Social impact bonds are exciting. They encourage investors to take a role in building better, more effective communities. Indeed, social impact bonds allow investors to profit by making society better in a measurable way. The Wikipedia entry on Social Impact Bonds describes the investment vehicle as a “Pay For Success Bond.” I like it!
Pay for success bonds would go a long way toward improving the outcome of our nation’s prison system. If we measured the success of prisons by the number of people they warehoused for a given length of time, we’d say they were a resounding success. Yet if we were to measure the success of prisons by the number of people they prepared for law-abiding, contributing lives upon release, then recidivism rates showed that prisons failed miserably.
We need a more innovative, disruptive system. Social impact bonds could finance this innovation. Goldman Sachs recognized this value proposition when it invested $10 million in a social impact bond to reduce New York City teen recidivism rates. The storied investment house profits by financing programs that lead people to success.
The Michael G. Santos Foundation has a lot of ideas on how we can encourage more people in prison to pursue self-directed paths that will prepare them for law-abiding, contributing lives. We’re grateful to be working with innovative, courageous leaders at the Los Angeles County Sheriff’s Department, at the National Guard’s Challenge Youth Academy, at the San Francisco Sheriff’s Department, and at the Santa Clara County Juvenile Hall. They’re deploying resources to pilot our Straight-A Guide Life Skills Program. They may not have access to funding from social impact bonds, but they’re leading the way by diverting resources away from warehousing human beings. Instead, they’re investing resources in community renewal, preparing more people in prison for law-abiding lives, tax-paying, contributing lives.