Roca’s long-term goal is to operate with sustainable public dollars, with a focus on public dollars that are outcomes-based and result in cost savings for the public entity providing the funding.
As a key part of this effort, Roca runs the nation’s largest Pay for Success (PFS) project to date. The Massachusetts Juvenile Justice Pay for Success Initiative improves the lives of over 1,300 young men, while reducing crime, promoting safer communities, and saving taxpayer dollars.
The Massachusetts Juvenile Justice Pay for Success Initiative (PFS) is a $32 million partnership between Roca, the Commonwealth of Massachusetts, the intermediary Third Sector Capital Partners and a host of private investors.
Through the project, Massachusetts criminal justice agencies refer high-risk young men to Roca on a monthly basis, and Roca’s success in reducing incarceration and increasing employment with these young men is measured by an external evaluator. The private funders cover 85% of Roca’s costs and assume most of the financial risk upfront, and they would be repaid by the Commonwealth only if the projected incarceration reduction outcomes are met.
Massachusetts criminal justice agencies refer over 1,300 high-risk young men to Roca over a period of 8.75 years (2014-2023). These young men will be engaged in Roca’s Intervention Model, which is designed to help this specific group stay out of jail and go to work.
Given the high cost of incarceration ($55,000/year per person at the time of project launch) and Roca’s demonstrated success in reducing re-offending, the project’s financial benefits for Massachusetts residents are expected to be substantial. At the project’s target impact of reducing incarceration by 40% the project would generate $21.8 million in budgetary savings, and at a 65% reduction the project would generate $41.5 million in gross budgetary savings.
In addition to Roca, the Commonwealth of Massachusetts and Third Sector Capital Partners, the partners in the PFS project include the lenders Goldman Sachs (through its Social Impact Fund), The Kresge Foundation and Living Cities; the philanthropic grantors Laura and John Arnold Foundation, New Profit Inc. and The Boston Foundation; and the evaluators Abt Associates and Child Trends. Roca and Third Sector Capital Partners have deferred part of their service payments, thus serving as funders of the project as well.
The criminal justice agencies referring young men to Roca include Probation, Parole, Sheriff Departments, the Department of Corrections and the Department of Youth Services.
Pay for Success, also known as Social Impact Bonds, is an innovative structure for government, private sector and nonprofit partnerships. It enables the government to pay for programs only once positive social outcomes are achieved; provides investors with an opportunity for financial investment that directly benefits society; and supports growth of nonprofits that offer promising social solutions.
PFS initiatives address a range of social challenges, including education, health, employment, criminal justice, and welfare. They started in the U.K. in 2010, and were first implemented in the U.S. in 2013. Outcome-based funding in general, and PFS in particular, is considered the cutting edge of nonprofit and social services funding.
To date, Roca’s PFS project is the largest PFS initiative in the U.S.
- From Visions of Promise to Sign of Struggle: Exploring Social Impact Bonds and the Funding of Social Services in Canada, the US, and the UK – James W. Williams, Dept. of Social Science, York University
- A Pay-for-Success Opportunity to Prove Outcomes with the Highest-Risk Young People – Federal Reserve Bank of Boston
- Introduction to Pay for Success – Third Sector Capital Partners
- The Potential and Limitations of Impact Bonds: Lessons from the First Five Years of Experience Worldwide – The Brookings Institute
- Supporting At-Risk Youth: A Provider’s Perspective on Pay for Success – Federal Reserve Bank of San Francisco
- Preparing for a Pay for Success Opportunity – Third Sector Capital Partners and The Rockefeller Foundation