Reimagining media funding through a prison experiment and a deadly disease
Can a relatively new financial instrument help news publishers in trouble? Only if we find a way to measure some of the impact of public service journalism.
Any day might seem like a good day to get out of prison, but it turns out Fridays can be tricky. The weekend makes it hard to accomplish important tasks, like finding housing or navigating bureaucracies, and easy to engage in risky behaviours, like partying or buying drugs. As a result, individuals released on Fridays are more likely to reoffend than those released on Mondays.
This was one of the takeaways from an experiment at HMP Peterborough, a prison about two hours north of London in the UK. The project aimed to reduce reoffending rates among inmates serving sentences shorter than a year who had no post-release supervision. It included innovative measures like changing release days, but its financing was the most groundbreaking aspect.
Rehabilitation -> … -> Profit
Typically, rehabilitation programs are funded by the state and/or involve the voluntary sector. Funding anything beyond fences and guards for prisons can be difficult in an increasingly tough-on-crime environment. This isn’t to push any particular political agenda but to highlight that even if someone has a great new idea to reduce recidivism—something everyone wants—raising money for it can be challenging.
But David Robinson had a really clever idea:
It's possible to calculate the average cost of incarcerating someone and, therefore, estimate how much money the state could save if recidivism rates were reduced by, say, ten percent. If a new rehabilitation program costs less than the savings it generates, there's money to be made. With profit potential, convincing people and organisations to fund an experiment becomes much easier.
This is precisely what happened.
Robinson launched a non-profit called "Social Finance" and raised £5 million. This wasn’t charitable giving but rather a risky, socially driven investment. The state entered into a complicated, results-based contract with Social Finance (and, by extension, its investors): if the intervention successfully reduced reoffending by 7.5%, the investors would get their money back with modest interest. If the project failed to reach the target, the investors would lose their money.
This is how the world's first social impact bond (SIB) was born. The £5 million Peterborough bond was a success, and investors were repaid with interest, leading to the model catching on. In a 2017 Medium post, Robinson wrote:
“This first, £5m programme was relatively small but with it we have shown the importance and the value of long — term impact driven funding.”
SIBs gained traction—and I promise we'll get to media funding shortly—partly because the world of finance (or at least some of it) has changed considerably over the past decade and a half. While seeking returns remains the dominant goal, an increasing number of investors are looking for something more: a positive social impact. As more investors seek this social impact, large financial service providers have also begun looking for projects like SIBs that can deliver both returns and impact. These instruments have become fashionable in some financial circles, and now there's a lot of money looking for deals. A Brookings Institute estimate in 2024 placed the total investment in 258 impact bonds at $517 million globally.
As newsrooms around the world grapple with shrinking revenues and search for sustainable business models, the success of SIBs in other sectors raises the question: Could this innovative financing model be adapted to support quality journalism and media organisations? The short (and possibly underwhelming) answer is: maybe.
For SIBs in the news industry, there's a significant problem: unlike recidivism, the value or impact of independent journalism is very difficult to quantify. There are rarely straightforward, predictable savings for state actors (or similar entities with deep pockets), so a critical component is missing. (We spoke to Khadija Patel about the difficulties of measuring journalism's impact a few issues ago.)
But there is a solution, in theory, at least.
Preventing cancer, funding media
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