Oct 7 Goldman Sachs Group Inc and its
investment partner will be paid $267,000 for helping to fund a
philanthropic program that reduced the number of children
needing special education services after preschool.
The milestone marks a turnaround for so-called social impact
bonds, which are issued by local governments in partnership with
charities and private investors to fund philanthropic projects.
Investors receive a return if a project saves public money.
The first social bond project earlier this year failed to
achieve its goals.
In the latest program sponsored by the United Way of Salt
Lake, Goldman's Urban Investment Group and Chicago investor J.B.
Pritzker committed up to $7 million collectively to help
increase school readiness for at-risk 3- and 4-year olds in
The group said it had significantly reduced the number of
students who would need special education services in
kindergarten and beyond.
The results, which saved school districts and governments
around $281,000 in total, triggered the first investor payment
for any pay-for-success program in the United States. Goldman
and Pritzker received a total payout of around 95 percent of
those savings, or around $267,000.
The repayment was coordinated by the United Way, who
convened a group of partners and investors.
Future payouts depend on the number of students who avoid
the use of special education each year through sixth grade.
Salt Lake City is an important hub for Goldman as its second
largest office in the United States besides its New York
Goldman helped to fund the first social impact bond in the
United States three years ago, a $9.6 million plan to reduce
recidivism among teenagers at New York's Rikers Island jail.
Earlier this summer, the program announced that it had failed to
hit its goal of cutting repeat offenses by 10 percent.
(Reporting by Olivia Oran in New York; Editing by Bernard Orr)