Posted Aug 02, 2012 10:01 am CDT
In a move that is being billed as the first of its kind in this country, Goldman Sachs will loan $9.6 million to New York City to fund a new four-year social services program intended to reduce recidivism among young men incarcerated at Rikers Island.
Details of the counseling and education program are to be provided later on Thursday by Mayor Michael R. Bloomberg, whose personal foundation is providing a $7.2 million loan guarantee. However, the “social impact bonds” that Goldman is to fund could provide a profit of as much as $2.1 million if a significant reduction occurs in the number of individuals who reoffend after they are released, reports the New York Times (reg. req.).
If recidivism is not reduced, Goldman could lose up to $2.4 million. Currently, half of the young men released reoffend within one year.
“This will get attention as perhaps the most interesting government contract written anywhere in the world this year,” said Jeffrey B. Liebman, a public policy professor at Harvard University. “People will study the contract terms, and the New York City deal will become a model for other jurisdictions.”
Similar programs have been tried in Great Britain and Australia and currently are being considered in Massachusetts.