2014-02-03

Co.Exist

The Biggest Social Impact Bond In The U.S. Will Keep At-Risk Young Men In Jobs And Out Of Prison

A new type of philanthropic investment is coming into vogue. Its biggest test just launched in Massachusetts.

Roca, a 26-year-old Massachusetts organization that aids high-risk young men who are on track for incarceration and early death, has proven its worth with an effective model for keeping its participants out of jail and in steady jobs. Now the organization is getting a big boost from a seven year, $27 million social impact bond—the largest ever in the U.S.

Social impact bonds are a relatively new type of philanthropy where donors put money in social impact programs, which have specific and tangible goals and make money back (paid by the state of Massachusetts, which has received $11.7 million in funding for the project from the U.S. Department of Labor) only if those goals are met. In this case, Roca is participating in a randomized trial to see how its efforts in keeping young men out of prison compare to the norm.

The funding, which comes from loans and grants provided by organizations including the Goldman Sachs Social Impact Fund, Living Cities, and New Profit, will allow Roca to help 929 at-risk young men between 17 to 23, all of whom are either exiting the juvenile justice system or are in the probation system currently. Nonprofit advisory firm Third Sector Capital Partners organized the effort.

Roca's model uses "data and research and real-time information and a whole lot of tenacity," says founder Molly Baldwin. The program consists of two years of intensive support, followed by two years of followup. It is successful because of its relentless outreach and intensive case management model in which one youth worker is assigned to provide two years of intensive support to 25 young people. Roca also provides programming for life skills, education, and employment, and focuses on engaging institutions that are or should be supporting its participants.

"This is a group of young men in the country that we leave on the street, are heading to prison, or dying young," says Baldwin. "The highest risk here is them and their lives. We are painfully aware of that."

The model seems to work. Out of 115 young men participating in the final two years of the four-year program, 89% have had no new arrests, 69% retained employment for at least three months, and 95% had no new technical law violations. "I've been involved in Roca for a number of years. It's positioned to scale in a compelling way," says Tripp Jones, the managing director at New Profit.

New Profit, which gave a $2 million grant for the social impact bond, is "a national venture philanthropy social innovation organization whose focus is to expand social mobility," according to Jones. The organization decided to participate in the initiative not only because of a belief in Roca, but also in the power of social impact bonds."We believe in the model and we want to experiment and test it out," says Jones.

Social impact bonds first came into existence in 2010. In December 2013, New York State launched a $13.5 million social impact bond—also known as a "pay for success initiative"—to help with an ex-convict training program. Now that Massachusetts has announced an even bigger bond, the innovative funding method is poised to continue growing.

[Image: Abstract via Shutterstock]

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