Good news once again today, a couple of stories discussing the Massachusetts initiative launching the largest yet SIB at $18 million to tackle recidivism alongside a more general US focussed article from Philanthropy Magazine.
Massachusetts said on Wednesday it will fight youth crime in the state by using the nation’s largest $18 million “social impact bond.”
“This is groundbreaking,” said George Overholser, CEO of Third Sector Capital Partners, which organized the project. “Under this program, we have gotten private people to take on the risk of non-performance instead of the taxpayer.”
Gov. Deval Patrick on Wednesday unveiled what he called a landmark initiative aimed at reducing recidivism among high-risk young men.
The proposal will cut down on crime, save taxpayers money, and improve outcomes for hundreds of young men leaving the juvenile justice system or who’re in the probation system, Patrick said.
The state will team with a nonprofit service provider, Roca, to serve hundreds of young men across the state by providing them with outreach, life skills and employment training, he said. The program will initially be funded with the help of $18 million in private loans and grants.
Roca aims to reduce by 40 percent the number of days that young men in the program are incarcerated — a goal that would generate millions in savings to the state.
If Roca is successful in meeting that goal, the state will make up to $27 million in “success payments” over a seven year period under a so-called “Pay for Success” model.
That money will go repay the private funders. If Roca exceeds the 40 percent goal, it and the private funders will receive a bonus.
An $11.7 million grant from the U.S. Department of Labor will also give state the opportunity to extend the project to serve up to 1,320 young men over nine years.
Pay-for-Success Projects Spread To More States
SIB News reported yesterday that a San Francisco foundation announced that it is providing $2.5-million to help “pay for success” projects gain a philanthropic foothold in California as similar efforts advance in Massachusetts, Utah, and New York.
In pay-for-success projects, donors, foundations, or other investors provide money for social programs that are expected to produce results that in the long run will save money for government agencies. If the programs achieve specific results, the government repays investors with a profit generated from those savings. If not, the government pays nothing.
The concept is being explored in more than a dozen states, but only a few programs are now under way. That’s largely because governments are often slow to change their procedures and it’s been hard to attract private investors and find nonprofits that can both deliver innovative services and track results, said Antony Bugg-Levine, chief executive of Nonprofit Finance Fund, which will run the effort in California paid for by the James Irvine Foundation.