There is renewed hope a National-led government will back fresh investment schemes similar to a youth offending programme recently funded through a social bond.

The bond was issued six years ago to fund the operations of Genesis Youth Trust, an Auckland-based charity working with children referred by police and Oranga Tamariki. 

Data shows that compared with a cohort with similar risk factors and over the same time period, those helped by Genesis Youth Trust were 30 percent less likely to re-offend, or if they did re-offend it was less severe than their previous offence. 

Not only did it reduce re-offending, it led to fewer hospital visits and referrals to mental health and addictions services and 40 percent more tertiary education enrolments than the group they were compared with.

However, despite its success, fewer young people got a chance to go through the system than was planned.  

A thousand young people were supposed to be enrolled, but only 607 were. 

“The change in government was accompanied by ministerial suspicion of social bonds, which translated into reduced departmental interest. The crucial impact was that frontline staff were less motivated to maintain strong referral flows into the bond (and the contract did not guarantee any flow levels),” the report said. 

The Covid-19 pandemic was also a factor in fewer referrals. 

As a result, not all of the funding was spent. 

Carl Bakker, the chair of the funding arm of Genesis Youth Trust, known as G-Fund, and the report’s author, said they tried to extend the life of the bond, by using the unspent money, but were unsuccessful.  

“While G-Fund sought to extend the contract life in negotiations with Oranga Tamariki to reflect the lower pace of enrolments, there was no corresponding interest so negotiations lapsed.” 

Genesis Youth Trust has since had to let about a dozen social worker staff go.  

Bakker said the report, published as a National government comes in, was good timing.  

“We did have to wait until all the data was ready but now’s a good time to be circulating it, for example Nicola Willis has made statements about social investment, for which this would fit.” 

ANZ Sustainable Finance head Dean Spicer said as the biggest social impact investor in the country, the government needed to be onboard if there was to be any traction.  

“It is a pay-for-performance so there needs to be somebody willing to pay. 

“I’ve been looking offshore at what’s happening there and there’ve been some examples of where non-government entities have been paying but ultimately, yes, it tends to be government entities who pay.” 

He said simply allocating funds to fix a problem may not be enough, but having outcomes to measure against made a difference.

“What hopefully this pilot has shown is that what really matters is the impact those funds are having and so ultimately the biggest-impact investor in New Zealanders is the government, and we haven’t seen a lot of follow-on opportunities of this type.  

“So it’s a matter of waiting and seeing whether this will be a mechanism used again.” 

He said investors and financial markets had come a long way since the inception of the bond in 2017.  

“We’ve now actually got some data to look at in the New Zealand context so that’s really helpful. I think there’s also a shift in terms of the market where perhaps the idea of supporting social outcomes was really the domain of philanthropic organisations, whereas increasingly, I think what we’re finding is that if you look at research done on KiwiSaver providers actually most Kiwis expect that the funds are going to be managed in a way that delivers not only a return, but also are invested responsibly.  

“So I think investment managers actually have to show that they’re taking impact into account as well as returns.” 

The report found that though investors were hesitant to get onboard at the start of the programme, by the end most “expressed considerable interest in further investments of this type”. 

The National Party campaigned on social investment and has promised a social bond as a way to improve the emergency housing crisis.

This would work by partnering with providers who could shift families out of emergency housing into secure homes in the short term and keep them there in the long term.

“Payments will reflect the long-term aim of ending emergency housing and providing better outcomes for vulnerable families. An initial bond of $50 million will be established,” housing spokesperson Chris Bishop said before the election.

Emma Hatton is a business reporter based in Wellington.

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1 Comment

  1. I am not clear what bonds add to what agencies are already doing. Obviously it is attractive to have funding coming from outside the taxpayer-funded system, but presumably those investments will only come if backed by the taxpayer (otherwise it is a big financial risk for those putting up the money)? Is this something like public-private partnerships for roads and other infrastructure? Again, one has to be careful that the taxpayer is not up for more money than if they had funded it wholly in the first place (this has been the experience with many such schemes that looked attractive because they took money off the balance sheet, but ended up costing more).

    The other thing one has to be careful about in extending these schemes beyond the risk to the taxpayer is the danger that investors will want to be surer about getting their investment back (understandably) and may place pressure on getting placements from those clients that are more low risk, which would leave the harder cases with the traditional public sector agencies.

    What was it about the Genesis case that assisted its apparent success? Can that be shared with other agencies, or is there some caveat on that? A previous review of the Genesis scheme carried out by a doctoral student at the University of Auckland (completed in 2015) showed no difference in reducing reoffending between the Genesis scheme and a control group ( So, what has changed, or was the methodology not quite up to the job (even though looking professional enough)?

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