Pay-For-Success Watch: Q&A With Molly Baldwin of Roca, Inc.

There are dozens of potential pay-for-success (PFS) ventures that are being gauged for feasibility, or have moved into a planning stage. But few of these projects, in which funders assume risk and taxpayers only pay if certain benchmarks are met, have actually gotten off the ground.

Off to an early start is Roca, Inc., the organization at the center of Massachusetts’ PFS juvenile justice gambit. Roca is using an investment of $27 million – from foundations and the Goldman Sachs Social Impact Fund – to work with older teens and young adults leaving the custody of the state juvenile justice system.

After three years of negotiation and preparation, Roca began services under the project in 2014. The goal is to serve 1,320 young men between 17 and 24 who are either in the probation system or are exiting the juvenile justice system.

Project evaluators will gauge its impact on high school graduation, GED completion and enrollment in other education- and employment-related programs. But the amount of payout to investors is pegged to the extent that Roca can lower recidivism.

Instead of pinning recidivism to new arrests or convictions, the contract between investors and the state is based on incarceration bed days. Large reductions will yield payback with bonuses for investors; smaller reductions will spell a fiscal loss (see chart.)

PFS

It is the fourth American PFS project and the largest to date. We sat down with Roca CEO Molly Baldwin for her thoughts on how it started and how it’s all going.

Youth Services Insider: What do you remember about how all of this came about? When was the first time you even heard the terms “social impact bond” or “pay for success?”

Molly Baldwin: “I read about it. I read about the stuff going on in England, in either Newsweek or The Economist.

Tracy [Palandjian], from Social Finance U.S., before she started that up, we met her.

I was captivated with several aspects. One is, really, if we’re working with people struggling a lot, how do we make sure we are helping them and have real outcomes.

Two, if it is ever going to work, there has to be government transparency. We all mean well, but how do you get from here to there? And how do you scale something if it’s good?”

YSI: The description of Roca’s model on your website concedes the trickiest part of work with high-risk juvenile offenders: “It is not a linear path to success- they get started, get angry, don’t like being told what to do, get high, get arrested, lose their work slot, many times over and finally they succeed.”

Has it been a challenge reconciling that fluid sort of philosophy with a project that pays out based on static accomplishments?

MB: “No, because we told them that. Essentially, the Commonwealth chose our model. Just because a guy gets referred to Roca doesn’t mean it will work out.

We often see early arrests. The problem is if there’s later arrests.”

YSI: Is this project the biggest thing Roca has ever taken on?

MB: “Oh yeah. We’re like every other nonprofit: well meaning, deeply passionate. Sometimes successful, sometimes completely foolish. I hope we did more good than bad, but I have no idea.

In 2005, we were looking at being fairly well known, and we were looking at work with mostly high-risk young men. Then they’d go home, shoot people and deal drugs. So we kind of brought ourselves to halt. We began on a journey to figure out how to help that group and really make a difference.

We created one of the best performance-based management systems, and other people will tell you that, it’s not me. Then it was about stripping out, removing parts of the organization, because you can’t be that good at that many things.

We transitioned the entire organization to mostly now working with high-risk young men who literally can’t participate elsewhere. Our model is not really about ‘Ready, Willing and Able.’ It’s a long-term behavioral health intervention, and they don’t have to want to be here. If a young person can go to community college, they should do it. If they can and want to get into Year Up, or Youthbuild, they should do it.

When this opportunity came to us, I thought we were ready. [Laughing] I’d like to say I wouldn’t have done it otherwise, but we need money like everyone else.”

YSI: You gave the following quote for a project summary on this: “We are betting the house on this.” What do you mean by that, will Roca’s future be in jeopardy if this does not succeed?

MB: “Yes. And more importantly, it’s about these young men. This group is headed to prison, or not a good life, if this doesn’t work.”

YSI: The proposal for this began in 2011, and officially started in January of 2014. What’s the interaction like now; are you guys pretty much just left to do the work, or is there a lot of communication and reporting with intermediary, state, etc?

MB: “We have a weekly phone call: Third Sector, the state, Roca, sometimes evaluators. Then there are quarterly reports, monthly operations meetings, and oversight meetings with investors.”

YSI: Third Sector put out a list of lessons learned from the process of developing this project. From the perspective of a primary service provider, what do you know now that will affect how you go at PFS projects in the future if Roca chooses to do so?

MB: “It better not be the first time you’ve done this. Some of these deals– it is the first time they’ve done it. This project was a very rigorous process. It just depends on what people’s tolerance for risk is.

The core of [our project] is something we’ve delivered. We had a really strong performance-based management system to begin with. I wouldn’t have taken this on if we didn’t.

The first year has been really hard, and really great. If you take PFS at high level, if it drives quality on the side of provider, it’s helping people who are vulnerable, it drives government transparency. All those things are going on, and they’re going on in concert.”

YSI: Is there anything in the contract, or anything at all, that commits the State of Massachusetts to continue funding if you guys are successful?

MB: “It opens the door. It’s not done deal, but it opens the door.”

Youth Services is mostly written by Chronicle Editor John Kelly.

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John Kelly
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John Kelly is editor-in-chief of The Chronicle of Social Change.