Social Impact Bond Shows No Impact (WNYC)

Results are in from the city's first experiment with a social impact bond. That's when private money funds a social program. Here's the catch — there's only a return on the investment if the program works and saves taxpayers' money.  In this case, Goldman Sachs invested in a program for teenagers at Rikers Island that tried to keep them from returning to jail. The program failed to meet its goals and Goldman lost money. 

The bond paid for a group therapy program for roughly 1,700 16- to 18-year-olds. Some teens received more therapy than others depending on how long they were incarcerated. The Vera Institute of Justice evaluated the program and said initial results showed that no matter how long the treatment lasted, the program did not have an impact on recidivism rates. 

Susan Gottesfeld of the Osborne Association, the group that worked with the teens, said teens needed more services — like mental health care, drug treatment and housing assistance — once they left the jail and were living back in their neighborhoods.

"Providing them well-rounded comprehensive wrap-around services is the way to go, and I think that's the direction we'll see happening on Rikers and in adolescent criminal justice in the city and state going forward," Gottesfeld said.

The experiment started in 2012 under the Bloomberg Administration. At the time, Bloomberg Philanthropies guaranteed a large chunk of Goldman's $7.2 million dollar investment, so the financial company only lost $1.2 million dollars in the end.  Both entities are calling the experiment a success. In an op-ed for the Huffington Post, they wrote that social impact bonds allowed government to try to find the right policy prescription without wasting taxpayer dollars on something that does not work.  

The jail for adolescents at Rikers has come under serious scrutiny by federal prosecutors who found that guards were abusing young inmates and violating their civil rights.  David Butler from MDRC, a research institute that monitored the social impact bond project, said the jail was chaotic and it was not uncommon for sessions to be interrupted by lock-downs or other incidents.

"At the end of the day, Rikers is a really challenging program environment. This intervention has never been done in an environment as demanding and challenging as Rikers or at the kind of scale that we were doing it," Butler said. 

The group therapy program will end at the end of August. But more programs are being considered by the de Blasio administration, which plans on expanding services for all inmates.

"This social impact bond allowed the city to test a notion that did not prove successful within the climate we inherited on Rikers.  We will continue to use innovative tools on Rikers and elsewhere," said first Deputy Mayor, Tony Shorris in a written statement.