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The Economic And Social Case For In-Prison Entrepreneurial Support

By News Creatives Authors , in Small Business , at September 24, 2021

Todd Khozein is the Founder and Co-CEO of impact and innovation company SecondMuse.

The world is waking up to the reality that many of the structures of our society are designed for a bygone era and are failing to meet all of our needs. Staggering economic inequality is driving health disparities we can no longer ignore and manifesting in social issues, from mental health crises to crime waves, that ultimately affect us all. 

Governments, nonprofits and other actors are working to address economic and social inequalities by providing a basic income to all citizens, expanding free education to more age groups and even harnessing AI to expand financial services to underserved populations. Yet, most of these efforts ignore one long-neglected group that holds outsized influence on the health of our societies and the potential to curb inhumane levels of poverty: the incarcerated.

More than 2 million people are currently incarcerated in the U.S., the world’s top imprisoner. Every year, members of this population are released and join a growing group of some 5 million ostensibly “free” adults with mouths to feed, but enormous obstacles are preventing them from meeting their financial needs — most notably, the scarlet letter of their criminal history. A recent uptick in releases related to Covid-19 and sentencing reforms have added to the stream of adults in this group, which has a population larger than any city in the U.S. except for New York.

Decarceration is an urgent goal but doomed to fail, in my opinion, if our society doesn’t first address barriers to the economic reintegration of men and women released from prison. We know that approximately 83% of individuals released from correctional custody return within around nine years. Barriers to traditional employment play an important role in this trend and incentivize formerly incarcerated people to turn to entrepreneurship instead — whether the illicit or productive kind.

As someone who has been engaged in entrepreneur support work and economic development for much of my life, when I consider the country’s prison problem, I can’t help but think about the transformative opportunity society is squandering. We could all reap significant benefits if we equip the many entrepreneurial-minded people within this population with the skills they need to truly reintegrate. While vocational training and education have been offered at prisons for decades, the reality is that upon release, most formerly incarcerated men and women struggle to find employment. The Prison Policy Institute found in 2018 that the unemployment rate among the formerly incarcerated was at nearly 30%.

While employers certainly have a role in changing this trend, investors and other members of society can do their part as well by helping those in the justice system become productive entrepreneurs. What would this look like, practically?

First, it would require investment in a practical, rather than theoretical, education. What this means is that those interested in starting a business would have the opportunity to work with teachers and mentors while still in prison to learn about — and actually develop — a business plan. I’ve observed that the few entrepreneur training programs for incarcerated or formerly incarcerated individuals that do exist boast remarkably low recidivism rates among graduates. We need to drastically scale these sorts of programs.

Mentorship and support would also be key, both before and after release. Starting a business is difficult work for anyone, not to mention individuals struggling with the range of challenges that come with reentry to society. These men and women should be thoughtfully partnered with people who can relate to their experiences and also those who can guide them, with empathy, through the world of business development and raising capital.

That brings us to what may be seen as the trickiest part of the puzzle: finding investors to support the businesses and innovations of currently or formerly incarcerated people. I would first remind investors that the overwhelming majority of traditional startups ultimately fail. Unlike investing in traditional startups, support for these types of businesses could potentially save the public a chunk of the $80 billion dollars spent every year on keeping so many people incarcerated. 

I would also argue for innovation and courage. Complex challenges call for brave and pioneering solutions, including new financial mechanisms that could be scaled and applied to other seemingly “risky” populations. Other mechanisms could offer grace periods and unique vetting models that minimize risk while enabling institutions to tap the creative and revenue potential of a population that has been long ignored. What innovations and solutions to our social and economic problems might these men and women bring? How might their history of social exclusion and reliance on self-sufficiency be translated into entrepreneurial success? 

Some of the rare folks who have been offered entrepreneurial support either during or after their prison sentences have gone on to start everything from gyms and apparel companies to coffee businesses. What might the country look like if all incarcerated and formerly incarcerated people with an “American Dream” were offered similar mentorship and support? We won’t know until we take the first courageous and urgent steps.

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