Pennsylvania reducing recidivism thanks to SIBs. Bonds working in Utah too – hooray!
Sadly some tediously linear media negativists see only bad news in Goldman Sachs being paid a return (they have also taken a bath on the Rikers Island bond but the same media recidivists view that as “hah! they can afford it those ugly 1 percenters!”).
Make no mistake, I may be a financial specialist and free markets / investment advocate but as previously stated: I clearly can see Goldmans is both a toxic brand for many who see it as a symbol of Wall Street’s excesses (justifiably enough) BUT it is also the best advertisement for the SIB process as GS does have some great brains amidst its staff roster.
If the brains trust of Goldman Sachs reckon SIBs work, then the process clearly has enormous potential.
In my native Northern Ireland we refer to folks “who want to cut off their noses to ‘spite their faces.” This is precisely the problem faced by the SIB movement so long as the reactionaries see anybody being paid for taking a risk as a bad thing.
This ignores the plain fact that if Goldmans are getting paid then other, deserving folks, are receiving an outcome they would not get otherwise – and that means a better life for them and a better society for all. That’s a glorious “win! win!” in my book, definitively not cause for concern that risk bearing investors get paid for making an economic transaction to deliver societal improvement.
An adult dialogue is what I am encouraging – although it has to be said the NGO sector is, alas, in some key areas, tragically ill-prepared for this dose of reality in many segments I fear. Clearly there is a lot of Schumpeterian action still to come before we can actually deliver the total benefits for SIBs going forward.
Then again that is why I created SIB News in the first place – the potential is too great to simply remain imprisoned by some negative thinking on the part of a failing blob orthodoxy which cannot cope with the digital world.
All feedback will be welcome as always – and I remain committed to making the SIB movement succeed, watch this space for some interesting news on my part too.
Thanks for reading, here are today’s stories, positive first, Goldman-phobes second…
Pay For Success Contracting Reducing Recidivism In Pennsylvania
Before It’s News
Pennsylvania’s recent efforts to make payments to the private operators of the state’s dozens of community corrections centers dependent on their performance at reducing recidivism appear to be yielding some promising early results, and could prompt other states to consider similar approaches.
The Pennsylvania Department of Corrections (PDOC) announced earlier this week an overall 11.3% reduction in recidivism across its 42 contracted community corrections centers between July 2014 and June 2015, marking the second consecutive year of decline.
Goldman Nets Payout As Social Impact Bond Project In Utah Meets Targets
Olivia Oran – Reuters
Goldman Sachs and its investment partner will be paid $267,000 for helping to fund a philanthropic program that reduced the number of children needing special education services after preschool.
The milestone marks a turnaround for so-called social impact bonds, which are issued by local governments in partnership with charities and private investors to fund philanthropic projects. Investors receive a return if a project saves public money.
The first social bond project earlier this year failed to achieve its goals.
In the latest program sponsored by the United Way of Salt Lake, Goldman’s Urban Investment Group and Chicago investor J.B. Pritzker committed up to $7 million collectively to help increase school readiness for at-risk 3- and 4-year olds in Utah.
The group said it had significantly reduced the number of students who would need special education services in kindergarten and beyond.
The results, which saved school districts and governments around $281,000 in total, triggered the first investor payment for any pay-for-success program in the United States. Goldman and Pritzker received a total payout of around 95 percent of those savings, or around $267,000.
The repayment was coordinated by the United Way, who convened a group of partners and investors.
For Goldman, Success In Social Impact Bond That Aids Schoolchildren
Nathaniel Popper – NY Times
Financial results at Goldman Sachs are going to look a little bit better this quarter because of the educational success of 100 or so kindergarten pupils in Utah.
The students were part of a relatively new financial experiment in which Goldman put up money to pay preschool costs for students who had been expected to need special education services.
When the students were tested this year — after a year in preschool — and found not to need extra help, the State of Utah paid Goldman most of the money it would have spent on special education for the children.
The payment represented the first time a so-called social impact bond paid off for investors in the United States.