Social Innovation
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Bringing Opportunities to Incarcerated Persons and Prison-Tech Startups

11.23.21 | 10 min read | Text by Emily Ryan


The Biden-Harris Administration should create a program that incentivizes unique prison-tech innovations by providing resources to help startups working in this space, specifically those that create solutions for individuals during and after their period of incarceration and beyond. The program would be structured as a partnership among several key government agencies, federal and state prison systems, and the private sector. For participating startups, the program would foster technical innovation, provide de-risking measures, connect viable product-market solutions, and establish equity-free funding opportunities. For individuals serving state and federal sentences, the program would improve rehabilitative efforts while in the corrections system, create potential job opportunities, and reduce recidivism rates. For the broader social good, the program would spur economic growth, create stronger communities, and contribute to more equitable outcomes.

Challenge and Opportunity

The United States has the highest number of incarcerated individuals worldwide: the U.S. prison population numbers nearly 1.9 million. Recidivism rates are equally astonishing. Of the over 600,000 individuals released from state and federal prisons each year, more than two-thirds are rearrested within three years of release. Half of those rearrested are subsequently reincarcerated.

The cost of recidivism is extraordinarily high. Recidivism costs taxpayers at least $366 million per year, with a single recidivism incident estimated to impose as much as $150,000 in taxpayer burden. Recidivism also has massive social costs. Continuous reincarceration harms communities, breaks families, and contributes to generational systemic poverty. To break this cycle, we as a nation need to rethink how we approach incarceration and assign more importance to reintegration efforts.

A major contributor to the recidivism cycle is prioritization of punitive measures over rehabilitative ones in U.S. prison systems. Such punitive measures can isolate inmates from friends, family, and even children for years or decades. Moreover, instead of providing access to educational tools that could set them up for meaningful work once released, prisons often shunt incarcerated individuals into low-level menial tasks that pay mere pennies per day. Incarcerated individuals often lack the skills needed to navigate life on the outside as a result. They are left without financial means or dependable job prospects. They are saddled with broken relationships and a lack of coping mechanisms. Coupled with the stigma of being labeled ex-offenders, they are often forced into unproductive behaviors and familiar but societally unacceptable actions. And inevitably, many fall into the same patterns and reoffend.

It is also worth considering the economic benefits our nation is failing to capture from formerly incarcerated individuals. According to the U.S. Chamber of Commerce, an estimated $78–87 billion in GDP annually is lost due to exclusion of formerly incarcerated job seekers from the workforce simply because of their ex-offender status, exclusion based on these individuals being “unskilled and unemployed” as a result of poor training and job opportunities while in prison. 

We can do better. Research shows that when incarcerated individuals are given access to tools that allow them to connect to people and resources who can help them, those individuals are better equipped to reenter society. Such tools include regular video and voice calls plus texts and emails with friends and loved ones. They include the ability to participate in physical, mental, and spiritual programs and community-led activities, including programs and activities offered through digital services. And importantly, they include access to online educational programs and learning platforms administered through hardware designed to make learning easier, more robust, and aligned with modern approaches to digital upskilling.

Indeed, there is a growing market for hardware, software, and other digital innovations designed to work within U.S. carceral systems. Startups focused on the prison-tech space have the knowledge and will to replace archaic, ineffective approaches to rehabilitation with more meaningful products and services. Unfortunately, prison-tech startups also face challenges not encountered by startups in other tech subsectors. 

First, many prison-tech startups are creating products and solutions that are extremely targeted towards smaller markets. For these players, finding customers means aligning with state and federal prison systems — something that is unfamiliar to a budding tech company.

Second, prison-tech startups, like all startups, often struggle to find funding. But while other startups can woo private funders with promises of equity, board seats, and concrete financial returns, success for these startups often includes bettering lives and fostering meaningful experiences, measures that cannot be quantified through revenue alone. Many investment firms have little interest in funding such “tech for social good” enterprises.
Third, prison-tech startups invest substantial time and money into including equality, accessibility and safety in their offerings. As such, access to this type of beneficial technology should not be limited to only carceral institutions with larger budgets to purchase them. At the same time, too many existing goods and services purport to serve incarcerated individuals equally and justly but are actually designed to maximize revenue generation. For example, systems like TRULINCS and JPay are pay-per-use services (for communication, money transfer, and other purposes) provided at extraordinarily high costs to incarcerated individuals and their networks on the outside — often at costs so high that the critical opportunities for connection they provide are simply unaffordable for those who need them most. Prison-tech products and services must be designed and used in ways that do not exploit, harm, or otherwise jeopardize the health and safety of incarcerated individuals and their families nor unduly burden individuals and their families with exorbitant costs per use.

Plan of Action

The Biden-Harris Administration should launch a cross-agency initiative to support prison-tech startups. The initiative would offer federal grants to fund private companies and nongovernmental organizations (NGOs) providing beneficial prison-tech goods and services: e.g., carceral learning platforms and tools that can prepare incarcerated individuals to reenter society. The initiative should also provide incentives for prison-tech startups to hire formerly incarcerated individuals. Such incentives will create self-sustaining ecosystems that provide meaningful, long-term employment to former inmates, drive bottom-line success for prison-tech startups, and better communities in which startups are based.

Relevant agencies

Key agencies to include in initiative design, management, and administration include the following:

Program structure

As explained above, the proposed initiative comprises two pillars. The first pillar focuses on federal grant funding to help prison-tech startups launch. The second pillar focuses on later-stage financial incentives and market support that help prison-tech startups scale and achieve long-term financial sustainability, and that encourage prison-tech startups to provide good jobs to previously incarcerated individuals. 

Pillar 1: Federal grant funding

Making federal grant funding (i.e., non-equity funding) available will encourage innovative startups to explore needed prison-tech solutions while minimizing risk associated with investing in such a specific market segment. The best option for funding the grant portion of the initiative is a combined approach that makes use of multiple existing federal funding vehicles.

The primary vehicle would be the Small Business Innovation Research (SBIR) program. Under SBIR, companies are generally awarded up to $150,000 for a Phase I (P1) grant that runs for up to six months. Companies who successfully complete P1 and show favorable outcomes and market opportunities can become eligible for Phase II (P2) funding, which has a cap of $1 million for a two-year period of performance. This staggered approach requires companies to measure and demonstrate positive outcomes in order to be eligible for follow-on investments. We propose creating a specific prison-tech topic code for SBIR, which would allow NSF and ED to use this program to allocate prison-tech startup grants. Though SBIR funding generally does not go beyond P2, the federal government could consider adding Phase III (P3) funding opportunities for particularly promising prison-tech startups. In P3, companies would be eligible for awards of $5–10 million to scale up products and services to meet the needs of prisons nationwide. A summary of proposed SBIR award numbers and funding levels for this initiative is proposed below.

Award numbers
PhasePeriod of PerformanceMax. awards disbursed per cycle
16 months — 1 year10
22 years5
3Est. 3 years2
Based on per annum investment at 100% for PI, 50% for PII and 33% for PIII, with an average of 7.5M award per PIII recipient)
Estimated funding levels (first five years)
YearFunding per phaseTotal funding
1P1: $1,500,000$1,500,000
2P1: $1,500,000
P2: $2,500,000
3P1: $1,500,000
P2: $2,500,000
4P1: $1,500,000
P2: $2,500,000
P3: $5,000,000
5P1: $1,500,000
P2: $2,500,000
P3: $5,000,000

Additionally, the Digital Equity Act — part of the recently passed bipartisan infrastructure bill—includes a total of $2.75 billion over five years to provide digital training and skill-development opportunities to low-income and disadvantaged populations, which includes those formerly incarcerated. Through this act (and specifically through its “Spurring Targeted Action through Competitive Grants” arm) the National Telecommunications and Information Administration (NTIA) will create an annual $125 million competitive grant program to support digital-inclusion projects undertaken by individual groups, coalitions, and/or communities of interest. The Biden-Harris administration should explore options for including the NTIA grants in the prison-tech startup initiative. 

Pillar 2: Later-stage financial incentives and market support

The goal of this pillar is to support prison-tech startups through the crucial period in between business launch and long-term fiscal sustainability — the period when many startups fail. Providing funding, markets and overall business support during this crucial time period ensures continuity of offering for the institution as well as ensuring small business thrives. 

The SBA and DOL should partner to provide continued financial incentives — e.g., extended tax credits and bonding programs — for prison-tech startups, particularly startups that hire previously incarcerated individuals. As part of this pillar, the DOL’s WOTC should be doubled to $19,600 per individual per year for employees making at least $65,000 per year.1 DOL’s Federal Bonding program should also be extended to cover the first 12 months or more of employment. Finally, the Biden-Harris administration should explore opportunities for retention bonuses or additional tax credits that encourage prison-tech startups to retain formerly incarcerated individuals beyond the first 12 months of employment.

The SBA and DOL should also help craft a business-to-prison product-matching service. This service will (1) allow prison-tech startups to focus on building the right solutions without worrying about customer acquisition, and (2) give prison management confidence that the prison-tech products and services they are purchasing are credible and tested. As part of this service, the SBA and DOL should assist businesses with understanding institutional needs and with understanding how to navigate federal and state contracting processes. The SBA and DOL could also try to help prison-tech startups identify supplementary customer bases among institutions such as city and county jails, juvenile-detention facilities, and state-sponsored healthcare facilities and hospitals in an effort to provide additional market opportunities for participating startups beyond the prison system. This ensures continued financial support for business and expanded product support through larger customer bases, something all startups need.