Thursday, July 30, 2015
Wall Street Not Giving Up On U.S. Social Impact Bonds
Social-impact bonds allow private capital to be funneled into philanthropic projects usually funded by governments and charities. Investors receive a return based on whether a project saves public money by addressing the social issue it targets.
Goldman Sachs helped to fund the first such program in the United States three years ago, a $9.6 million plan to reduce recidivism among teenagers at New York's Rikers Island jail.
Last month, the program's third-party monitor, the nonprofit Vera Institute, announced the initiative, had failed to hit its goal to cut repeat offenses by 10 percent. As agreed at the outset if the program did not reach its goal, its architects including the New York City's Mayor's Office, Bloomberg Philanthropies, and Goldman announced that the program, which was originally scheduled to run for four years, would shut down in August.
Goldman lost $1.2 million and Bloomberg Philanthropies - a partner in the project - lost $6 million, which would have been recouped had the program met its goals....