By: Amelia Josephson, Manager, Financial Health Network
One in five Americans has a criminal record of some kind. People of color represent 37% of the general population, but 67% of the incarcerated population. Two in three justice-involved families struggle to meet basic needs.
Policing practices, sentencing laws, bias in the criminal justice system, underinvestment in communities of color, the criminalization of poverty, and the resulting consequences of a criminal conviction all play a role in perpetuating a system that too often fails individuals, families, and communities.
With so many American families impacted by the inequities of the criminal justice system and struggling to navigate long-standing systems of incarceration and punishment that prevent them from achieving financial health, the opportunities to drive impact with innovative solutions are significant.
To support the financial health of people and families of those who have been fined, arrested, detained, and/or incarcerated, the focus of this year’s Financial Solutions Lab Exchange Challenge is “Improving the Financial Health of Justice-involved Individuals.” The Exchange, with expertise and advisory support from Credit Builders Alliance, will award up to five $50,000 grants to support innovative solutions designed and implemented by nonprofit-fintech partnerships that address the unique financial health challenges justice-involved individuals and their families face.
Why Focus on the Criminal Justice Space?
Two-thirds of adults in the U.S. are not Financially Healthy, according to the U.S. Financial Health Pulse: 2020 Trends Report, with Black Americans, people with low incomes, and women bearing the brunt of the economic burden of the pandemic. We also know that the criminal justice system disproportionately affects low- to moderate-income communities of color. This further amplifies other financial health challenges already impacting these communities.
- Two in three families with a justice-involved family member struggle to meet basic needs, including maintaining housing, as a result of their loved one’s conviction and incarceration.
- Credit scores of formerly incarcerated individuals are 50 points lower on average than those of individuals without a record of incarceration.
- Punitive fines and fees post-incarceration create cycles of debt that can damage credit scores and result in wage garnishment, suspension of a driver’s license, or, in some instances, reincarceration for nonpayment.
Furthermore, the COVID-19 pandemic has hit prison populations particularly hard, with correctional facilities topping The New York Times’ lists of largest outbreaks for months. In addition to suffering disproportionate health impacts, incarcerated individuals have been cut off from visitation and many in-person services. In many jurisdictions, this has amplified already urgent needs for useful, affordable technology-enabled products and services among incarcerated individuals and their families.
How Nonprofit-Fintech Partnerships Can Help
While policy solutions are critical to reforming our criminal justice system, we know that there is a role the nonprofit and fintech sectors can play in better serving the individuals, families, and communities impacted by the system. In conversations with stakeholders in the space, we’ve seen the innovative work being done around the country. We want to support and lift up that work. The time is right for innovation to advance the financial health of justice-involved individuals and their families.
Working together, nonprofits and fintechs can improve financial health outcomes for individuals and families impacted by the criminal justice system. Across the country, nonprofits assist individuals with pretrial needs, help families stay connected to incarcerated loved ones, provide in-prison programming, and support returning citizens when they come home to their communities. Fintech solutions have the potential to enhance the capabilities of nonprofits and the individuals they serve.
We welcome applications from emerging or existing nonprofit-fintech partnerships working on:
- Fintech Distribution: A nonprofit integrates a fintech tool into its existing program to increase engagement and impact. Example: A nonprofit re-entry support organization partners with a fintech credit building tool to help returning citizens establish credit and improve access to employment, housing, and financial products.
- Nonprofit Referral: A fintech integrates or refers customers to relevant nonprofit services. Example: A fintech helping individuals communicate with their incarcerated loved ones partners with a nonprofit to offer financial coaching and career development resources.
- Systems Enhancements: A nonprofit implements fintech systems or tools to enhance back-end systems or operational processes. Example: A nonprofit Community Development Financial Institution partners with a fintech to enable the use of nontraditional forms of credit in lending practices.
- Insights and Design: A fintech engages a nonprofit to get design input on new products and features. Example: A budgeting fintech engages a nonprofit to design and test a new product for returning citizens that is responsive to these users’ needs.
Learn More and Apply
We invite fintech companies and nonprofit organizations (including nonprofit Community Development Financial Institutions) to tackle these financial health issues together and help people across the U.S. impacted by the criminal justice system.
The program is accepting applications through June 30, 2021, and will announce the next cohort of grantees in fall 2021. The partnerships selected for the 2021 Exchange Challenge will receive a $50,000 grant, technical assistance to support project execution, and a forum to actively engage with nonprofit and fintech peers in your cohort.