and werkerschaft Steinfurt-Warendorf, one of BOAS Werkt’s German partners that offers training in building, metalwork, plumbing and welding. The focus is on general professional expertise, health and safety training, the German language and culture, differences between German and Dutch working culture, and a visit to a German employer. That is followed by a practical apprenticeship and, subject to mutual agreement, an employment contract of at least six months with the German employer. All this will take place under the guidance of BOAS Werkt.

Participating parties comment on working together on the SIB:

Patrick Welman, Councillor for Economy and Employment,
Enschede local authority:
This SIB is a creative way of tackling this social issue and that is in keeping with the innovative character of Enschede. We want to offer our jobseeking residents optimal employment opportunities across the border.”

Martin Postma, BOAS Werkt:
We are building bridges with the German employment market.”

Jos Verhoeven, Start Foundation:
“Expanding the horizons of the employment market. That is where we are directing our efforts.”

GerritZalm, ABN AMRO:

“After three local SIBs and a national SIB, we are now financing the first cross-border Social Impact Bond. We believe that achieving social and financial returns is a very appealing combination, which we will continue to support.”