Failure of New York City's first Social Impact Bond | What's Left
The first Social Impact Bond (SIB) to be tested in New York City has failed to deliver on its promises. The program the Bond was invested in, saw millions of dollars spent counseling youth in prison with the goal of reducing their chances of re-offending.
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Despite the program, re-offending rates remain unchanged. In response, the heads of the Bloomberg and GoldmanSachs foundations (who were promoting and investing in the SIB) tried to explain the failure as merely a minor setback. Unfortunately for them, promoters of public services are calling it what it was: a complete debacle. This money could have been spent paying the bail they couldn’t afford, a strategy that has proven to reduce re-offending rates in other states.
The program was set to fail from the start, as bankers controlled the funding. Most of the youth would not have been incarcerated if they lived in a different state – which would have meant lower re-offender rates. So, part of the solution to the problem is to not just send youth who have committed minor crimes to prison, but to support them on the outside by providing meaningful and helpful social programmes.
On the money side, borrowing to pay for social services is nonsensical and finance should be kept far away from future attempts at solving this problem.