Each year, 10 million people are arrested and charged with crimes in the U.S. and nearly 600,000 return to their communities from incarceration. Low-income households and communities of color are the most impacted by the U.S. criminal justice system today. For individuals returning home post-incarceration, there are a number of barriers to successful reentry, including reduced employment opportunities and lack of access to financial health tools.
Financial Health Challenges and Justice-Involved Individuals
Financial Health Network research found that many justice-involved individuals are poorly served by the financial system both before and after incarceration. Twenty-nine percent of justice-involved respondents were unbanked prior to incarceration. Sixty-two percent did not attempt to borrow from either a bank or a nonbank lender in their first three years post-release, reflecting challenges accessing credit.
The financial health impact of insufficient access to financial products and services can be further exacerbated by a lack of employment opportunities for justice-involved individuals, as jobs are often limited for returning citizens. A 2018 study found that formerly incarcerated people are unemployed at a rate of more than 27%. For those who are able to find employment, median earnings for formerly incarcerated individuals are $10,090 in their first year of release, with only the top 20% earning more than $15,000.
The Financial Health Network’s recently released report, “Financial Health and Criminal Justice: The Stories of Justice-Involved Individuals and Their Families,” reveals that some individuals could not go back to their prior line of work upon release. Others found that certain professions were closed off to them. One individual explained that he used to work for two large entertainment companies and had extensive time in the industry, but after his conviction and release, he could not return because of the employer’s strict background checks. Another person interviewed had worked to obtain her teaching certification to pursue a higher-paying job, but was turned away because of her record.
Meet the Teams Working to Reduce These FinHealth Challenges
Together with advisory partner Credit Builders Alliance, the Financial Solutions Lab solicited applications from nonprofit-fintech partnerships working to improve the financial health of justice-involved individuals. We received applications from partners working on a range of financial challenges across the country, which were reviewed by a panel of experts in reentry and grant-making.
To help lower barriers to financial health and improve employment outcomes for returning citizens, the Financial Solutions Lab has awarded grants to five nonprofit and fintech partnerships working across the United States as part of our 2021 Exchange cohort. These partnered organizations will work together to promote financial health by connecting returning citizens with tools and resources to build resilience and thrive. The Lab will capture learnings from each project and share them at the close of the grant term.
The grantees include:
Justine PETERSEN Housing and Reinvestment Corporation and LaunchCode (Missouri)
The Justine PETERSEN and LaunchCode partnership seeks to address the financial health of incarcerated individuals and returning citizens in Missouri. The partnership will engage incarcerated Missourians in co-designing training around credit and entrepreneurship, while providing one-on-one credit building and business planning counseling for those within six months of release. Upon release, clients will continue to receive credit-building support via customized credit action plans and services, easing reentry and increasing access to entrepreneurship among returning citizens who face barriers to traditional employment. Consumer and business lending products are available for those who successfully reenter the workforce and gain access to stable income.
Justice and Accountability Center (JAC) of Louisiana and DaisyDebt (Louisiana)
Through this project, Justice and Accountability Center (JAC) of Louisiana and DaisyDebt plan to work together to adapt DaisyDebt’s existing debt dispute technology (designed for attorneys and counselors) to make it accessible to formerly incarcerated individuals and incorporate it into JAC of Louisiana’s existing Reentry Legal Clinics. The project will result in a fintech tool that will empower formerly incarcerated individuals to navigate the debt dispute process on their own, without the need for an attorney or counselor, and allow attorneys and credit counselors working with formerly incarcerated individuals to improve their services.
The Anti-Recidivism Coalition (ARC) and Stretch Finance collaboration aims to expedite access to checking accounts and remove barriers to employment for formerly incarcerated people. This is accomplished by providing ARC members with a free Stretch Finance checking account and debit card, combined with employment opportunities tailored to individuals with conviction histories. By incorporating the benefits of a checking account into relevant ARC support forums, Stretch Finance provides members unfamiliar with financial services with a more trusted and targeted account opening experience. The personalized employment opportunities, which are integrated into the digital banking experience, make finding a job more efficient.
Through this partnership, finEQUITY will manage marketing, partnership referral, and outreach, while IRC’s Center for Economic Opportunity (CEO) will provide integrated small-dollar loans and a decade of experience helping refugees to integrate financially. Together, they will reach formerly incarcerated community members who are either concerned about their credit status, don’t know their credit status, or know that they are credit invisible.
The Urban League of Essex County is partnering with Mobility Capital Finance, Inc., (MoCaFi) to offer a fully-featured mobile banking solution to assist returning citizen clients and their families. This financial product will provide credit building and bill payment capabilities at no cost to the user, alongside Urban League of Essex County’s wraparound services. The Urban League of Essex County is a comprehensive social service and community development organization providing integrated services to help families advance economically. MoCaFi’s platform also offers users resources to help them reduce bad credit, incentivize building savings accounts, and improve their economic stability over time.
In collaboration with Credit Builders Alliance, we look forward to working with these grantees over the course of the grant term and to sharing insights from their projects next year. To connect with our Exchange team or with one of the grantee organizations, please email firstname.lastname@example.org.