Understanding and Confronting the Prison-Industrial Complex - An Overview for Philanthropists - Arabella Advisors
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Understanding and Confronting
the Prison-Industrial Complex
An Overview for Philanthropists
OCTOBER 2018
UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
A BO UT T H E REPORT
As part of its commitment to learning, Robert Wood Johnson Foundation engaged Arabella
Advisors to conduct a study of the intersections between the private US prison system and the
work of foundations. The views expressed in this report do not necessarily reflect the views of
the foundation.
A BO UT A RAB EL L A ADV I SORS
Arabella Advisors helps foundations, philanthropists, and investors who are serious about
impact create meaningful change. We help our clients imagine what’s possible, design the best
strategies, learn what works best, and do the work necessary to turn their visions into reality.
To learn more, visit www.arabellaadvisors.com.
2
UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
CONTENTS
Introduction 4
Mass Incarceration and the Prison-Industrial Complex 5
Opportunities for Philanthropists to Help Drive Change 6
An Overview of the Prison-Industrial Complex 7
The Prison-Industrial Complex Spans Multiple Sectors 7
Strategic Intervention Points Within the Prison-Industrial Complex 10
Next Steps for Concerned Philanthropists 17
Support Additional Research on the Prison-Industrial Complex 17
Divest from Egregious Actors 17
Implement Investor Activism and Capital Market Strategies 19
Matching Types of Actors with Potential Philanthropic Strategies 20
Conclusion 21
Acknowledgments 21
3UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
Introduction
PHILANTHROP I STS can help address over-incarceration in America and the serious harm it
does to communities by supporting efforts to better understand and confront what criminal
justice experts call “the prison-industrial complex,” the network of companies that currently
profit from the US prison and detention system. Through their endowments, philanthropists
may be unwittingly invested in corporations within the prison-industrial complex whose
efforts are at odds with funders’ charitable missions and commitments to social, economic,
and racial equity. This report provides a high-level overview of the prison-industrial complex
for philanthropists, identifies several opportunities for potential intervention, and begins to
outline possible strategies that concerned funders and impact investors can use to help curtail
its growth and influence—and thereby work to end the current era of mass incarceration.
We hope that the report will prove helpful to funders that are concerned about the ways in
which their unintentional investments in the prison-industrial complex may undermine their
values and priorities and seek to understand how they can remediate those harms.
W
e recognize that We also recognize, however, that our nation’s prison and detention
ending the era of mass ending the era of mass system and represents a potential
incarceration will incarceration will require a better entry point for disrupting and
require much more than is understanding of ways to beginning to change that system.
outlined here. It will require effectively confront the prison-
fundamental reforms to our industrial complex: the network Curtailing the influence of the
criminal justice system, including of thousands of companies that prison-industrial complex and
changes to unjust, unfit, and are currently involved, in various holding the worst actors
overly punitive sentencing policies ways, in the detention, accountable will require a broad
and drug laws, as well as reforms incarceration, and confinement of array of governmental, nonprofit,
of prosecutorial and policing human beings across the United and corporate actors.
practices that correlate with States. As we describe in more Philanthropists can play a role in
soaring prison populations. It will detail below, this network tackling this part of the mass
require funding for programs extends across a wide range of incarceration problem by using
designed to build communities, sectors and includes a variety of their endowments and grant-
reduce crime, and break down the actors, from companies accused making capital to increase
pathways and practices that of egregious and exploitive understanding of the prison-
currently channel far too many practices to others that may industrial complex, expose and
people into prisons, jails, and simply be supplying services to stigmatize flagrant practices
other detention centers. It will prisons to still others that may going on within it, and counter the
require more support of racial not even realize that prison labor political influence of those
justice and equity, work in which is part of their supply chains. This seeking to preserve and extend
many funders are increasingly network is part of what enables, the current system of mass
engaging. perpetuates, and helps to shape incarceration.
4UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
Mass Incarceration and the Prison-Industrial Complex
MASS INCARC ERATI O N in the United States harms both individuals and communities, with
particularly devastating effects on communities of color, and it often does so without advancing
the public safety objectives that incarceration purports to serve. With 2.3 million people in
confinement and nearly three percent of the population under some form of correctional
supervision, the United States imprisons far more of its people than any other country.1
Over-incarceration disproportionately impacts economically distressed communities and is a
significant driver of racial inequality. Those convicted of felony offenses—primarily blacks and
Latinxs—suffer profound, long-term collateral consequences, including, but not limited to, lost
voting and civil rights and legalized discrimination in employment, housing, and access to
public benefits.
D
espite the significant harm correction at the local, state, and Activists and others charge
it does to communities, federal levels have handed billions numerous companies within this
mass incarceration is big of dollars in contracts to private complex of engaging in egregious
business. Skyrocketing firms. This has led to a network of and exploitive practices. Some
incarceration rates in the United thousands of companies that companies have also played a role
States have turned the criminal profit from mass incarceration, in advocating for the public
justice system into a multi-billion ranging from the companies that policies that have driven mass
dollar industry, with federal, state, operate private prisons to the incarceration and increased
and local governments spending subcontractors that provide immigrant detention. Others are
$80 billion on incarceration in prisons with telecommunications, companies that profit from
2013 alone.2 In an effort to achieve transportation, food vending, and conducting business within and
cost savings, departments of many other goods and services. across the network.
Racial composition of the incarcerated population in the United States*
% OF US INCARCERATED NATIONAL
RACE/ETHNICITY % OF US POPULATION
POPULATION INCARCERATION RATE
White (non-Hispanic) 64% 39% 450 per 100,000
Hispanic 16% 19% 831 per 100,000
Black 13% 40% 2,306 per 100,000
SOURCE: PRISON POLICY INITIATIVE, USING US CENSUS DATA. *Does not add up to 100%
1
Wagner, Peter. “Mass Incarceration: The Whole Pie 2018.” Prison Policy Initiative. 14 March 2018. [Link]
2
Executive Office of the President of the United States. “Economic Perspectives on Incarceration and the Criminal Justice System.” April 2016. [Link]
5UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
Over the last
40 years, due to
State and Federal Prison Population
a surge in tough-on-
crime laws such
2MM
as three-strikes
laws, mandatory 1.5MM
minimums, and truth-
in-sentencing laws, 1MM
the number of people
incarcerated in 0.5MM
the United States has
0
quintupled.
1970 1980 1990 2000 2010 2020
*DOES NOT INCLUDE US JAIL POPULATION. SOURCE: BUREAU OF JUSTICE STATISTICS
Opportunities for Support organizations and entities that are engaged in
Philanthropists to Help initiatives that are working to harmful practices, and can
Drive Change counter the advocacy efforts potentially motivate other
Much work remains to be done, of politically active corporations corporations to cease doing
and we see several areas where that profit from mass business with them unless and
philanthropists can play valuable incarceration. Various companies until they reform how
roles in beginning to confront the within the prison-industrial they operate. Meanwhile,
prison-industrial complex. complex provide money to investment in positive solutions
lobbying groups that strengthen can begin to help rebuild
Support research to map the and perpetuate policies that help damaged communities.
network of companies involved in drive mass incarceration. Those
the prison-industrial complex in STATE
working for better policies need Consider investor
PRISONERS
activism and
greater detail. Such mapping can financial support to overcome capital market strategies. Donors
raise awareness of the prison- potential opposition from groups and investors may also want
industrial complex, identify and that benefit from the continuation to use theirFEDERAL
capital and influence
PRISONERS
expose its harmful practices, and of “business as usual” in the sector. to take equity positions in
empower advocates to counter companies that are associated
the influence of those seeking Divest from egregious actors with the prison industry from
to advance policies tied to profits and invest in positive solutions. which they can raise awareness
rather than to preserve and As in other sectors, divestment and push companies toward
protect communities. can help isolate and stigmatize reform from within.
6UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
An Overview of the
Prison-Industrial Complex
There is no The Prison-Industrial America). These corporations
heavy hitter among Complex Spans Multiple build, own, and operate private
Sectors prisons, immigration detention
philanthropists The prison-industrial complex is centers, halfway houses, and
who’s saying, an extensive network of other forms of detention.
‘We are not going thousands of public and private
to support corporations, many of which have Other actors within the prison-
the prison-industrial profited directly from the industrial complex include
complex and neither dramatic increase in the number companies that supply goods and
of people detained in the United services to prisons, jails,
should you.’
States since 1980. The most immigration detention centers,
It would have a well-researched and reported-on and community corrections
huge impact to have companies profiting from the programs; companies within the
even 10 big foundations prison system are private prison for-profit bail industry; and
on board.” operators, including the GEO companies that use or profit from
N ATION A L JU V E N I L E Group (formerly the Wackenhut prison labor.
J USTI CE E X PE RT Corrections Corporation) and
CoreCivic (formerly the Not every company necessarily
Corrections Corporation of warrants outcry or action. For
7UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
example, companies that provide Case management technology and security equipment and
food or construction services to firms provide software systems to technology.
publicly run prisons and are not track arrest, probation,
engaged in any unfavorable incarceration, and medical records Prison personnel agencies
practices may not be good targets of current and former inmates. provide prisons with staff
for advocates or funders. More members, including guards, and
research—including on how Prison construction and with staff training and
companies profit, the effects of maintenance companies build management systems.
their services, and whether or not prisons and other detention
they use political influence to centers and provide maintenance, Bail bond agents provide bail
perpetuate mass incarceration— engineering, and utility services. loans to people who cannot afford
is needed to understand the their bail.
full impact of every company’s Telecommunication companies
involvement in the prison- provide communication services Bail bond insurance
industrial complex. to prisoners, such as phones or companies provide insurance to
video visitation systems. bail bondsmen that backs their
To facilitate our own research and bail bonds.
analysis, we identified 14 sectors in Health care providers provide
which various companies that medical services and Financial service providers/
make up the prison-industrial pharmaceuticals to prisoners and banks and corporate investors
complex operate: medical equipment to prisons. provide financing to private
prison operators to construct and
Prison operations and Food and commissary equip prisons, and to facilitate
management companies oversee companies provide food, cafeteria prisoner money transfers.
private prisons, halfway houses, supplies, and vending machines
or immigration detention facilities. and stock prison commissaries. Prison labor programs
They may or may not build or own provide services, raw materials,
the detention facility. Prisoner transportation firms and technology for prison
provide transportation services to education, rehabilitation, and
Community-based corrections prisoners and visitors. vocational programs (does not
companies manage tracking and include companies purchasing
surveillance systems for people Products and equipment goods and services created with
diverted from prisons or placed suppliers provide furnishings, IT prison labor).
on probation. and communications equipment,
8UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
THE PRISON-INDUSTRIAL COMPLEX AT A GLANCE
2.3 $15
million people
$5.1
The amount some prisoners
are forced to pay for a 15-minute
phone call
are in confinement million
in the United States. The combined
total that
SOURCE: PRISON POLICY INITIATIVE private prison
owners
CoreCivic and
the GEO Group
spent to lobby
SOURCE: THE INTERCEPT
local, state,
3,100+ and federal
governments
in 2016 Number of prisoners held in
corporations
profit from mass private prisons
incarceration.
126,272
SOURCE:
SOURCE: CORRECTIONS CORRECTIONS
ACCOUNTABILITY PROJECT ACCOUNTABILITY
PROJECT
68,690
Bail is a
$2
billion 1999 2015
per year industry. STATE PRISONERS FEDERAL PRISONERS
SOURCE: THE ATLANTIC SOURCE: PEW RESEARCH CENTER
9UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
Strategic Intervention detention centers, and other
Points Within the Prison- detention facilities, and for the bail
Industrial Complex bond industry.
To help philanthropists begin to
approach this intricate network of
corporations strategically, we We know CoreCivic
have identified four categories of and the GEO Group
actors that cut across the throw a lot of
previously mentioned sectors.
The categories represent
money around.
4. Socially responsible public
meaningful, potential intervention We know they have
companies: Many notable public
points to reduce the harm done been working hard companies are doing business
by the prison-industrial complex. to get in good with the prison industry despite
The first two categories are of graces with this public commitments to corporate
actors whose priorities need to be administration, social responsibility (CSR).
countered, corrected, and
and that they are also Consumer products and services
changed most immediately: companies that have built brands
very involved at the
based on their commitment to
hyper-local level.” social responsibility may be
ADVOCACY ORGANIZATION particularly sensitive to public
EXECUTIVE
recrimination for their involvement
in the prison industry.
1. Egregious actors: Companies
whose profit-seeking activities Egregious Actors
enact undue financial burden or The next two categories Some companies within
physical harm on incarcerated represent crucial players upon the prison-industrial
people. which the current system complex financially exploit those
depends. Actors in these involved in the criminal justice
categories may or may not system or cut corners in ways
recognize the roles they play in that threaten their safety and
the system, and some could wellbeing. These companies
become partners in driving operate within several of the
change within it. They are: previously identified sectors and
2. Undue influencers: These have come under legal and/or
actors, including corporations media scrutiny for various types
and correctional trade of exploitation and/or neglect.
associations, use lobbying dollars
and campaign contributions to 1. Prison Operations and
protect privatization, oppose Management
criminal justice reform, and 3. Financial sources and A 2016 Department of Justice
shape criminal justice policy in underwriters: These actors are report determined that private
ways that benefit their business providing the financial fuel for the prisons run by CoreCivic, the GEO
interests. companies that are operating Group, and Management and
private prisons, immigration Training Corporation were more
10UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
violent, abusive, and dangerous houses, as well as sharp Global Tel Link, CenturyLink, and
than publicly operated prisons.3 increases in violence, drug use, Securus) often charge extremely
Inmates in these private prisons and gang activity.5 high rates compared to what
were also more likely to be placed those outside of prison typically
in solitary confinement or on 3. Bail Bond Agents pay, sometimes more than $1 per
lockdown than inmates in public Bail is now a $2 billion per year minute.8 Many incarcerated
prisons; and, they were less likely industry serviced by over 15,000 individuals, who have little to no
to receive basic health care. bail professionals.6 Across the income, cannot afford to speak to
Measures that private prisons industry, bail bondsmen charge loved ones for more than a few
pursue to meet the demand for high fees—up to 15 percent of the minutes at a time. In addition,
low costs—incentives that total bail amount (with a minimum some prisons have moved toward
state-run prisons don’t have to the fee of $100)—to the most paid video visitation and away
same degree—may be causing vulnerable and poorest individuals from in-person visitation, meaning
these harsh conditions. in the criminal justice system, and that some prisoners are now
threaten them with incarceration if financially unable to communicate
2. Community-Based Corrections they fail to make payments.7 Bail with their families at all.
As more states have allowed bondsmen have broad powers to
for-profit operators to run arrest and jail their debtors that 5. Prisoner Transportation
halfway houses, reports of unsafe other creditors do not have. Many Private prisoner transportation
conditions, neglect, and abusive bail bondsmen have been accused companies, including the giant
practices have risen across the of harassing and even extorting Prisoner Transportation Services
country. Cost-cutting has led to extra fees out of debtors and their of America (PTS), have received
substandard hiring and training families under the threat of enhanced scrutiny in several
practices that keep houses incarceration. The bail bondsmen states for instances of sexual
staffed with unqualified, poorly industry is made up of many harassment, escape, injury, and
paid workers. In Oklahoma, small, local, privately held even death.6 For example, PTS
private halfway house operator companies that receive insurance and Brevard Extraditions Inc.
Avalon Correctional Services backing from nine large national are currently being sued in
operated a house where or multi-national insurance Virginia by a man who had been
employees sanctioned fights companies, including Tokio arrested in 2016. The man's
between residents and recorded Marine America, Fairfax, lawsuit alleges that these
them on cell phones. Despite Bankers, Endeavour, and others. companies put people in
these abuses, Avalon was able to unsanitary and unsafe conditions,
keep its state contracts.4 CEC, an 4. Telecommunications in violation of their constitutional
operator of halfway houses in The vendors that supply rights, because of a financial
New Jersey, experienced an telephone and video visitation incentive to pick up as many
epidemic of escapes across its services to prisons (such as detainees as possible.10
3
“Review of the Federal Bureau of Prisons’ Monitoring of Contract Prisons.” Office of the Inspector General, US Department of Justice. August 2016. [Link]
4
Jones, Corey. “12 Ex-Avalon Tulsa Inmates Sue Facility, ODOC with Allegations of ‘Gladiator-Style’ Fights, Drug Ring.” The Tulsa World. 10 April 2015. [Link]
5
Dolnick, Sam. “At Halfway House, Bedlam Reigns.” The New York Times. 17 June 2012. [Link]
6
White, Gillian. “Who Really Makes Money off of Bail Bonds?” The Atlantic. 12 May 2017. [Link]
7
“How Much Does Bail Cost?” AboutBail.com. Accessed: 25 September 2018. [Link]
8
Law, Victoria. “$15 for 15 minutes.” The Intercept. 16 June 2017 [Link]
9
Jan, Tracy. “Privately Run Prisoner Transport Company Kept Detainee Shackled for 18 Days in Human Waste, Lawsuit Alleges.” The Washington Post. 24 April
2018. [Link]
10
Ibid.
11UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
in several Idaho prisons.11 not required to disclose their
Additionally, several class-action supply chains.
lawsuits have accused Corizon
of withholding care to some
prisoners and providing
In recent years, inadequate care to others, Undue Influencers
smart, strategic including those with cancer and Our research also identified
[private prison] diabetes, causing suffering and how some players within
corporations are death.12 A current class-action the prison-industrial complex
lawsuit in Illinois accuses the have used significant political
following the market.
state’s corrections department of muscle to convince state and
That means they significant lapses in care that put federal officials to adopt policies
are now in the patients at “risk of pain, injury, that promote mass incarceration.
probation space, and death.”13 The suit implicates More recently, these players
which had been Wexford Health Sources, which lobbied to defend privatization
almost exclusively has been the state’s prison care and shape criminal justice reform
nonprofit. These contractor since 2011.14 policies in ways that benefit
their business models. Political
corporations have 7. Prison Labor Programs activity in this industry manifests
bought the better Many companies contract with in four main ways:
nonprofit treatment prison labor outfits to produce
providers.” products or services at low cost. 1. Lobbying
ADVO CACY In some states, prisoners earn Many of the largest corporations in
ORG A N I Z ATI O N minimum wage, but in others, the prison-industrial complex hire
EX ECU TI V E they earn only 16 cents per hour lobbyists at the federal and state
or nothing at all.15 Some levels to advance their interests. To
corporations contract directly get a sense of how politically
with local, state, and federal active the industry is, Arabella
6. Health Care Providers prisons for prison labor, while identified the 22 largest publicly
Advocates have accused two of others have prison labor in their traded or private equity-owned
the largest providers of prison supply chains and may not even corporations that are either fully
health care in the country, know it. Prison labor in the United dependent on the prison-industrial
Wexford Health Sources and States, especially within state complex for their revenue or own
Corizon Health, of delivering prisons, where the bulk of the subsidiary businesses that are fully
poor-quality care. In a report to a nation’s prisoners are held, is an dependent. According to their
federal judge in Idaho, advocates opaque industry. Generally, state lobbying disclosures, the members
charged that Corizon Health prisons are not required to of this group spent a total of $33.2
provided poor care and neglected disclose the corporations they million lobbying the federal
the health needs of prisoners work with, and corporations are government between 2015 and
11
Dutton, Audrey. “Saint Al’s Sues Idaho Prison Contractor Over $14M in Medical Bills.” The Idaho Statesman. 27 April 2018. [Link]
12
Clarke, Matt. “Numerous Lawsuits Filed Against Corizon.” Prison Legal News. 3 August 2017 [Link]
13
Walsh, Dylan. “Does Bad Health Care Constitute Cruel and Unusual Punishment?” The Atlantic. 17 June 2017. [Link]
14
Ibid.
15
Goodrich, Julie and Mari Schwartzer, et al. “Prison Labor in the United States: An Investor Perspective.” NorthStar Asset Management. May 2018. [Link]
12UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
In total, the Corrections
Accountability Project identified
3,100 corporations with business
interests in the criminal justice
system (ranging from complete to
minor involvement) that gave a
combined total of $175 million in
state and federal political
contributions in the 2016 election
cycle alone.19
3. Revolving Doors
In addition to lobbying state and
federal officials and funneling
contributions to candidates,
many corporations that do
business with the prison industry
2017.16 According to their own new forms of private detention are keen to hire former legislators
reports, in 2016 alone, the GEO from which they can profit. and agency officials to extend
Group spent $3.3 million and their influence in government, or
CoreCivic spent $1.8 million to 2. Campaign Contributions conversely, to have the officials
lobby states and the federal Corporations connected to the hire their staff members. These
government (including members prison-industrial complex also connections accelerate the
of the Senate and the US House of make contributions to state and growth of private prisons by
Representatives, the Department federal policymakers to build allowing corporations to build the
of Justice, the Department of political influence. Drawing on case for privatization, navigate
Homeland Security, and other data from the Corrections the contracting process more
agencies).17 The GEO Group and Accountability Project, we easily, and, in some cases, avoid
CoreCivic publicly stated that they estimate that the 500 companies strict oversight. Many top
do not lobby for or against policies that are completely dependent on corrections officals at the federal
or legislation that would determine the prison-industrial complex gave level and in several states,
the length or reason for an at least $2.5 million to political including Ohio, Maine, and New
individual’s incarceration or candidates in 2016.18 These totals Mexico, worked for CoreCivic or
detention. However, they do lobby do not include contributions to the GEO Group before entering
legislators to pass laws that will independent political action public service or moved to the
keep people detained longer and committees (PACs) or 501(c)(4)s prison industry after leaving
push for government investment in supporting political candidates. government.20, 21
16
Arabella identified the 22 companies (including parent companies) that are dependent on the prison industry for revenue using the Corrections
Accountability Project’s “The Prison Industrial Complex: Mapping Private Sector Players.” Lobbying expenditures data come from www.OpenSecrets.org.
17
Corrections Accountability Project. “Immigration Detention: An American Business.” June 2018. [Link]
18
Data on direct contributions to candidates pulled from FollowtheMoney.org and aggregated by Arabella Advisors. Data courtesy of the Corrections
Accountability Project. (Accessed June 29, 2018)
19
Ibid.
20
Katz, Eric. “Federal Official Boosted Use of Private Prisons; Now He Has a Top Job at One.” Government Executive. 29 August 2018. [Link]
21
Clarke, Matt. “Private Prison Companies Use Political Influence to Increase Incarceration.” Prison Legal News. 15 November 2012. [Link]
13UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
behalf of the individuals, who then
4. Support for Advocacy and must repay the bail bondsman
Trade Associations and pay additional surcharges.
While some companies in the
prison-industrial complex may Additionally, many corporations in
not directly lobby on criminal the prison-industrial complex
justice issues, they consistently sponsor corrections industry trade
sponsor powerful advocacy associations, which have a history
groups and industry trade of advancing policies that drive
associations that have been vocal mass incarceration. According to a
proponents of policies that foster 2015 report by the advocacy
mass incarceration policies. The group In the Public Interest, in
conservative American Legislative 2014, corporate vendors to the
Exchange Council (ALEC) has prison industry contributed at
One-third of worked with corporate sponsors least $3 million to five of the
prisoners in some to pass numerous policies that largest professional corrections
have helped drive incarceration to associations: the American
states are housed historical levels and that have Correctional Association, the
in county jails, increased the detention of American Jail Association, the
and sheriffs’ immigrants. Throughout the Association of State Correctional
associations and 1990s, CoreCivic (then Administrators, the Corrections
individual sheriffs Corrections Corporation of Technology Association, and the
are shameless America) was a corporate National Sheriffs’ Association.22
sponsor of ALEC and held a place These groups typically support
about lobbying to
on ALEC’s Criminal Justice Task platforms designed to maintain
their own benefit. Force. During this time, ALEC and expand the prison-industrial
They want successfully pushed model complex—policies that serve the
more prisoners in legislation creating tougher interests of the associations’
their jails.” sentencing laws in dozens of corporate members. For example,
ADVOCACY O RG A N I Z ATI O N states, driving steep increases in the National Sheriffs’ Association's
EX ECU TI V E incarceration rates throughout the policy platform advocates for
1990s and 2000s. Additionally, stronger immigration enforcement
the American Bail Coalition, a policies, which would result in
longtime partner of ALEC, helped higher levels of immigrant
to draft model legislation to detention, and has received
expand the bail industry, resulting corporate sponsorship from many
in three states legalizing “post- companies in the prison-industrial
conviction” bail. Under this new complex, such as Aramark, Global
practice, which exposes Tel Link, Wexford Health Sources,
thousands of new people to the TriTech Software Systems,
bail industry, bail bond companies Pay Tel, and Accredited Surety
can pay court-imposed fines on and Casualty Company Inc.23
22
In The Public Interest. “Buying Access: How Corporations Influence Decision Makers at Correction Conferences, Trainings, and Meetings.” August 2015. [Link]
23
“Corporate Partners.” National Sheriffs’ Association. Accessed: 25 September 2018. [Link]
14UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
Financial Sources and Wall Street banks have an
Underwriters outsized role in the system Private equity firms
Another set of actors is because they extend revolving that invest in
crucial to the system’s lines of credit to private prison businesses that are
functioning: its financial sources operators and underwrite the entirely dependent
and underwriters. An expansive companies’ bonds.24 Because the on revenue from the
network of banks, private equity GEO Group and CoreCivic are prison-industrial
firms, and insurance companies technically classified as real complex:
finance the prison-industrial estate investment trusts (REITs),
complex and enable it to operate. the lion’s share of their profits American Securities
These financial backers offer a must be returned to shareholders, Apax Partners
potential entry point to apply leaving little cash on hand for
Audax Group
financial pressure on other actors everyday expenditures. They need
Beecken Petty O’Keefe &
in the industry, including private continuous, massive lines of
Company
prison operators, bail bondsmen, credit—and could be vulnerable
BlueMountain Capital
and additional companies to any credible effort to push
Management
engaged in malicious practices. banks to withhold their financing.
Falfurrias Capital Partners
1. Banks 2. Private Equity Frazier Healthcare Partners
Banks make loans to all Private equity firms play a strong GTCR
creditworthy applicants, often role in backing hundreds of H.I.G. Capital
without bias or moral judgment. companies that do business with Kanders & Company
As such, any effort to curtail bank the prison system. According to Peninsula Capital Partners
financing of companies in the Corrections Accountability
Platinum Equity
prison-industrial complex cannot Project data, 76 private equity
Prophet Equity
rely on moral arguments; instead, firms own 141 companies within
it must make a credible case that the prison-industrial complex, 52 Riverside Ventures
those companies’ business of which are completely Spotlight Equity Partners
practices expose them to dependent on the prison industry Sverica Capital Management
litigation and regulatory risks, for their business.25 The list at
undermine their prospects for right shows the private equity
SOURCE: CORRECTIONS
delivering strong financial returns, firms that invest in businesses ACCOUNTABILITY PROJECT
and make them less creditworthy. that are entirely dependent on
This is a difficult path but one that revenue from the prison-industrial
could be worth exploring further, complex, such as private prison
as the two largest private prison operations, telecommunications potential pathways to engaging
operators, the GEO Group and firms, and security services them through investor activism
CoreCivic, rely extensively on companies. While private equity that involves large institutional
debt to finance their operations. firms may be less susceptible to investors. Some of these
According to a 2016 report by In public pressure than publicly held strategies are described in more
the Public Interest, six prominent financial institutions, there are detail below.
24
In The Public Interest. “Report: The Banks That Finance Private Prison Companies.” 17 November 2016. [Link]
25
Tylek, Bianca. “The Prison Industrial Complex: Mapping Private Sector Players.” Corrections Accountability Project. April 2018. [Link]
15UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
3. Insurance Companies with the prison-industrial system.
The largest insurers A small cohort of large insurance While over 100 companies that
backing the companies underwrites the bail do business with prisons maintain
bail industry, with industry, allowing tens of public CSR commitments that
subsidiaries: thousands of bail bondsmen who outline their dedication to
charge high fees to vulnerable and improving communities, it is not
AIA
economically distressed clear to what degree they profit
IFIC Allegheny Casualty Co.
populations to operate across the from mass incarceration or for
American Surety Company country. According to a 2015 how long they have been doing
Bankers Financial Corporation ACLU report, many of the largest so. More research is needed on
Bankers Surety bail insurers are multi-national companies that identify
Bail USA corporations for whom bail themselves as socially responsible
Endeavor Insurance Services insurance is a tiny part of their to understand the extent of their
Aladdin Bail Bonds/Two Jinn business. For others, especially investments in the prison industry.
those companies actively involved Additionally, advocates and
Seaview Insurance Company
in the American Bail Coalition, researchers have identified several
Fairfax Financial Holdings
Limited bail insurance represents a large high-profile, brand-name
portion of their business, which companies with strong corporate
The North River Insurance
Company insurance companies have social responsibility policies that
United States Fire Insurance
worked aggressively to expand. sell products created by or provide
Company services performed by prison labor
FCS programs. Because prison labor
systems lack transparency, it is
Lexington National
Socially Responsible Public hard to know if these companies
R&Q
Companies use prison labor on a regular basis,
Accredited Surety and
Many companies maintain in what amounts, and for what
Casualty Company
public commitments to CSR products or services.
Seneca Insurance Company
related to promoting public
Tokio Marine America
health, community development, By setting up supply chain-
HCC Surety Group or similar issues, even as they monitoring systems, socially
United States Surety profit from a system that targets responsible companies could root
Company economically distressed out prison labor from their
US Specialty Insurance communities and perpetuates suppliers or continue to source
Company
poverty and incarceration. Using from prisons while demanding
data from the Corrections higher standards for working
Accountability Project, Arabella conditions and better wages for
SOURCE: COLOR OF CHANGE/ACLU identified large, publicly traded prisoners—in other words, an end
companies with over $5 billion in to exploitive practices.
annual revenue doing business
16UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
Next Steps for Concerned Philanthropists
Given the scale of the system of money flows between companies document trends in abuse across
mass incarceration and the that benefit from prisons and the prison-industrial complex and
extensive network of actors elected officials, the extent of monitor the most egregious
profiting from it, philanthropists these companies’ access to corporate actors and sectors.
will ultimately need a multi- politicians, and the specific
pronged, multi-year, multi-actor policies for which they lobby. Financing networks. Advocates
approach to effectively confront Gaining a stronger understanding have begun to explore the
the prison-industrial complex— of corporate influence and the complex networks of financial
one that uses both their ability to identify the elected support and underwriting within
endowment capital and grant officials that accept corporate the prison-industrial complex,
making to mobilize public, money from the prison-industrial but they need more information
political, and financial pressure for complex is the first step in on how to disrupt financing for
reform. Developing such a reducing that influence over time. the industry’s most glaring,
multi-pronged, multi-year influential actors.
intervention strategy is beyond Prison labor supply chains.
the scope of this report. However, Prison labor supply chains are Policy research. Philanthropists
in surveying the landscape, we complicated and opaque, and the can support advocates who are
have identified several steps that field does not have accurate researching the most effective
concerned funders and investors information on which companies oversight and regulatory policies
can begin to take even today. profit from prison labor. These at the state and federal levels that
data are somewhat simpler to find can counter the influence of the
Support Additional at the federal level; finding the prison-industrial complex. Better
Research on the Prison- data at the state level will require oversight of contractors and
Industrial Complex investments in comprehensive increased disclosure requirements
Philanthropists can bolster efforts supply chain research. This for corporations taking
to challenge the prison industry information will help advocates government funds could help
by funding research in several identify high-profile brands that identify and eliminate harms
areas. Filling these research gaps use prison labor and allow them within in the prison system.
is important for developing to apply public pressure and
comprehensive corporate demand the brands stop the Divest from Egregious
accountability strategies, practice, or insist that prisoners Actors
divestment campaigns, or receive a fair wage and safe Divestment movements that
approaches to investor activism. working conditions. have targeted South African
apartheid and the fossil fuel
Political activity. According to Reports of harm. Our industry have demonstrated that
many advocates, those working understanding of the physical and these types of campaigns can be
for reform generally do not have financial harms caused by an effective strategy for
much political muscle to support corporations within the prison stigmatizing offending industries
their work, while corporate actors industry is incomplete, with and reducing their influence,
give millions in political information drawn piecemeal building broader social
contributions to lawmakers who from lawsuits, one-off movements, and making the
support tougher criminalization investigations, and reports to political environment more
and immigration laws. Advocates advocacy groups. Philanthropists amenable to positive policy
still do not know exactly how can support advocates’ efforts to changes. Philanthropists should
17UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
view divestment primarily as a
movement-building and political
strategy, rather than a means to INVEST FOR IMPACT
exert substantial financial
pressure on its targets, as most As a complement to divestment strategies, philanthropic funders can
pursue impact investing strategies that channel divested (or other) funds
experts believe divestment is
into companies that are working to counter the deleterious impacts of
unlikely to meaningfully impact mass incarceration and reduce recidivism, such as businesses that provide
corporate bottom lines. The employment and economic opportunity for citizens returning from prison.
biggest actors in prison
divestment to date are
universities, municipalities, and 1 Make mission-related investments in companies that are committed to
employing individuals with criminal records. Philanthropists can work
with a socially responsible financial services company to customize a
faith-based institutions. portfolio that sets up a positive screen for such businesses.
Philanthropists are still relatively
rare in this landscape and can
help develop the movement not 2 Make program-related investments in innovative companies and
organizations working to counter the impacts of mass incarceration.
For example, the New Orleans-based Rising Foundations runs a small
only by removing prison
business incubator for previously incarcerated individuals and provides
investments from their own
them with microgrants and zero-interest loans. Similarly, Boston-based
endowments and retirement New Profit operates the Unlocked Futures accelerator, which invests in
funds but also by leading a call for businesses created by previously incarcerated people.
divestment pledges from fellow
philanthropic institutions.
3 Make use of pay-for-success financing, also called social impact bonds,
to make impact investments in initiatives that aim to reduce
incarceration rates. Philanthropists can use these bonds to provide loans to
organizations that are working to reduce recidivism by providing behavioral
How Philanthropists Can health, job training, and education programs to those who are exiting
Advance a Prison Divestment prisons or the juvenile justice system. Several prominent foundations have
Movement recently invested in the Massachusetts Juvenile Justice Pay for Success
1. Divest your endowment assets Initiative, which aims to reduce incarceration rates by supporting hundreds
of at-risk young men in the probation system.
of any holdings in CoreCivic or
the GEO Group, two of the most
egregious, politically active, and
vulnerable companies in the
prison-industrial complex. want an investment partner to communications, research, and
Philanthropists can act quickly to help establish investment screens grassroots organizing capabilities.
remove these high-profile private and root out companies profiting Philanthropic funding can help
prison companies even while they from incarceration can work with put such infrastructure in place.
consider a more comprehensive socially responsible investment While several advocacy groups—
divestment strategy that includes groups like OpenInvest to including Enlace, the Corrections
multiple screens and other establish investment accounts Accountability Project, and the
corporations. that align with their values. American Friends Service
Committee—and student
2. Use social, governance, and 3. Provide grants to advocacy activists at a handful of Ivy
environmental screens to groups that are building a prison League universities have started
exclude companies profiting divestment movement. To be prison divestment efforts,
from the prison-industrial successful, divestment efforts investments that better broadcast
complex from endowment must be situated within a larger their work could help the
holdings. Philanthropists who movement that has movement gather momentum.
18UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
Implement Investor complex. Investor activism can be private equity firms, and have a
Activism and Capital a powerful tool when it activates history of shareholder activism on
Market Strategies large, institutional investors and CSR issues.
Investors who are eager to exert influences financial analysts and
financial pressure on companies Wall Street opinion makers by 2. Use your standing as investors
may be able to achieve greater demonstrating how a company’s to provide proxies and access for
impact by taking equity stakes in practices—due to reputational advocates seeking to advance
companies connected to the risks, regulatory pressures, shareholder resolutions. While
prison-industrial complex and litigation risks, etc.—are reducing individual philanthropists may not
using their standing and creative shareholder value. be well positioned to execute a
strategies to push companies to shareholder advocacy campaign,
reform. Investor activism investors can provide nonprofit
proponents who seek to engage How Philanthropists organizations or other activist
and disrupt companies in this way Can Reform the Prison- investors with their proxy votes to
could pursue a variety of Industrial Complex Through strengthen a shareholder
objectives: demanding that Investor Activism campaign’s position.
private prison operators increase 1. Provide grant support to
pay in prison work programs; organizations engaged in investor 3. Join with other philanthropists
forcing companies connected to activism targeting the prison to set up an investment fund
the prison-industrial complex to industry. Several organizations, that has stakes in the most
disclose full details of their including the Human Rights egregious and politically active
lobbying and political activities Defense Center and the Interfaith companies in the industry.
and to cease supporting politically Center on Corporate Philanthropists could staff a fund
active trade associations and Responsibility, have engaged in with experienced researchers and
industry front groups; pressuring low levels of shareholder advocates who can use the fund’s
telecommunications companies advocacy on this issue. standing as an investor to
to stop charging incarcerated Philanthropic capital could advance industry reforms from
individuals excessive fees catalyze their efforts. Additionally, the inside. This could include
for video visitation and phone partnering with big pension funds shareholder resolutions as well
services; pushing for the such as the California Public as more aggressive shareholder
replacement of corporate board Employees’ Retirement System strategies, such as delaying
members with directors who (CalPERS) and large fund mergers and acquisitions,
are more sympathetic to the managers such as BlackRock can withholding votes in board of
interests of the communities bring real power to investor director elections, or pushing for
impacted by mass incarceration; activism. These institutional proxy access that allows for
and demanding that companies investors own large equity stakes direct shareholder nominations to
reduce their business with and in most public companies, are the board to gain concessions
reliance on the prison-industrial often the largest investors in from company management.
19UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
Matching Types of Actors with Potential Philanthropic Strategies
Each of the categories of companies we identified earlier represents an intervention point to reduce the prison-
industrial complex's harm. As such, there is a different set of goals that philanthropists and their advocacy
partners can pursue for each category. This chart summarizes those goals and their ultimate impact.
EGREGIOUS ACTORS UNDUE INFLUENCERS FINANCIAL SOURCES AND SOCIALLY RESPONSIBLE
UNDERWRITERS PUBLIC COMPANIES
GOALS
- Understand where the most - Secure full disclosure of - Convince financial backers - Gain a better
egregious practices within the lobbying and political to stop supporting bad understanding of which
system are occurring activities actors within the prison- brand-name, socially
- End egregious and harmful - Pressure companies to industrial complex responsible companies
practices cease supporting politically benefit from prison labor
active trade associations and - Encourage socially
front groups responsible companies to
end contracts with
privately operated prisons,
immigrant detention centers,
and other facilities
STRATEGIES
- Research on corporate - Opposition research to - Investor activism that - Support organizations
activity to identify egregious expose companies’ undue pushes financial backers to pushing for comprehensive
practices influence condition their financing on research into corporate
- Divestment campaigns that - Divestment campaigns that reforming egregious supply chains to identify
stigmatize these companies help stigmatize these practices that pose litigation prison labor
and create public pressure companies and other financial risks - Investor activism and
for regulatory reform - Investor activism to push corporate accountability
- Investor activism to push for disclosure and campaigns that push
for reforms from the inside of curtailment of political and high-profile companies to
companies lobbying activities cut ties with the most
harmful elements of the
prison-industrial complex
POTENTIAL IMPACT
- Curtailment of the most - Decline in the political - Pressure from financial - Isolation and
exploitive and harmful influence of companies in the backers to reform the most stigmatization of companies
practices in the prison prison-industrial complex egregious practices in the engaged in egregious
industry and in their ability to advance industry practices in the industry
policies related to prisons - Increased public visibility
and the criminal justice of and attention to harmful
system that adversely impact practices in the prison
communities industry
- Improvement in the
standards, working
conditions, and wages for
prison labor
20UNDERSTANDING AND
CONFRONTING
THE PRISON-INDUSTRIAL
COMPLEX
Conclusion
will require advocating for fundamental reforms to our
ENDING THE ERA O F M ASS I N CARC ERATI O N
criminal justice system, including rolling back tough-on-crime sentencing policies and drug
laws and reforming prosecutorial and policing practices that have caused prison populations to
soar. It will also require confronting the power and influence of the prison-industrial complex:
the thousands of companies that profit from the detention, incarceration, and confinement of
human beings in the United States. Philanthropists can continue to invest in and profit from
these companies themselves, or they can use their endowments and grant-making capital in
creative and strategic ways to expose, stigmatize, and disrupt the industry, neutralizing its
harms and its undue political influence in our politics. Taming the prison-industrial complex can
help restore the public’s ability to shape just and equitable criminal justice and immigration
policies. Better policies and more accountable corporations can help reverse the mass
incarceration and mass criminalization that undermine freedom and opportunity for millions.
Acknowledgments
ARABELLA ADV I SO R Swould like to acknowledge the contributions of the experts and field leaders
who contributed their time, knowledge, insight, and research to the development of this report.
They include Jim Baker (Private Equity Stakeholder Project); Andrew Behar (As You Sow);
James Bell (W. Haywood Burns Institute); Noah Bookbinder (Citizens for Responsibility and
Ethics in Washington); Kevin Connor (LittleSis.org); Bill Dempsey; Margaret Dooley-Sammuli
(ACLU of California); Rachel Fagiano (Nathan Cummings Foundation); Alex Friedmann (Human
Rights Defense Center); Shar Habibi (In The Public Interest); Kyle Herrig (Daylight Project);
Kevin Keenan (Vera Institute of Justice); Cyrus Kharas (Arabella Advisors); Marc Mauer (The
Sentencing Project); Tulaine Montgomery (New Profit); Zachary Norris (Ella Baker Center); Udi
Ofer (ACLU Campaign for Smart Justice); Angela Peoples (ACRE); Rashad Robinson (Color of
Change); Lorraine Ramirez (Funders for Justice); Liz Ryan (Youth First); Marc Schindler (Justice
Policy Institute); Susan Shah (Vera Institute of Justice); David Shapiro (ACLU National Prison
Project); Carrie Sloan (ACRE); Ryan Strode (Arabella Advisors); Rob Thomas (Social(k));
Jamie Trinkle (Enlace); and Andrew Wright (Marathon Strategies).
We extend a special thanks to Bianca Tylek of the Corrections Accountability Project at the Urban
Justice Center for sharing the organization's in-depth research on the corporations profiting from
the prison-industrial complex.
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