Goldman Sachs buys ‘social impact’ bonds

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Goldman Sachs, the New-York based investment firm known for managing the money of sovereign nations and millionaires, is betting on Roca, a Chelsea nonprofit that tries to keep young men out of jail.

Goldman Sachs, along with five local and national foundations are investing $18 million as part of an experiment in financing social services known as “social impact bonds.” If Roca meets its goals in reducing recidivism — the rate in which released offenders return to jail — the state will pay back these investors, plus a modest return.

If the nonprofit fails, the investors will lose nearly all their money. “This is a change in the way government does business for the better,” said Glen Shor, state secretary of Administration and Finance

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