Goldman Sachs to Invest Millions in Inmate Rehabilitation
Goldman Sachs has announced its intention to invest $9.6 million in a prisoner rehabilitation program at New York City’s notorious Rikers Island jail in a move that could net the company a $2.1 million return.
Goldman Sachs has announced its intention to invest $9.6 million in a prisoner rehabilitation program at New York City’s notorious Rikers Island jail in a move that could net the company a $2.1 million return.
“Social impact bonds” are a new device for funding public projects with private money. The stated aim is to put the profit motive in the service of the public good. Whether or not an investor sees a return on the investment is a function of a project’s success. In the case of Rikers Island, that translates into how closely prisoners conform to a program aimed at reducing repeat criminal offenses.
“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 groundbreaking initiative,” Mayor Michael Bloomberg said when the plan was announced.
Social impact bonds are now being considered as alternatives to public funding by cash-strapped state governments throughout the country. The concept, however, has its critics.
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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.
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