Social Impact Bond to reduce reoffending in US launched


Alliance magazine



Social impact bonds (SIBs), widely touted as a possible answer to shrinking public purses and a way to secure non-government investment in the solution of a social problem, have claimed their US avatar in the shape of a scheme to reduce reoffending in New York City. The scheme follows considerable US interest in the UK pilot scheme in Peterborough prison with the same aim. Rockefeller Foundation invested $500,000 in the Peterborough project, while McKinsey has recently released a report on the possible uses of SIBs in the US (Alliance eBulletin, July 2012). Though the NYC scheme is being hailed as the first in the US, the Obama administration announced pilot schemes in the areas of job training, education, juvenile justice and children’s disabilities in February last year. 

One difference between the UK and US projects, however, is that while the Peterborough scheme was largely financed by charitable foundations, global investment bank Goldman Sachs has financed NYC’s social impact bond. The bank will provide $9.6 million in finance for the scheme, and MDRC, a non-profit organization, will manage the project. The four-year programme, in which MDRC and other organizations will provide education, training and counselling to young ex-offenders, must reduce the recidivism rate by at least 10 per cent for Goldman to recoup its investment. If the recidivism rate drops further, Goldman could profit to the tune of $2.1 million beyond its original investment.

Source, 3 August 2012

For more information
Alliance eBulletin, July 2011

Tagged in: Reoffending social impact bonds Social investment USA

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