Exploring “Social Impact Bond” Structure in JapanNippon Foundation and Yokosuka City Partner to Promote Special Adoption

The Nippon Foundation has concluded an agreement with the City of Yokosuka for a pilot project to promote special adoption*1 programs, with the signing to be held as outlined below. The project will be based on a social impact investment model known as a “social impact bond,”*2 with the aim of providing family environments for children who require protective care while at the same time reducing the cost to the local government.

There are roughly 40,000 children in Japan who cannot be raised by their biological parents, and approximately 85% of these children live in children’s institutions. At the same time, Japan is experiencing a rapid increase in the number of people wishing to adopt children or become foster parents, who are estimated to number roughly 10,000. Nevertheless, the percentage of children living in institutions in Japan is extremely high compared with major overseas countries, with the government having only placed roughly 4,600 children into foster care during fiscal 2013.*3 As a result, the United Nations in 2008 called on Japan to improve this situation.

Although the City of Yokosuka has two children’s homes, these are insufficient and the city government also needs to use additional facilities outside the city, creating a significant economic burden. Foster care programs are showing progress, but the city has also decided to partner with the Nippon Foundation to promote special adoption programs for children to accelerate the shift from institutional care to family care. This will be Japan’s first program based on the structure of a social impact bond, which aims to improve social issues and reduce costs to taxpayers, to facilitate the placement of newborn infants.