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]
Matt Gaetz forgot which network he was on: Surprised CNN anchor said ‘I’ve never been called Sean Hannity’
Rep. Matt Gaetz seemed to confuse cable news networks during a Thursday appearance
Gaetz was interviewed by CNN's Chris Cuomo, who aggressively challenged Gaetz on the facts as the Florida Republican attempted to defend President Donald Trump.
Despite the fact Cuomo's interview was nothing like the puff segments Gaetz is used to on Fox, the congressman seemed confused by the end.
"Congressman, you are always welcome, wherever I am, at nine or eleven, whenever," Cuomo said.
"Thanks Sean," Gaetz replied.
"Did you just call me Sean?" Cuomo asked. "Did you just call me Sean?"
California lawmaker who chaired Republican Assembly caucus leaving GOP — to become an independent: report
On Thursday, the Sacramento Bee reported that California Assemblyman Chad Mayes, the former Assembly Minority Leader, is leaving the Republican Party and registering as No Party Preference.
"Instead of focusing on solutions for the big problems that we've got, we focused on winning elections," said Mayes in his announcement. "For me, I'm at the point in my life where I'm done with gamesmanship."
Mayes, a controversial figure who was implicated in an affair with a fellow public official, represents Yucca Valley. He is the second Republican Assemblyman this year to leave the party, after Brian Maienschein of San Diego, who Maienschein of San Diego.
‘Quantum physics generator’ incident in Ohio results in evacuation — hazmat found no radiation
Authorities in Columbus, Ohio evacuated dozens of homes after a man called 911 to report being burned by a
"Firefighters say nothing threatening was found in a northwest Columbus garage," WCMH-TV reported. "According to firefighters, a man called and reported that he received ‘RF burns’ while building some sort of ‘quantum physics generator’ in a garage. The man used words like ‘particle accelerator,’ ‘alpha rays,’ and ‘radiation’ while describing how he was burned."