Doing Good Pays- Really?

Photosource:Kaizan Crossword

For ages, Private sector has seen the social challenges as a part of their philanthropic activities. Recently, there has been a paradigm shift in their perspective from seeing these as philanthropic to one of their business proposition.
Social Impact bond is an experimental financial arrangement where in private investor will invest in the program and the government will pay back to these investors. The condition is that the program should meet the government's expectation. If the success exceeds the target, government has set for the program then investors would be getting interest, in addition to the amount,they had invested. The mention of Social Impact Bond in the previous class really got me into finding more about it. Among many other articles, there is one article,”Being Good Pays” in The Economist (August 18,2012). This article is an attempt to explore if Social Impact Bond model can actually help keep youngster keep out of jail.
As mentioned in the article, Goldman Sachs in New York is funding the program,” to reduce the re-incarceration rate “among youngster. Goldman sees this funding not a grant but a” real loan”. As per the model, if incarceration rates for the teens drop by 10%, Goldman gets its money back. If it falls further than 10%, Goldman will get interest over and above money it invested. However, if the rate of re-incarceration, do not fall to a desired level or at all, Goldman will lose it money completely.
Wow! Really?? Is this model going to work?
In my opinion, I do not think so. As per the model, Goldman has to exceed the government’s expectation to actually make a profit over its investment. If Goldman only meets the expectation but fail to exceed one then it should be happy in getting back what they had invested. The worst of all; 100 percent loss if no change happens. I really wonder that which private corporation, will take such a great risk when the ultimate objective is to maximize profits.
I am really curious to know that what encouraged these corporates to take such a risk. Have they calculated the additional cost for training appropriate staff for this work? What about evaluation mechanism? Do they have parameters in place to evaluate the outcomes?
Can this model be used for all social issues(including poverty, water, sanitation) or do we need to set criteria to screen issues which could be addressed using this model only?