Reducing Recidivism Through Entrepreneurship

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Author	Catherine Kirby
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© edegan.com, 2016

Reducing Recidivism through Entrepreneurship

High rates of recidivism in the United States negatively affect prisons, inmates, the government and tax-paying citizens. In 2013, 2,220,300 people were imprisoned in the U.S.. A Bureau of Justice Statistics studies found that within three years of release, 67.8% of released prisoners were rearrested. Within five years, 76.6% of released prisoners were rearrested. Researchers typically link recidivism to lifestyle, unemployment, low levels of education, poor residential location, mental health problems and family instability. High levels of recidivism costs states millions of dollars; A Pew Charitable Trusts’ Center study estimated that if 41 states cut their recidivism rates by 10% they would save $635 million. On top of the monetary costs for the state's, recidivism rates have a negative effect on families and communities including familiar instability and a higher probability that a family will live in poverty.

A variety of entrepreneurs and public service organizations have developed programs to empower prisoners and combat high recidivism rates. Notable social entrepreneurship programs such as the Last Mile and Cafe Momentum provide leadership skills and help reduce recidivism through a variety of methods.While social entrepreneurship is a start, what about actually teaching entrepreneurship skills to prisoners?

While some might assume that inmates are incapable of holding down a job, let alone establishing their own businesses, the reality is that many people leaving the prison system are potential entrepreneurs. Inmates that took the Miner Sentence Completion Scale-Form T test, an assessment of entrepreneurial aptitude, scored higher than average entrepreneurs, slow-growth entrepreneurs and manager scientists. Additionally, many inmates are in prison due to their participation in illegal businesses, including drug trafficking and smuggling. In Freakonomics, Steven Levitt remarks that the gang in Sudhir Venkatesh’s study on gangs and the drug trade acted as a franchise for the larger Black Disciples organization. Coupled with the willingness to take risks that characterizes many inmates, prisoners could be prime candidates for entrepreneurship.

Prison Entrepreneurship Program- Unlocking Potential through Entrepreneurship One of the most notable and successful programs is the Prison Entrepreneurship Program (PEP), an innovative rehabilitation program aimed at transforming inmates in Texas. PEP places carefully selected inmates through a four-month business education program, teaching them skills valuable in entrepreneurial settings, including financial literacy, an employment workshop, a business etiquette course, and a Toastmasters class. Participants take over forty exams and interact with business executives. The final exam involves a thirty-minute business plan presentation. PEP also provides a prison-release and post-prison components including follow-up and startup mentoring.

The results from PEP demonstrate a fantastic return on investment, especially given the 1,300+ participants. 100% of PEP graduates find jobs within 90 days of release. Nearly 100% of these graduates are still employed after a year. Since 2004, PEP graduates have launched more than 200 businesses, and six of these generate over $1 million in gross annual revenue. Most importantly, PEP graduates have a recidivism rate of less than 7%.

Defy Ventures- Embarking on the Entrepreneurial Journey Defy Ventures also provides an entrepreneurial education to inmates. This national organization, which mostly operates in New York and California, describes itself as “an entrepreneurship, employment, and character development training program for currently and formerly incarcerated men, women, and youth.” It puts former inmates, mostly former leaders of drug rings and gangs, through a two-month training program. After, Defy Ventures admits some former prisoners into a 12-month entrepreneurship program where they compete for startup grants. It has a 3% recidivism rate and has produced more than 150 startups, mostly small businesses such as eco-friendly cleaning services. Defy has distributed over half a million dollars to Defy-based startups and small businesses through business pitch competition awards and microloans. Additionally, participants report a 95% employment rate within 7 months of enrolling in Defy.

Inmates to Entrepreneurs- Broadening Access to Entrepreneurial Education Inmates to Entrepreneurs provides educational seminars on entrepreneurship, online resources, and group-based support to help former inmates start low-capital businesses. This program, based in North Carolina, focuses on giving seminars on starting businesses in local prisons to inmates with six or fewer months to serve. Additionally, the organization brings ex-offender mentors on board that run successful businesses. AJ Ware, member of the Board of Directors for Inmates to Entrepreneurs, noted in a TEDxRaleigh talk that the participating inmates had less than a 3% recidivism rate and a 75% employment rate within 90 days of release. He also stated that in 2012, participants started 14 business. Inmates to Entrepreneurs is unique in its ability to provide large scale learning as its online resources and seminars are easier to implement in a variety of locations compared to the other two programs.

For the Future These three programs illustrate the potential of entrepreneurship programs in reducing recidivism rates in the United States. While expansion of these programs could potentially make the same positive impact on prison populations across the nation, it is also possible that the small size of these programs is integral to their success.

All of the programs described here carefully select a small group of participants. It may not be possible to target all parts of the prison population. Many of these programs have a competitive application process and low acceptance rate. Further research could be done to see the effects of entrepreneurship programs on a large scale without rigorous selection criteria employed.

Focusing on a small subset of the population does have long-term beneficial effects for former inmates and the communities around them. PEP has a 340% return on every dollar donated because of the money PEP saves by reducing recidivism and reliance on government assistance, and increasing child support payments. The potential economic benefit of an expansion of these programs could lead to saving the government and taxpayers millions of dollars.

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