Goldman Sachs Profits by Investing in Social Impact Bonds

Rut-ro.

Diane Ravitch's blog

Clever equity investors! Goldman Sachs is profiting by investing in Social Impact Bonds, which pay off by helping pre-schoolers avoid placement in special education. The pilot program is in Utah. Goldman Sachs makes money for every child who is not referred to special education services.

But critics are skeptical:

“Nine early-education experts reviewed the program for The New York Times and identified irregularities in how the program’s success was measured. These seemed to significantly overstate the effect of the investment.

“Goldman said its investment helped almost 99 percent of the Utah children it was tracking to avoid special education.

“Researchers say well-funded preschool programs can reduce the proportion of students needing special education by 50 percent at most, usually nearer 10 or 20 percent.

“The success rate in the Utah program was based on what researchers say was a faulty assumption — that many of the school children would have…

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