written by
Lore De Jonge

BESIX Foundation invests in “Back on Track” with social impact bond

Global Me@BESIX Group Me@SixConstruct Me@Socogetra Me@BESIX Infra Me@Cobelba Me@JacquesDelens Me@FrankiFoundations Me@Vanhout Me@Vandenberg 2 min read

Following the global financial crisis, tighter public sector budgets and rising public debt have severely constrained traditional government subsidy programmes. The financial world has therefore set to work to find alternative funding for vital social work. New forms of financing, such as crowdfunding and peer-to-peer loans, are rapidly gaining popularity, as are social impact bonds.

Indeed, the demand for social investment has also grown exponentially in recent years, leading many companies to put money into this type of investment for financial return but also and above all for social return.

BESIX Foundation, which since its creation in 2009 has developed its activities around education, the environment and construction and which to date has funded 242 projects around the world, joined the running on 4 March 2020 by investing in the “Back on Track” project with a social impact bond.

The “Back on Track” project by Oranjehuis, a Belgian non-profit association, provides intensive accompaniment for up to one year for young adults between the ages of 17 and 25 in West and East Flanders coming out of detention (prisons in Ypres, Bruges, Ruiselede, Ghent and Oudenaarde and closed institutions for young people). Over a period of 3 years, 8 supervisors want to help 133 young people to “get back on track”, by providing concrete support in the search for accommodation and employment, along with social supervision and ongoing psychological counselling to prevent recidivism.

How does this social impact bond work?

Social impact bonds are fixed-income instruments that serve to raise capital for projects with positive social results. In this case, the private investor (BESIX Foundation) offers a specific capital amount to finance a defined social programme provided by a defined service provider (Oranjehuis). If the service provider achieves the predefined social impact (133 young people successfully reintegrated over 3 years), the results subsidizer (The Flemish Community and the Fonds Jongerenwelzijn) will reimburse the initial investment to the investor (BESIX Foundation).

This performance-based compensation model highlights the importance of transparency, accountability and evidence-based funding.

Why is BESIX Foundation participating?

“For over 10 years now, the BESIX Foundation has contributed to a better world by participating in and funding hundreds of projects with social aims around the world. The “Back on Track” project is a new opportunity for the Foundation to undertake a solidarity project that meets a real social need. We have decided to invest in the system because we have been seduced by the innovative side of the methodology, as well as by the quality of the project team”, explains Frédéric de Schrevel, Secretary General and CSR Manager of the BESIX group.

Who are the other participants?

The European Social Impact Bond Fund of BNP Paribas, BNP Paribas Fortis and Labido Invest (Boss Paints) are, together with BESIX Foundation, investing 1.7 million euros in this project. The BNP Paribas banking group is also providing the financial structuring of the bond. KU Leuven’s LUCAS research team is acting as an independent evaluator of the project.