Impact Evaluation of the Adolescent Behavioral Learning Experience (ABLE) Program at Rikers Island

Source: Vera Institute of Justice, July 2015

Vera determined that the program did not lead to reductions in recidivism for participants. The change in recidivism for the eligible 16- to 18-year-olds, adjusted for external factors, was not statistically significant when compared to the matched historical comparison group. Furthermore, the 19-year-olds and the study group (16- to 18-year-olds) displayed similar trends in rates of recidivism over time, indicating that any shifts were the result of factors other than the ABLE program. The program did not reduce recidivism and therefore did not meet the pre-defined threshold of success of a 10 percent reduction in recidivism bed days.


Are Governments ‘Paying for Failure’ With Social Impact Bonds?
Source: Liz Farmer, Governing, August 2015

Unpredictable as they are, programs like the one at Rikers are not going away. In fact, these attempts to link altruistic policy goals with the pursuit of private profit have been gaining steam as the latest promising innovation in public finance. The mere announcement of the Rikers project back in 2012 was a catalyst for action in dozens of other jurisdictions. Cash-strapped governments quickly became sold on the concept that they can use private money from investors for preventive social programs — money the government will have to pay back only if the programs produce the desired measurable outcomes. In 2013 alone, 28 state and local governments applied to the Rockefeller Foundation and Harvard’s Social Impact Bond Technical Assistance Lab to receive help in developing such programs.

What We Learned from the Failure of the Rikers Island Social Impact Bond
Source: Donald Cohen AND Jennifer Zelnick, NonProfit Quarterly, August 7, 2015

…That said, there are certain lessons we can take from this failed experiment:

  • When SIBs fail, social problems persist: Taxpayers avoided paying some costs for the program, but the underlying problems that contribute to recidivism remain.
  • The scope of SIBs is limited by the demand for short-term results: Most social problems are complex and require comprehensive programs and policies that stay the course. A bias toward programs that produce quick, measurable results narrows the public dialogue and waters down findings.
  • SIBs divert investments that could be used in other ways: Philanthropy plays an important role in funding social interventions. In light of the failure of this first-in-the-nation SIB-funded intervention, philanthropic organizations may be asked to bear more of the risk to keep SIBs attractive to investors. A 2013 report by MDRC notes that it “may be necessary for benevolent funders to step in to ‘smooth the curve’ for traditional investors.” Not only does this undermine a key claim of SIBs, that they shift responsibility to the private sector alone, but it suggests that philanthropic dollars might be diverted from directly funding other innovative programs, shouldering risk for private investors instead.

Wall Street not giving up on U.S. social impact bonds
Source: Jessica Toonkel, Reuters, July 28, 2015

Last month, the program’s third-party monitor, the nonprofit Vera Institute, announced the initiative, had failed to hit its goal to cut repeat offenses by 10 percent. As agreed at the outset if the program did not reach its goal, its architects including the New York City’s Mayor’s Office, Bloomberg Philanthropies, and Goldman announced that the program, which was originally scheduled to run for four years, would shut down in August. Goldman lost $1.2 million and Bloomberg Philanthropies – a partner in the project – lost $6 million, which would have been recouped had the program met its goals. Still, the idea of social impact bonds, also called pay for performance contracts, has appeal for those who continue to participate in and seek deals in that space, officials at the firms told Reuters. … Goldman expects to receive initial results from its second social impact bond, a $4.6 million program launched in 2013 in Utah aimed at helping children from low-income families in the next few weeks. Additionally, the firm has helped fund two other programs – a $27 million initiative in Massachusetts intended to keep juveniles who have left jail from returning and a $16.9 million program in Chicago designed to help low-income families prepare their children for kindergarten.

Wall St. Money Meets Social Policy at Rikers Island
Source: Eduardo Porter, New York Times, July 28, 2015

…Aimed at reducing teenage recidivism by at least 10 percent, the Adolescent Behavioral Learning Experience was found, in a careful evaluation by the Vera Institute of Justice, not to keep teenagers from being sent back to Rikers at all. … The experiment, financed by the nation’s first social impact bond, offers a glimpse of a potential future for delivering government services. … The beauty of the therapeutic experience, from New York City’s perspective, was that it was financed not by taxpayers but by a $7.2 million investment by Goldman Sachs — backed by a $6 million guarantee by Bloomberg Philanthropies. The city agreed to pay Goldman back only if the program could trim recidivism by a tenth, enough to save some money by closing a section of the jail. While Goldman’s profits would rise as recidivism fell below that threshold, the city would keep a share of the savings. … For one, designing social policy around precisely measurable results and narrow incentive mechanisms to draw private sector money might circumscribe the types of services the government will provide, in effect orphaning the messier, hard-to-measure challenges. “If the government objective is to save money, it limits the use of programs like these to things that are very expensive, like prison beds, hospital beds, foster care beds,” Mr. Berlin said. “The choice of projects might be affected.”

Putting evidence first: Learning from the Rikers Island social impact bond
Source: Justin Milner, Erika C. Poethig, John Roman, Kelly Walsh, Urban Institute, Urban Wire blog, July 6, 2015

Results from the first generation of social impact bonds (also known as pay for success deals) are starting to come in. Last week, the field learned the results of the evaluation of the first social impact bond transaction in the United States. The investment by Goldman Sachs and Bloomberg Philanthropies in a program to serve young men at the Rikers Island jail—the main processing and housing facility in New York City—did not show a sufficiently positive effect to warrant the continuation of this intervention. The program will terminate at the end of August. The results seem to be a defeat for this approach. We see them as a partial victory for this disruptive innovation. Here’s why:
• The social impact bond transaction worked as exactly as intended. ….
• The Rikers program shows why monitoring outcomes is essential to understanding the real-world impact of our social investments. ….
• Implementation and context matters. A lot. …..

Goldman Sachs Invests in Government and Expects to Be Paid Back
Source: Fawn Johnson, National Journal, January 20, 2015
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Goldman Sachs officials are proud, very proud, that their firm made the first investment ever in a public-private “pay for success” program. In 2012, the financial giant entered an agreement with the city of New York to loan $10 million of start-up cash to establish a cognitive-behavioral-therapy program for juveniles incarcerated on Riker’s Island. At the time, half of the adolescents who left New York City’s Department of Correction returned within one year. …. Goldman Sachs’ entrance into this kind of financing—most often known as social-impact bonds—could change the way both Wall Street and governments do business.