Social Finance Drives Landmark New York State Deal

Social Finance is proud to announce the launch of the nation’s first state-led Social Impact Partnership (often known as a “Social Impact Bond” or SIB) in New York. This $13.5 million capital raise is the largest to date globally and represents the first-ever SIB offering distributed via a leading wealth management platform – Bank of America Merrill Lynch – to qualified private and institutional investors.

Please find New York State’s press release here.

Please find Governor Cuomo's "Building on Success: 2014 State of the State" here. See page 176 for a discussion of NYS PFS efforts.

Please find Bank of America Merrill Lynch’s press release here.


The State of New York, The Center for Employment Opportunities (CEO), Bank of America Merrill Lynch, The Robin Hood Foundation, The Rockefeller Foundation, Chesapeake Research Associates and Social Finance have formed a landmark partnership to expand comprehensive reentry employment services to 2,000 formerly incarcerated individuals in New York City and Rochester, N.Y.

The following documents provide additional insight into the structure and details of the transaction:

  • For the PFS intermediary contract, please read more here.
  • For a detailed summary of the transaction, please read more here.
  • For a transaction "fact sheet," please read more here.


The New York SIB is the nation’s first state-sponsored SIB, and the $13.5 million equity capital raise was the largest to date globally. Importantly, this transaction is also the first-ever SIB offering distributed via a leading wealth management platform, made available to qualified private and institutional investor clients of Merrill Lynch and U.S. Trust and other impact investors. Social Finance is proud to announce more than 40 investors have participated in this transaction. This landmark distribution model is an important and exciting development in the field.

The SIB will provide $13.5 million over a 5.5-year investment life to expand the work of Center for Employment Opportunities (CEO), a world-class provider of evidence-based training and employment programs to recently incarcerated individuals in New York State. This flexible, multiyear funding will cover the full cost of CEO’s programmatic work and core costs. CEO’s preventative program will assist 2,000 individuals over a four-year service period to break the downward cycle of recidivism while obtaining gainful employment. Goals of the project include:

  • Expand proven workforce reentry services to at-risk formerly incarcerated individuals
  • Help to break the downward cycle of recidivism for individuals at high risk of returning to prison
  • Deploy private investment capital to expand social service programs in an unprecedented way
  • Lower government remediation costs including incarceration and criminal justice services by providing prevention-based services
  • Facilitate collaboration by the public, private, and nonprofit sectors toward a common social goal

Additionally, this is the first SIB to use a Randomized Control Trial (RCT) in determining outcome payments. The RCT is widely considered to be the most rigorous evaluation methodology for social program effectiveness and is often used in FDA drug trials.[1]


Social Finance identified the opportunity, conducted rigorous due diligence to select the provider partners, brought together the public and private sector parties that constitute the partnership and played a central role in negotiating the transaction. It will also provide ongoing performance management throughout the life of the project.

Bank of America Merrill Lynch has distributed this opportunity through its wealth management platform to private and institutional investors via a private placement offering, a first in the SIB space. BAML is committed to transforming the instrument into an investment class that will become a standard component of client portfolios.

The Center for Employment Opportunities will receive funding to expand its evidence-based training and employment services program to serve an additional 2,000 recently-released inmates over a four-year period.

The Rockefeller Foundation will provide a first-loss guarantee to protect up to $1.3 million of investor principal, or approximately 10 percent of the total investment.

The Robin Hood Foundation, NYC’s pioneering poverty fighting organization, committed early to a $300,000 investment in the transaction.

Chesapeake Research Associates will independently validate the results of a Randomized Control Trial that measures outcomes for program participants; verified social impact will form the basis of outcome payments to investors.

Jones Day provided legal expertise in the SIB structuring and contracting process.


This transaction provides CEO with a flexible, predictable source of funding to expand their program, provide investors with an opportunity to align their investment portfolio and social values, and ensure that government only pays for positive results. Most importantly, 2,000 individuals will receive the help they need to have a shot at a better life. 

Under this pay-for-success partnership, the public, private and social sectors have come together to achieve a common goal – increasing employment and improving public safety in New York – in a structure and distribution model that we believe represents a significant step toward building a more robust, sustainable SIB marketplace.

Press Coverage:

‘Pay for Success Bonds’ Drum Up Interest - Barron's

Wealth Managers Help Investors Follow Their Passions and Turn a Profit - Institutional Investor 

$13 Million In Social Investment Bonds Might Pay 12.5% - The NonProfit Times

Merrill taps rich investors for ex-convict social-impact bond - Reuters

'Pay for success' social-impact bonds help train ex-convicts - The Christian Science Monitor 

B of A Clients Hope to Profit from Fall in Incarceration Rates - American Banker

New York launches initiative to promote employment for formerly incarcerated individuals - Auburn Citizen

Cuomo announces inmate employment program - The Register-Star 

NY Launches First State-Led Pay for Success Project - New York Nonprofit Press

[1] Jon Baron, "Rigorous Program Evaluations on a Budget: How Low-Cost Randomized Controlled Trials Are Possible in Many Areas of Social Policy," Coalition for Evidence-Based Policy,, 3.