Cardiff Council is considering an “innovative” new scheme that could see philanthropists, wealthy individuals and charitable trusts fund foster placements for some of the city’s most vulnerable children.
The local authority is looking at the possibility of using what are known as social impact bonds (SIBs) to fund foster placements for children and young people with complex needs, such as challenging emotional and behavioural problems.
If those placements were successful, the individual or organisation would get a return on their investment.
The scheme would target children who have been placed in, or are on the brink of being placed in, residential care – often outside Cardiff – because of their complex needs, and those whose previous foster placements have broken down repeatedly.
Finding foster placements for children with backgrounds like this is considered “high risk” for the council, but an SIB would see an investor – likely to be a philanthropist, wealthy individual, trust or foundation – take on that risk by funding the child’s move from residential to foster care, and the investor will get a return on their cash if the placement is successful.
It is hoped the scheme will reduce the number of children being placed in non-council and out-of-county residential care, and save money for the council as this type of care is far more expensive than foster placements.
At a meeting of the authority’s children and young people scrutiny committee earlier this week, the cabinet member for children’s services Councillor Richard Cook said SIBs had been used successfully elsewhere in the UK, including a scheme in Peterborough to stop prisoners reoffending, and to place children with foster families in Manchester.
Coun Cook said the Labour administration planned to carry out a feasibility study – at a cost of between £50,000 and £80,000 – to see if SIBs for looked after children would be viable in Cardiff.
Committee member Cecilia Love questioned what would motivate an investor to get involved in such a project, given that they would be taking on most of the risk, while Coun Bill Kelloway warned the council would have to be careful that it was not left “picking up the pieces” if external investment went wrong.
But officer Nick Jarman said setting up the SIBs would be “cost neutral” for the council, adding: “People who get involved in this are principally motivated by philanthropy. If people were looking to make a killing, this would not be the area. They would be trying to adapt things that work in markets to deliver social good.”
The proposal for the feasibility study will go before cabinet in December.
Coun Cook said: “I am very pleased that the council could be considering using social impact bonds to tackle problems in Children’s Services that up until now have been very difficult to resolve. Cardiff has far too many looked after children who are cared for out of county.
“The council is the corporate parent to these children and they deserve the best future we can provide for them. Social impact bonds could introduce innovative ways of working and bring investment that will be difficult to find in the current climate with the council having to make £55 million of savings in the next few years.”