In partnership with Bank of America Merrill Lynch and Social Finance, Inc., the office of New York State governor Andrew Cuomo has announced the launch of the first state-led social investment, or pay-for-success, bond in the country.

The initiative, which has raised $13.5 million from foundation and private-sector investors, will fund efforts to train and employ formerly incarcerated individuals and reduce recidivism in the state while saving taxpayer money. Private investors in the project include the Robin Hood Foundation, which has committed $300,000 to the effort, and the Rockefeller Foundation, which has agreed to guarantee up to $1.3 million, or about 10 percent, of the investors' principal should the project fail to repay 100 percent of their investment after five and a half years.

The initiative will work to connect two thousand individuals recently released from prison who are at high risk of re-offending to intensive employment training and job placement services while assisting with their reintegration into the community. Services will be provided over four years in Rochester and New York City by the Center for Employment Opportunities.

For investors to be repaid, the project must reduce recidivism among the target population by at least 8 percent and/or increase employment by at least 5 percent. If the program meets its performance targets, the state stands to realize $7.8 million in savings, while if it exceeds its targets, investors will earn a return on their investment that is proportionate to the savings and benefits achieved by the public sector — up to a maximum of 12 percent to 12.5 percent annually, the NonProfit Times reports. The U.S. Department of Labor will provide outcome-based payments to investors for the first thousand former inmates served, while New York State will provide funds for the next thousand served.

"This project is a win-win for our state, facilitating the reentry process of individuals into the community by boosting employment opportunities and thereby reducing recidivism rates, but requiring payment for services only if these goals are met," said Governor Cuomo. "By assisting these individuals, who are often at risk of becoming repeat offenders, to become productive members of society, we can make New York's communities safer and more prosperous for years to come."