Near the end of the summer the banking giant Goldman Sachs released a fairly unique plan to invest in its neighbourhood, at no cost to the taxpayer. The plan focuses on the fairly constant issue of New York’s detained youth. The plan is aimed to introduce responsibility skills, decision-making, and problem-solving skills to offenders between the ages of 16-18. New York’s youth, after release from detention have a reincarceration rate of 50%. “In this new model, private investors fund the intervention through a nonprofit contractor and the government pays the contractor only if the program meets its goals.”
The plan is a pioneer in the privatization of community services. Should it reduce reincarceration by 10%, the City, will save money while the investors receive a much greater return on their investment. Goldman Sachs will fully fund the program over the next four years; it will not allocate its resources, but rather grant the program liberty in where the money goes.
The innovative project will bring much needed services to the nearby Rikers Island and will hopefully improve New York’s community in ways which the government cannot. There is great eagerness to witness its effect.
Web Reference: http://www.goldmansachs.com/what-we-do/investing-and-lending/urban-investments/case-studies/social-impact-bonds.html