Pressure to direct government funding toward smart, effective initiatives may be why a new type of bond, social impact bonds, are becoming financing options for social programs.  Early initiatives using social impact bonds – essentially borrowing funds to pay for savings later – have been used in other areas, but now may be making their way into the justice system.

In a recent Reclaiming Futures blog post, an article titled  New York City, Massachusetts Launching First Social Impact Bond Programs in United States, written by Kristina Costa and Jitinder Kohli, discusses how external investors and government agencies are working together to achieve measurable, positive social outcomes.  In the case of New York City, they aim to reduce the recidivism rate of youthful offenders “by at least 10 percent over four years…” saving money that will be returned, with interest, to investors. In Massachusetts, key service providers will be negotiating for a contract to address chronic homelessness and juvenile justice. 

Social impact bonds targeted at preventative measures can shift the focus away from a crisis management approach, which is often costly and ineffective, to a more holistic, long-term approach to save and also improve outcomes for communities in a real and measurable way.      by Katey Collins