Racism in the Criminal Justice System (beta)
According to the The Sentencing Project, African American adults are 5.9 times as likely to be incarcerated than whites, and Hispanics are 3.1 times as likely. As of 2001, one in three African American boys born in that year, and one of every six Latinos, could expect to go to prison in his lifetime, compared to one in seventeen white boys.
African American and Latinx communities face deep structural inequities in treatment across every stage of the criminal justice process, from arrest, to trial, to sentencing, to prison and post-prison experiences. Some of these inequities are the result of "color-blind" policies, such as equal access to free legal counsel, that do not account for the vast differences in how access to resources can change the quality of legal representation. Others are directly resulting from biases during the sentencing process and more: for example, black men spend an average of 20% longer behind bars in federal prisons than white men for the same crimes.
Many foundations, including MacArthur Foundation, Ford Foundation, and Open Society Foundations, have committed to supporting restorative justice and criminal justice reform through their grantmaking activities. But what opportunities exist for foundations and other investors to consider how criminal justice and racial equity intersect in their investing activities? Below, we explore this topic in further detail.
- Services and products—and the investments behind them—can have negative consequences for our communities, in some cases affecting communities of color at higher rates. Examples of services with evidence of negative effects include tobacco, firearms, and prisons.
- Investment strategies addressing the negative effects of services or products sometimes involve divestment, negative screening, and engaging with companies to improve practices or the nature of services. To effectively act, we must look beyond the services themselves to the ecosystem of products, people, and systems enabling those services. For example, some organizations call for divestment from private corporations providing telecommunications services within prisons, as they often charge inmates exorbitant rates for telephone calls.
- Impact investors may find many opportunities to make a difference inside every single financial mechanism shaping the criminal justice system, including policing, privatization, bail reform, sentencing reform, and more. However, not all forms of financial support can or should take the form of an investment. For example, while some of this research has been done, organizations need funding to both support additional research and ensure that insights reach decision-makers.
- This page is evolving and in need of additional resources from experts in criminal justice financing and capital flows: if you have ideas to share, please contact us! And visit the Racial Equity Library for a growing list of related resources.
Divest from and/or Activate Against Private Prisons
Private prisons are privately-run corporations and organizations that are contracted by government. Unlike government run facilities, private prisons directly benefit from higher rates of incarceration. For example, the largest private prison corporations, Core Civic and GEO Group — both publicly traded companies— together manage over half of the private prison contracts in the U.S. and earned $3.5 billion in revenue in 2015. From 2000 to 2016, the number of people housed in private prisons increased five times faster than the total prison population. Research also suggests that private prisons disproportionately house people of color. Many private prison operators also run private immigrant detention centers.
The federal government and nearly 30 states used private prisons in 2016. Between 2000 and 2016, Arkansas, Kentucky, Maine, Michigan, Nevada, North Dakota, Utah, and Wisconsin stopped contracting private prisons due to concerns about safety and cost cutting for vital services such as health care. In the same time period, Alabama, Connecticut, Pennsylvania, South Carolina, and Vermont began contracting with private prisons. The following foundations are examples of investors that have divested from and screened out private prisons from their endowment:
- The California Endowment (TCE) applies 3 “negative screens” that prohibit certain investments that do not contribute to racial equity, healing, and wellness. In 2015, after learning about the effects of hyper-incarceration and its impact on communities of color, TCE began screening out for-profit prisons.
- Heron Foundation divested from private prisons in 2015. Upon discovering that their endowment included passive investments in private prisons, the foundation noted: "Heron has embarked on the path of understanding the externalities (positive and negative) of our investments, and looking beyond the financial return to an investor to understand how such externalities are contributing to or detracting from our mission."
Support Bail Funds
According to the Brooklyn Community Bail Fund (BCBF), 60% of people in U.S. jails are detained while awaiting trial — before being sentenced for any crime. In many cases, this is for lack of money to pay the price of bail. BCBF, Massachusetts Bail Fund, The Bronx Freedom Fund, and others provide revolving community bail funds that pool money to pay bail for local residents. When returned, the money re-enters the pool be re-lent to others. See here for a list of bail funds for protestors. See here for the National Bail Fund Network.
Many foundations support these bail funds through grants. While bail funds are not necessarily appropriate for foundation investments, they demonstrate the power of and need for below-market — in this case 0% interest — investment capital and the important role that foundation capital could play as a grant maker for a deeply under-supported investment tool.
Understand and Advocate for the End of Police Brutality Bonds
According to the Action Center on Race and the Economy (ACRE),U.S. cities and counties often use bonds to pay for settlements or judgments from court cases involving police brutality. When cities or counties issue bonds to pay settlement costs, banks and other firms collect fees for the services they provide, and investors collect interest. The use of bonds in this manner greatly increases taxes for citizens, while producing profits for investors— sometimes nearly doubling the original settlement costs. "We call the bonds used to cover police related settlement and judgment costs “police brutality bonds,” because they quite literally allow banks and wealthy investors to profit from police violence," notes ACRE in a thorough report attached to this post.
Divest From or Engage with Companies Developing Facial Recognition Software
According to the National Institute of Standards and Technology, algorithms used in facial recognition technology falsely identified Black and Asian faces 10 to 100 times more than White faces. Yet these same biased softwares are regularly used by police departments to identify suspects. While some companies, including Amazon and Microsoft, have temporarily banned police from using their softwares in response to public calls for justice, it is not clear for how long these decisions will last or whether they will have a wide-reaching effect on the development or use of such software for policing practices. Foundations can consider examining their portfolio to divest from companies responsible for this software or leverage shareholder voice to advance further action.