Around the nation, a new way of improving communities is being tested — social-impact investing, or “pay for success.” Someone puts money up for a measurable outcome like 10 percent less recidivism in a particular locality, and if it works, the local government pays a return on the investment.
The NY Times wrote yesterday that a well-known investment in New York, supported by money from Goldman Sachs, did not meet its target. On the other hand, among the imprisoned youth who went through the ethics program, some really appreciated the attention and began to change their ways.
So in the end, social-impact investing comes down to a cost-benefit analysis: how much will a government pay to save one life?
Times columnist Eduardp Porter adds, “Last October the Corporation for National and Community Service put up $12 million in grants to advance and evaluate emerging models that align payment for social services with verified outcomes.
“This carries enormous promise. To the extent that governments could buy results, instead of covering the expense of services rendered, policy could be made more efficient regardless of where the money came from. If voters could be provided evidence of a government success, they might be more willing to support it.
“And yet the push to evaluate all must be tempered as well. The Moral Reconation Therapy at Rikers [Island prison] may not have reduced recidivism as hoped. But the many services offered around the therapeutic interventions achieved other useful things, not least keeping potentially violent youths busy on productive activities for much of the day.
“ ‘All they were testing is whether M.R.T. by itself would make a difference, not whether something you could do in a jail would make a difference,’ [Elizabeth Gaynes, chief executive of Osborne Association, which carried out the therapy]. said. ‘Even if we could have raised money to do other stuff, we were not allowed to because we were testing M.R.T. alone.’
“To the hard-nosed evaluators of the new landscape of social services, this sort of argument may sound like a cop-out. But it carries a truth: Social policy probably cannot be limited exclusively to the things one can readily measure.” More here.
[I will be on vacation for a few days. Look for a post from one of my colleagues.]