New York’s notorious Rikers Island jail would not immediately suggest an obvious source of lucrative profits for the banking industry. But investment giant Goldman Sachs is now hoping to make potentially millions of dollars by helping persuade the prison’s inmates to turn over a new leaf.
The strange turn of events is the consequence of an announcement on Thursday by New York City mayor Michael Bloomberg that the facility is to be the testing ground for a controversial new source of funding for social projects called “social impact bonds”.
The device, pioneered in Britain, will be the first of its kind for an American city and essentially taps private investors for funds to run projects that have normally been the concern of the state or non-profits.
If the projects run well, the investors can earn a healthy profit. If it fails to meet targets, then they get hit with a loss.
As such, Goldman has now shelled out a $9.6m loan that will pay for a new four-year scheme aimed at reducing re-offending among young prisoners released from Rikers.
It is structured so that if the scheme reduces recidivism by more than 10% it could make as much as $2.1m.
If, however, it falls short of that target, Goldman’s losses could add up to as much as $2.4m.
“Helping young people who land in jail stay out of trouble when they return home is one of the most difficult, and most important, challenges we face … we are eager to see the outcome of this ground-breaking initiative,” Bloomberg said in a statement announcing the plan.
His administration also called for “expressions of interest” from other investors keen to take on similar schemes.
Social impact bonds are now being considered by other American cities and arms of state government, including in Minnesota and Massachusetts.
Some American non-profit groups, such as Central City Concern in Portland, Oregon, have already got funding via philanthropic bonds.
The investment vehicles are fairly common in Europe and one of the most high-profile schemes is currently underway in the British city of Peterborough.
That programme began in 2010 and it too involved an attempt to reduce re-offending rates from people leaving detention. Its success is still being evaluated.
But the concept behind social impact bonds – essentially bringing in a profit motive into often sensitive areas of social policy – has critics.
Mark Rosenman, director of the Washington-based Caring to Change organisation, said he was sceptical about the idea of a market-based solution to difficult and complex social issues. “My general concern is that when you open a portion of the non-profit sector to the profit motive, we find that it displaces concern about solving public problems with a concern for private profit. You see that with the healthcare sector and higher education.
He added that a particular problem was how success and effectiveness was accurately measured in any social impact bond scheme.
“How do you develop a metric to measure success that fully reflects the public purpose of the project?” he asked.
In New York, the Goldman cash will be used to fund a programme called the Adolescent Behavorial Learning Experience (Able), which is part of the Young Men’s Initiative working on Rikers Island.
Able is aimed at cutting the current poor state of youth recidivism in New York which sees some 50% of adolescents aged 16 to 18 who are released from detention return within a single year.
“There has never been a project on this scale delivered at Rikers before. It is a pioneering, transformative approach,” said Christine Pahigian, executive director of Friends of Island Academy, a group which will help implement the project.
[Jailed woman behind bars via Shutterstock]
Trump goes into full attack against another American company — Ford motors
President Donald Trump went off on another Twitter rant Wednesday, taking aim at another American company.
"Henry Ford would be very disappointed if he saw his modern-day descendants wanting to build a much more expensive car, that is far less safe and doesn’t work as well, because execs don’t want to fight California regulators. Car companies should know that when this Administration’s alternative is no longer available, California will squeeze them to a point of business ruin. Only reason California is now talking to them is because the Feds are giving a far better alternative, which is much better for consumers!" Trump tweeted.
‘He wasn’t that bad then’: Former Trump Org insider recalls when Trump shifted to become ‘a joke’ and ‘a cartoon’
Former Trump Organization insider Barbara Res recalled a time she worked with President Donald Trump when he "wasn't that bad."
MSNBC host Ari Melber began the segment by calling Trump a "snowflake" for getting mad with Denmark for calling his idea of purchasing Greenland "absurd."
"Let's just deal with this real quick. We know it's how he operates: Attack, troll, mock, bully and indignantly complain other people are bullying him," Melber noted. He then welcomed Res to discuss what is happening in Trump's brain.
He asked Res if anything could become an important issue to Trump if it wounds him enough. "Is he a snowflake?"
Rudy Giuliani sneaked off to meet Ukrainian officials in Madrid about Biden conspiracy theories: report
On Wednesday, The New York Times reported that President Donald Trump's lawyer Rudy Giuliani secretly traveled to Madrid in recent weeks to meet with a top aide of new Ukrainian President Volodymyr Zelensky to go fishing for dirt on Democrats.
One of the key focuses of Giuliani's phone calls and in-person meetings was to try to dig up evidence that former Vice President Joe Biden acted improperly to remove a Ukrainian prosecutor investigating an energy company his son was invested in — which has been broadly discredited as conspiracy theories. He also tried to hunt for proof that Ukrainian officials colluded with Democrats to hurt Trump's campaign in 2016, a claim which is not supported by evidence.