Impact investing to support wellbeing of families and children and education and employment of young people
Jyväskylä, Tampere, Karkkila and Vihti will launch a project in which the problems faced by children, young people and families will be tackled proactively and at the right time. The aim is to increase wellbeing and reduce the costs of services and the need for unemployment benefits.
The project includes a new feature where municipalities only pay for the achievement of the performance targets, such as the completion of a secondary degree, finding employment or a reduction in the number of unauthorised school absences. A form of impact investing called Social Impact Bond (SIB) will be used in the project. Such projects are financed with private capital, which the municipalities will pay back in addition to a reasonable profit only if the performance targets are met.
Completing a secondary qualification and finding work are key factors in becoming a member of society. However, about 15% of young people and up to a half of those placed in substitute care by child welfare services will not achieve any degree beyond basic education. The cost to society of a young person not in education or employment is approximately EUR 18,000 per year.
Municipalities define project aims
The project in Jyväskylä has two target groups. The aim is that 70% of the participants, who are young people at risk of terminating secondary level education, will graduate. Another objective is that the number of sixth-graders, who perform poorly at school and are at risk of becoming clients of child welfare services, will be reduced by 50% and that their school performance improves.
“It is necessary that we find new funding and operating methods to prevent problems. In this project, Jyväskylä is testing a new preventive approach and funding model and we hope that the results will speak for themselves,” says Eino Leisimo, Director of Education in the City of Jyväskylä.
Meanwhile, Tampere aims to ensure that 80% of the young people placed in substitute care receive at least a secondary degree and that 80% are either gainfully employed or study at the age of 25.
Karkkila, Vihti and their joint municipal welfare authority Karviainen aim to reduce the need for corrective services by providing early and timely support to families with children.
The Centre of Expertise for Impact Investing, which is part of the Ministry of Economic Affairs and Employment, has prepared the project together with the municipalities. FIM Private Equity Funds (FIM Pääomarahastot Oy), which was selected through the competitive tendering procedure required by the Act on Public Procurement and Concession Contracts, will be in charge of implementing the project and collecting the investor capital together with the Central Union for Child Welfare. The project will begin at the start of 2021 and last for 10 years.
“The coronavirus crisis has further increased the need for early and timely support, especially among vulnerable children, young people and families. At the same time, the financial resources of public authorities are spent on funding corrective child welfare services. By combining the impact investing capital from private investors with the preventive services provided by the best operators, the project aims to achieve a real impact on wellbeing while lowering the costs of child welfare services. If successful, the project will benefit not only families but also the public sector and investors,” says Jani Kempas, Managing Director of FIM Private Equity Funds.
A similar SIB project to improve the wellbeing of children and young people has already begun in Helsinki, Hämeenlinna, Kimitoön, Lohja and Vantaa. The SIB model has also been used in Finland to promote wellbeing at work in the public sector as well as employment of immigrants and people who have been without work for a long time. Other projects are also being planned.
Mika Pyykkö, Director, Centre of Expertise for Impact Investing, Ministry of Economic Affairs and Employment, tel. +358 295 047 135
Anna Tonteri, Chief Specialist, Centre of Expertise for Impact Investing, Ministry of Economic Affairs and Employment, tel. +358 295 047 163
Jani Kempas, Managing Director, Impact Investing, FIM Private Equity Funds, tel. +358 9 6134 6494