Nearly half of the youth released each year from Rikers Island, New York City's largest jail, return within 12 months. That's an unacceptably high number and one we aimed to dramatically lower when we started a robust new program for youth in the jail back in 2012. As we learned recently, the program, an evidence-based cognitive behavioral therapy that's been effective in reducing recidivism in many other correctional settings, did not work at Rikers Island. As a result, the program will be discontinued.

Still, we're encouraged that the innovative public-private partnership that allowed all of us to try to help these young people in need and do something new -- called a social impact bond -- worked. That may sound counterintuitive. It's not.

To understand why social impact bonds are impactful, and why they worked here, we need to consider how they are structured and what they are supposed to do.

With a social impact bond, a private investor funds a program that, if it achieves set goals, will address a policy priority, produce positive social results and save the government money in the long term. A portion of those savings is returned to the investor in the form of profits. If the program doesn't meet itstargets, the investor loses their money with no burden on taxpayers.

In the case of Rikers, Goldman Sachs invested $7.2 million resulting in a $1.2 million loss. $6 million in grant funds from Bloomberg Philanthropies guaranteed part of the loan in the event the program failed to meet its targets.

So why label the social impact bond financing mechanism a success?.....

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