NYC Social Impact Investment Fails to Meet Goal

NYC Social Impact Investment Fails to Meet Goal

A New York City program designed to reduce recidivism rates among adolescent inmates at Rikers Island failed to meet its goal, and as a result the city will not have to pay for it, the Bond Buyer reports.

The nation's first social impact bond — a pay-for-performance vehicle that leverages private funding to finance public services — the Adolescent Behavioral Learning Experience was launched in 2012 and slated to run four years. Aimed at reducing recidivism among 16- to 18-year-olds who entered Rikers in 2013 by 10 percent or more, the program, which will be discontinued on August 31 after an independent evaluation found it to be ineffective, offered interventions focused on social skills, personal responsibility, and decision making.

Conducted three years into the program's run, the evaluation by the Vera Institute of Justice found that ABLE did not lead to a 10 percent reduction in recidivism among program participants, and that any change in recidivism rates, adjusted for external factors, was statistically insignificant when compared to those for a matched historical comparison group.

Overseen by MDRC, a nonprofit, nonpartisan education and social policy research organization, the program was financed by a $7.2 million loan from Goldman Sachs and a $6 million loan guarantee provided by Bloomberg Philanthropies. The termination of the program means that Goldman will lose $1.2 million. Had the program run the full four years, Goldman's investment would have been $9.6 million, with Bloomberg Philanthropies' backstop totaling $7.2 million.

"While it is disappointing that the program did not meet its goals, the social impact bond financing arrangement worked as it was supposed to," MDRC said in a statement. "With the SIB, New York City was able to provide a promising intervention to more than four thousand young people over the three years the program operated, using financing from the private sector. The city agreed to pay for this program only if it achieved a certain magnitude of impact on reducing recidivism. Because the program did not meet the impact requirements, the city is not paying for a program that did not produce results — a positive outcome for the city and taxpayers."