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 3
UNDERSTANDING 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. 4
UNDERSTANDING 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] 5
UNDERSTANDING 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. 6
UNDERSTANDING 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 7
UNDERSTANDING 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, 8
UNDERSTANDING 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 9
UNDERSTANDING 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 10
UNDERSTANDING 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. 11
UNDERSTANDING 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] 12
UNDERSTANDING 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] 13
UNDERSTANDING 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] 14
UNDERSTANDING 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] 15
UNDERSTANDING 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 16
UNDERSTANDING 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 17
UNDERSTANDING 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. 18
UNDERSTANDING 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. 19
UNDERSTANDING 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 20
UNDERSTANDING 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. 21
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