NEW YORK, N.Y. – About 1,500 incarcerated New York City teens have received behavioural therapy aimed at lowering their chances of returning to jail in the first year of a Goldman Sachs-funded program that’s the first U.S. effort to lure private investors to finance public social programs.
Non-profit research group MDRC, the program’s administrator, said Wednesday its met many of its first-year goals as it aims to counsel more than 9,000 youths over the next four years under a novel approach to social welfare, called a social impact bond: let companies foot the bill and profit if the program is a success.
Goldman Sachs stands to make a profit on its $9.6 million investment if MDRC’s behavioural therapy program prevents enough 16-, 17- and 18-year-olds in the city’s notorious Rikers Island jail complex from reoffending.
More than 3,100 adolescent inmates were admitted into Department of Correction custody on Rikers in 2010, the most recent year for which figures are available. The DOC says nearly half return within a year of being discharged.
If the recidivism rate declines by at least 10 per cent, officials said, the project will be considered a success and the Department Of Correction will pay back the $9.6 million loan. Goldman stands to make a $2.4 million profit if an independent review of recidivism data finds the reoffending rate of the 1,500 young people in the first group declined more than 9 per cent in the first year after their release. Goldman could make even more if they stay out of jail for a second year.
The program must also serve 9,240 participants within four years for Goldman to get paid. If rates don’t fall low enough, the city won’t make any payouts.
“It’s important for people to understand what a huge undertaking this is,” said Susan Gottesfeld, the associate executive director of The Osborne Association, one of the groups implementing the behaviour therapy, called Adolescent Behavioral Learning Experience, or ABLE.
ABLE gives the young people Moral Reconation Therapy, a research-based 12-step curriculum that helps teens improve their thinking so that they make better choices in how they react to life’s situations.
But lockdowns, alarms, security measures and young people being placed in punitive segregation all present barriers to providing consistent therapy, the review found.
The Vera Institute of Justice will review the data to discover what effect, if any, the ABLE program has on reducing recidivism. Vera will compare those numbers with a historical group who didn’t receive the cognitive behavioural training as well as to a group of 19- and 20-year-olds. That report is due in July 2015.
The program has “already improved their problem-solving and decision-making in jail and we are hopeful the program will accomplish its goal of reducing recidivism,” said DOC Commissioner Dora B. Schriro.
The Goldman loan was backed by a $7.2 million grant by Bloomberg Philanthropies, Mayor Michael Bloomberg’s personal foundation. That grant was a key factor in the city’s ability to finance the program.