(Reuters) - Wall Street firms like Deutsche Bank (>> Deutsche Bank AG), Santander Bank and Bank of America (>> Bank of America Corp) are still interested in backing U.S. social impact bonds, despite the failure of the first such initiative.

Social-impact bonds allow private capital to be funneled into philanthropic projects usually funded by governments and charities. Investors receive a return based on whether a project saves public money by addressing the social issue it targets.

Goldman Sachs (>> Goldman Sachs Group Inc) helped to fund the first such program in the United States three years ago, a $9.6 million plan to reduce recidivism among teenagers at New York's Rikers Island jail.

Last month, the program's third-party monitor, the nonprofit Vera Institute, pulled the plug. It announced the initiative, originally intended to run for four years, would shut down in August after failing to hit its goal to cut repeat offenses by 10 percent. Goldman lost $1.2 million and Bloomberg Philanthropies - a partner in the project - lost $6 million, which would have been recouped had the program met its goals.

Still, the idea of social impact bonds, also called pay for performance contracts, has appeal for those who continue to participate in and seek deals in that space, officials at the firms told Reuters.

"We are certainly not going to distance ourselves from our explorations into doing social impact bonds because of what happened here," said Gary Hattem, head of Deutsche Bank's global finance group. "This is the frontier of something."

Social impact bonds started in the UK as a product to sell to wealth management clients. There are seven projects in the United States, out of 40 worldwide, representing over $70 million, according to the Rockefeller Foundation's social finance group.

The Goldman prison deal was uniquely challenging because of how difficult it is to reform in the disruptive environment at Rikers, said John Roman, a senior fellow at the Urban Institute.

Goldman expects to receive initial results from its second social impact bond, a $4.6 million program launched in 2013 in Utah aimed at helping children from low-income families in the next few weeks.

Additionally, the firm has helped fund two other programs - a $27 million initiative in Massachusetts intended to keep juveniles who have left jail from returning and a $16.9 million program in Chicago designed to help low-income families prepare their children for kindergarten.

Northern Trust, which is a senior lender along with Goldman in the Chicago program, is pursuing opportunities in the social impact bond space despite the complexity of the transactions, said Connie Lindsey, head of corporate social responsibility and global diversity and inclusion at Northern Trust.

"We hope that transaction structuring will become more standardized and require less time for transactions to close," she wrote in an e-mail to Reuters. Some projects have taken more than a year to implement, executives have told Reuters.

Because each social impact bond program is unique and involves multiple different private, nonprofit and government partners, they can be complex to set up, said Gwen Robinson, managing director, community development at Santander Bank, which helped fund a $3.5 million social impact bond to address homelessness in Massachusetts last year. It may take some time to standardize the process.

"I wouldn't be surprised if it takes five, six or 10 years before there is real critical mass," she said.

(Reporting By Jessica Toonkel; Editing by Andrew Hay)

By Jessica Toonkel