Massachusetts Juvenile Justice PFS Initiative

Massachusetts Launches Landmark Initiative to Reduce Recidivism Among At-Risk Youth

$28 Million Initiative Is Largest Financial Investment in a Pay for Success Contract in the Country

Former Massachusetts Governor Deval Patrick announced the launch of the nation’s largest financial investment in a PFS initiative, which is designed to improve outcomes for hundreds of at-risk young men in the probation system or leaving the juvenile justice system. The Massachusetts Juvenile Justice Pay for Success Initiative will not only improve the lives of young people, but also reduce crime, promote safer and stronger communities and save taxpayer dollars.

Pay for Success (PFS) contracts, also called Social Impact Bonds, combine nonprofit expertise, private sector funding, and rigorous evaluation to transform the way government and society respond to chronic social problems. In a PFS initiative, funders assume up front financial risk, and taxpayers pay for a program only if a third-party evaluator determines that the initiative has achieved specific outcomes that create benefits to society and generate savings for government.

The Project

• The initiative will allow Roca to provide its high-impact intervention to 929 at-risk young men aged 17 to 23 who are in the probation system or exiting the juvenile justice system. Roca’s programming aims to reduce recidivism and increase employment through intensive street outreach and targeted life skills, education and employment programming. The Roca intervention is delivered over an intensive two-year period followed by two years of follow-up engagement.
• Massachusetts will make up to $28 million in success payments for this seven-year project, which is the largest investment in a PFS initiative in the U.S. to date.
• Funding for the Massachusetts initiative includes commercial and philanthropic funding as well as risk sharing, in the form of deferred service fees, from the service provider (Roca) and project intermediary (Third Sector Capital Partners). The funders assume project risk by financing services up front with the promise of repayment from government sources only in the event of success.
• Massachusetts will repay funders only if Roca’s services are proven to produce positive societal outcomes and savings for the Commonwealth. These success payments will come from the Commonwealth and the U.S. Department of Labor, which awarded the Commonwealth a first-of-its-kind PFS grant of $11.7 million. The additional funding for success payments from the Department of Labor grant will enable the Commonwealth to extend the project, should it prove successful, to an additional 391 young men, thereby serving a total of up to 1,320 young men over nine years.
• The Massachusetts Juvenile Justice Pay for Success project was originally slated to end on December 31, 2019. Given that referrals of project participants were slower than anticipated, all of the stakeholders -- Roca, the Commonwealth of Massachusetts, Goldman Sachs, the Kresge Foundation, Living Cities, Third Sector and the independent evaluator -- agreed that an extension would allow for a better understanding of the long- term impacts of Roca’s services on job readiness, employment, and recidivism. Final results are expected in 2024.

Additional Information

• Read the Press Release (1/29/2014) and Fact Sheet (Revised 1/1/2021) about the initiative
• Read Frequently Asked Questions (Revised 1/1/2021) about the initiative
  
• Read the PFS contract released by the Commonwealth
• View a video from Goldman Sachs about the Massachusetts PFS initiative
• View an infographic from Living Cities about the potential of the initiative

For more information or inquiries, please contact info@thirdsectorcap.org.

Partners

Funders

Goldman Sachs will provide $9 million in senior loan financing through its Social Impact Fund.

The Kresge Foundation and Living Cities together will provide $3 million ($1.5 million each) in junior loan financing.

Laura and John Arnold Foundation, New Profit and The Boston Foundation together will provide $6 million in grants ($3.7 million from Laura and John Arnold Foundation, $2 million from New Profit and $300,000 from The Boston Foundation).

Press

National Coverage:

• Goldman’s Bullish on Boston Bloods Staying Out of Jail – Bloomberg
• Tackling Mass Incarceration – New York Times
• Massachusetts uses largest ‘social impact bond’ to tackle crime – Reuters
• Unlocking Private Capital to Invest in Human Capital – Institutional Investor
• Massachusetts Governor Patrick unveils recidivism initiative – Boston Herald via Associated Press (also featured in San Francisco Chronicle, South Coast Today)
• Massachusetts Started a $27 Million Experiment to Reduce Youth Recidivism – Next City
• Social Impact Bonds to Fund Program to Reduce Recidivism – Nonprofit Quarterly
• Goldman Sachs, Kresge to Kickstart Largest Social Impact Bond – aiCIO
• Goldman’s $27M stay-out-of-prison bond – CNBC
• The Biggest Social Impact Bond In The U.S. Will Keep At-Risk Young Men In Jobs And Out Of Prison – Fast Company Co.Exist
• Mass. Unveils Biggest U.S. ‘Pay for Success’ Effort – The Chronicle of Philanthropy’s Philanthropy Today
• Biggest ‘Social Impact Bond’ In The U.S. Targets Stubborn Recidivism – Forbes
• Massachusetts Pay for Success Initiative Advances Government, Private Sector, and Philanthropic Investment in Human Capital – Huffington Post
• This State May Have Discovered the Secret to Saving Tax Dollars While Doing Good – NationSwell
• Massachusetts $27M Social Impact Bonds Aim at Recidivism – Bond Buyer
• Massachusetts’ juvenile justice Pay for Success initiative: An interview with George Overholser, CEO, Third Sector Capital Partners – Gov Innovator

Local Coverage:

Case Studies

• Preparing for a Pay for Success Opportunity: Third Sector, with support from the Rockefeller Foundation, published a case study on its experience working with Roca, Inc. on their successful response to Massachusetts’ Social Innovation Financing project for juvenile justice. The case discusses the challenges, lessons learned, and process of launching the nation’s first state-level Pay for Success contract.
• The Massachusetts Juvenile Justice PFS Initiative: Project Brief: With the support of Rockefeller Foundation and the Laura and John Arnold Foundation, Third Sector published this deep dive into the mechanics and structure of the Massachusetts' PFS contract, including practical innovations that could be replicated in other projects and key insights.
• The Massachusetts Juvenile Justice PFS Initiative: Lessons Learned: In this case study, the major lessons drawn from the Massachusetts Juvenile Justice Pay for Success Initiative are reviewed and discussed.