The Business of Corrections: Toward a Nonprofit Model

The for-profit prison model was introduced in 1983 to alleviate overcrowding in the public sector, but it also introduced valuable innovations, some of which have been adopted by the public sector.  However, this success has also come with questions about the wider impact of a profit motive in corrections. Setting aside this important conversation for the moment, I believe it’s safe to say that contract-based correctional outsourcing has an important role to play as the sector enters into a period of profound change. 

Maybe even a revolution. As Social Purpose Corrections’ CEO Brian Koehn has recently argued, dramatic changes are long overdue. For reasons too numerous to get into here, I believe the social costs of simply making small adjustments to the existing paradigm are far higher than the costs of trying something new. Which explains why I’m so thrilled to have join SPC’s team. 

As a former corporate officer with twenty years of experience in contract-based corrections, I’ve seen the best and worst these facilities have to offer. I’ve also seen the sector evolve over recent decades, much of it being influenced by the perception that for-profit prisons cut corners to increase profits.  This was not universal within the industry; the people with whom I worked were highly dedicated to wellbeing of those in their care. But over the years, government buyers were forced to become both very sophisticated and highly prescriptive in what services are required of private corrections and how they are to be executed.  They established rigorous auditing processes which, if used correctly, ensure that these requirements are fulfilled and nearly every jurisdiction assesses financial penalties when these requirements are not met.  

In other words, when effectively executed, government contracts largely eliminate the possibility of profit-driven corner-cutting. But they have also dramatically curtailed the innovation that private prisons are able to introduce. Contract correctional companies will continue to exist, providing correctional services at a cost that is attractive to customers. They will do so while paying market salary and benefit packages to front-line workers rather than far more costly government packages and, to a lesser extent, through corporate buying arrangements that yield economies of scale rather than local, community-based arrangements.

So, while for-profit corrections retain certain advantages over those operated by the government, we see, if you will, an “open lane” for further innovation by adopting a nonprofit model for contract corrections. The idea is to retain the cost advantages and operational flexibility of private facilities while allowing for greater, continued innovation directly helping each incarcerated person focus on the opportunities that come with his likely release—rather than punishment that fosters further despair and violence. 

The Current Model

First, for-profit corrections, like every other large industry that works with the government, maintains vast networks of lobbyists. Like all lobbyists, their task is to manage perceptions of the private corrections industry, look for opportunities, and encourage policies that optimize their freedom to operate. While SPC would also have to maintain staff who are responsive to lawmakers, we would focus on a transparency- and outcome-based compensation model, where reporting on key metrics becomes the basis of most government relations communication. This will give us a cost advantage with regard to government outreach. 

Second, as a nonprofit, SPC certainly has an incentive to grow and serve as many states as are open to our model. But we will do so without the driving imperatives of business growth necessary for for-profit corporations. Our North Star is the changing of the culture of incarceration in order to lower recidivism and, thus, the other out-of-control social costs that come with a model designed to maximize the punitive effect of prisons. Positive social outcomes inside and outside the walls are what will drive our growth, not merely efficiently operating a growing number of beds. 

Social Purpose Corrections’ Not-for-Profit Model

SPC’s model is designed to replace the inspect-and-fine oversight system with one that establishes a baseline of compensation for services, with higher levels of remuneration for officer and staff performance and the achievement of positive and measurable outcomes. With this radically different model, SPC aims to fundamentally recreate the incarceration model in the United States.

  1. Staffing.  Corrections as it exists today has an abysmally high rate of staff turnover, in both the public and for-profit sectors.  This is incredibly expensive, as retraining the same post over and over again keeps more team members in the classroom and fewer on the floor.  It also drives involuntary overtime and diminishes the employee’s sense of control over their work-life balance.  It suppresses experience levels, and makes lockup more dangerous for all involved.  

One of the top drivers of staff turnover is compensation that does not properly, well, compensate staff who succeed in a very challenging environment.  Another key driver is professional outlook: If this is just a job, rather than a vocational career, there are certainly more comfortable jobs out there.  Another driver is a top-down, micromanaging culture that deprives the employee of a sense of ownership and purpose.

In our model, staff will be both compensated and treated in an empowering manner that engages in sharing the success of those under their supervision and compensates them accordingly.  The correctional officer will be the most important employee in the company, and the facility hierarchy will be as flat as possible, built to support and empower those responsible for the facility’s, and the residents’, success.  Every opinion will be heard, and collaboration will be the norm.  

  • Dynamic Security Model.  Borrowing from proven policies and techniques already employed in Norway, our facility operating model will be novel in U.S. corrections.  We will focus on creating the most community-normal lifestyle experience as is possible for a given incarcerated person’s security level and personality.  We will focus on bringing community resources and programming into the facility, approximating as much and as safely as possible life on the outside.  You can read more about our Dynamic Security Model here.  
  • Outcomes-based Billing and Transparency.  Rather than the per-occupied-bed fee structure that exists in for-profit corrections today, we will structure our compensation to be heavily affected by measurable outcomes.  As I stated above, government agencies responsible for corrections have become highly prescriptive in how contractors operate, the primary enforcement mechanism being fines for performance failures. While this limits incentives to cut corners, it has had the side-effect of gutting most of the innovations that the private sector hoped to bring to the correctional environment.  We hope to fundamentally change this fee model by structuring our contracts to reward agreed-upon outcomes.  These could include in-facility outcomes such as educational goals, vocational and social skills demonstration, and the like, as well as potential bonus awards for improvement in post-release performance such as recidivism and employment.  We will build into our reporting an open window for our customers and community partners, leading to something more like a constant, collaborative audit and away from the current adversarial, punitive model. 

As SPC’s nonprofit model is deployed, we hope it will save tax dollars. What we can say with certainty is that the goal is to fundamentally change the lives of incarcerated people and corrections workers, and in so doing to change a wide range of social outcomes impacted by corrections.  Rather than paying taxes, private-sector corporate compensation packages, and stockholder/owner incentives, our margin will go to mission—programming, training, and community wrap-around innovations.  Our return on investing will be based on returning more capable citizens to their communities, measurable by:

  • A better foundation of support and security for underserved communities;
  • Lower rates of recidivism and reincarceration, and thus fewer victims and lower court costs;
  • Less homelessness, mental health challenges, addiction, and addiction-related societal costs; and
  • Stronger families contributing to the tax base, and a hope of breaking the parent-to-child cycle of incarceration. 

As stated above, community involvement is critical to the incarcerated person’s experience and as such we will prefer local procurement arrangements to corporate ones wherever possible.  This support of local business will offset the loss of the property taxes to remote facilities should the model result in such loss.

New Thinking, New Alliances

Another critical component of the Social Profit Corrections model is our power to leverage the full non-profit network across the country.  Both for-profit and public sector corrections collaborate with non-profit agencies to improve the experience and success of incarcerated people, but the current contract corrections model undeniably leaves many powerful potential partners on the sidelines.  Our experience has already shown incredible openness to a change in direction in corrections. We are in the process of fostering an alliance of non-profits to blanket the entire pipeline of home and family, mental health, crime, incarceration, re-entry, and re-offense paradigm.  To truly change, we have to touch people every step of the way, which will take a level of openness and collaboration the sector has never seen. 

We will also rely on the power of private philanthropy.  We are finding that major donors share our sense of urgency about the need for a fundamental change in corrections, and a desire for an operations model that gets beyond the level of conversation to making it happen.  With opportunities such as a staff academy, support curricula and programs for staff and incarcerated people, and implementation of these programs in our facilities, there is tremendous openness.  

Yes, this is a bold plan. But the number of people ready to reach across partisan lines to do something concrete that both protects society and breaks the current system’s orientation toward making people worse while they’re in lockup is innumerable. The current approach isn’t just ridiculously expensive in financial terms, it’s dehumanizing. Despite the best intentions and professional competency of so many in the corrections sector, society is yielding a terrible return on ever-increasing investment, with many intractable social problems made worse by an incarceration system that was built for another era. It’s time for a change.

John Pfeiffer is the Executive Vice President for Mission Support at Social Purpose Corrections.  In this role he coordinates the business support components of the organization including people, finance, legal and technology.