At Rikers Island jail in New York City, nearly half of all incarcerated adolescents will return within one year of being discharged – an occurrence known as recidivism. The NYC Adolescent Behavioral Learning Experience (ABLE) Project for Incarcerated Youth attempted to disrupt this pattern by launching the nation’s first Social Impact Bond in 2012. The bond would allow the NYC ABLE Project to implement Moral Reconation Therapy, an evidence-based intervention that focuses on improving personal responsibility and decision-making. It aimed to serve over 17,000 youth at Rikers Island and ultimately reduce the rate of recidivism by at least 10 percent. Based on an evaluation from the Vera Institute of Justice, the ABLE program did not meet its pre-defined success threshold for reductions in recidivism, and the program was discontinued in 2015.
- Year Launched2012
- Service Delivery Term (Years)4 (projected); 3 (actual) [Note 1]
- Motivation for ProjectNearly half of all adolescents incarcerated at Rikers Island jail will return within one year of being discharged.
- Project Objective(s)Reduce recidivism by at least 10 percent
- Individuals Served17,287 (projected); 4,000 (actual)
- GeographyNew York City, NY
- Issue AreaRecidivism
- Initial Investment ($ millions) [Note 2]9.6
-  The NYC ABLE project was designed as a four year project, but gave the investor the option to continue funding for the fourth year based on results for the first year of participants after a two-year evaluation period. This interim evaluation demonstrated no impact on recidivism, so the program was ended after the third year of service delivery.
-  This category captures the initial private investment raised to support the project that has the potential to be repaid if the project achieves its pre-determined outcomes. Many projects, particularly those in the supportive housing and health arenas, leverage existing public resources, such as subsidized housing and health insurance, to achieve program impact; the value of these resources is not included in these dollar values but are discussed in more detail in Sections 7, 8 and 9 of this report.
- Service Provider(s) [Note 1]Friends of Island Academy; The Osbourne Association
- Payor(s) [Note 2]New York City Department of Corrections
- Transaction Coordinator(s) [Note 3]MDRC
- Evaluator [Note 4]Vera Institute of Justice
- Validator [Note 5]None
- Project Manager [Note 6]MDRC
- External Legal Counsel [Note 7]Debevoise
- Technical Assistance Provider(s) [Note 8]MDRC; Correctional Counseling, Inc.
-  Delivers program interventions to target population over the course of the PFS contract
-  Makes payments when pre-determined outcomes have been met
- Roles and responsibilities may include: design and structure of PFS project and financing model; capital raise; stakeholder management; on-going performance management
-  Design and implement plan for determining whether outcomes have been met
-  Verify accuracy of data used in evaluation plan, or evaluation plan itself
-  Intermediary during service delivery phase, and/or fiscal sponsor for project funds
-  Provide assistance in drafting, reviewing and negotiating PFS contracts
-  Provide support and expertise to project stakeholders in the project development and/or project implementation phases
Evidence and Program Design
- Service Intervention(s) Model and/or TypeCognitive Behavioral Therapy: Moral Reconation Therapy
- Evidence base for interventionMeta-analysis of Cognitive Behavioral Therapy [Note 1]
- Has effectiveness of the intervention for PFS project target population been evaluated?No
- Has the service provider provided this intervention previously?No
- Is PFS project: Scaling an existing intervention by replicating at a larger scale? Demonstrating the effect of a new program model or combination of services? Transplanting an existing intervention(s) to a new target population and/or service delivery setting?Transplanting
-  The estimated impact of the ABLE Program was based on a meta-analysis of 58 evaluations of different models of cognitive behavioral therapy programs serving different subsets of a criminal offender population in different settings. Moral Reconation Therapy (MRT), the intervention used by the ABLE Program, is a type of cognitive behavioral therapy. MDRC conducted a literature review that determined that all of the models of CBT achieved comparable results as long as they were implemented as originally intended by program designers. MRT was selected as the type of cognitive behavioral therapy to implement at Rikers Island based on existing evidence as well as fit of the model with the unique conditions and operational challenges of the jail setting. For more information, see MDRC’s Financing Promising Evidence-Based Programs: early lessons from the New York City Social Impact Bond (http://www.mdrc.org/sites/default/files/Financing_Promising_evidence-Based_Programs_FR.pdf).
- Evaluation Design MethodologyQuasi-experimental: regression discontinuity using historical baseline
- Data Source(s) for EvaluationNew York City Department of Corrections; New York City Office of Management and Budget
- Outcomes Tied to Success Payments1) Number of participants served; 2) Total jail days avoided
- Outcomes Tracked, Not Tied to Success PaymentsIntensity/dosage of service and progress through program stages; Number of safety incidents and conflicts reported
- Length of Evaluation Period4 years (projected); 3 years (actual)
Service Provider Characteristics and Service Delivery
- Single or multiple service providers?Multiple
- Service provider type(s) (nonprofit, government, private)Nonprofit
- Service provider OR site selection methodRFQ to shortlist of local organizations
- Service Provider Experience with PFS Intervention1 of 2 service providers had experience running other cognitive behavioral therapy programs
- Referral Method for PFS Target PopulationMandatory for all 16-18 year olds attending school while detained at Rikers Island
- Did the project have a ramp-up phase? (Y/N; brief description)Yes: 11 month period operating at half-scale (4 months prior to 7 months post-project launch); services during pre-launch period provided in-kind
PFS Contracting and Governance
- Operational Oversight Structure [Note 1]Operational Committee made up of project manager and service providers’ staff
- Frequency of meetings and/or reportsEvery 1-2 weeks
- Executive Oversight Structure [Note 2]Program monitoring committee made up of New York City Department of Corrections and Mayor’s Office, service providers and project manager
- Frequency of meetingsMonthly
- Investor role in project governance?None
- Frequency of reporting to investorsMonthly reports; Quarterly meetings
- Non-standard Contract Termination Events [Note 3]1) Non-performance by service provider or intermediary
- Appropriations Risk Mitigation Strategy [Note 4]None
-  Committee or working group involved in regular and/or day-to-day monitoring of project progress
-  Oversight and decision-making body for PFS project
-  Events that allow stakeholders to exit their contractual obligations, beyond those typically found in loan agreements and contracts
-  Means by which to mitigate risk that funding is not available for investor repayment
- Senior Investor/ Lender and Total Senior Investment ($MM)Goldman Sachs ($9.6)
- Subordinate Investor/ Lender and Total Subordinate Investment ($MM)None
- Deferred Fee Source and Total Deferred Fees ($MM)[Note 1]None
- Recoverable Grant Source and Total Recoverable Grants($MM)[Note 2]None
- Non-recoverable Grant Source and Total Non-recoverable Grants ($MM)[Note 3]None
- Guarantor and Guarantee ($MM) [Note 4]Bloomberg Philanthropies ($7.2)
- Illinois Dually-Involved Youth Project
-  Deferred fees are delayed payments for the services provided by service providers, transaction coordinators and/or project managers. Deferred fees are one way of structuring projects so that more stakeholders have a financial interest in ensuring project success.
- Philanthropies can use either their regular grant making protocols, or protocols for program-related investments (PRIs), to contribute to PFS capital stacks. If a foundation does not use a PRI, their investment may be structured as either a loan or a recoverable grant. The distinction between the two is in the expectation of repayment. A loan, even if from a philanthropic source, is expected to be repaid, and structured accordingly. A recoverable grant does not bear the same expectation of repayment.
-  Non-recoverable grants are traditional grants contributed to capital stacks; if the project is successful and generates full repayment, the non-recoverable grants can remain with the service provider or project manager, or be recycled by the original funder.
Basic Repayment Structure
- Initial Investment ($Millions)9.6
- Maximum Repayment Funds Committed by Payor ($Millions)11.7
- Full service delivery term (years)4 (projected); 3 (actual)
- Full repayment period (years)4 (projected); 3 (actual)
- Interim outcomes reported? Tied to payments?Yes/Yes
- Sustainability/ Recycling of FundsAny unspent portion of guarantee to be used by intermediary to facilitate future transactions
Detailed Repayment Terms
- Trigger for initial repayment of principal [Note 1]8.5% reduction between control and treatment
- Threshold for full repayment of principal10% reduction between control and treatment
- Threshold for full repayment of principal plus maximum success payments20% reduction between control and treatment
- Repayment timingYear 3 (Final)
- Return to Investor [Note 2]11% to 22%
- Success Payment to Other Stakeholders? [Note 3]No
-  Initial repayment does not equate to full principal return. Investors may recover only part of their principal if projects do not meet a certain level of success.
-  There is no standard methodology for calculating investor return. These numbers are what is publically reported, and comparing from one project to another may not be an apples-to-apples comparison for the reason of potentially different calculation methodologies. Calculation methodologies may be provided in investor agreements, which are not available publically and were not available for this report’s analysis.
-  Success payments for other stakeholders such as project managers and service providers create a financial incentive for project success.
- Project Development Costs Not Covered by PFS Capital RaiseTransaction coordinator fees
- Funding source(s) for project development costs, if anyBloomberg Philanthropies
- Project Implementation Costs not covered by PFS CapitalEvaluation; Project Intermediary
- Funding sources for implementation costs not covered by PFS capitalBloomberg Philanthropies