Vol. 22, No. 5,514 - The American Reporter - September 7, 2016

by David Koch
American Reporter Correspondent
Colombus, Ohio
October 24, 2009
American Essay

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COLUMBUS, Ohio -- When ex-cons violate parole and are sent back to prison on a new felony conviction, as six out of 10 will be, their average stay in jail is from three to six years. The cost to jail them is $94,834 per "recidivist," as prison systems call them. The total incarceration cost for these recidivists alone is between $3 and $7 billion a year - just for the taxpayers of Ohio!

Can prisoner recidivism realistically be reduced from a current level of 36 to 59 percent to a figure below 10 percent? It can't happen overnight, but yes, it can. With state and federal budgets for prisons reaching incendiary levels, the need to implement new and innovative programs and reduce the annual $350 billion cost of recidivism has become profound.

Enormous amounts of capital are spent each year on offender rehabilitation and community reentry. However, despite these expenditures, the recidivism rate has escalated from roughly 50 percent just a few decades ago.

Although there are many excellent rehabilitation and reentry programs a vailable, very few are genuinely focused on, or capable of, addressing the core and immediate needs that can move an individual from an offender and tax consumer to an ex-offender and tax contributor.

Ex-offender community reentry is fundamentally a function of economics. Whether a person is a recent ex-offender or a recent college graduate, they need income. Without legitimate gainful employment, our survival mechanism is nevertheless going to provide for our basic needs.

As a fundamental goal, a genuine solution to a social problem necessarily incorporates the financial mechanisms for economically perpetuating the solution and therefore, the problem no longer requires funding from tax, community, charitable, or government and foundation grant sources.

Some of the most successful social organizations have practiced the principle that "The people who are the problem or have the challenge develop and become their own solution." Only a growing constituency of individuals who have personal experience and skin in the game will effectively conquer the challenges that contribute to recidivism.

Business incubation is not a new concept, but it is revolutionary, and with additional innovative concepts, business incubation can substantially solve the dilemma of recidivism within a generation.

The most common goals of incubation programs are creating jobs in a community, enhancing a community's entrepreneurial climate, retaining businesses in a community, building or accelerating growth in a local industry, and diversifying local economies.

Hundreds of businesses are started every day but very few are organized for success. The need to address the fundamental business disciplines is frequently either not adequately considered or not adequately budgeted.

All businesses need competent accounting, payroll, finance, legal and compliance assistance, sales and marketing, advertising, customer service, corporate communications, administration, etc. Each of these departments contributes to the organizations' overall health and its ability to grow. However, the implementation of each discipline requires substantial capital for an autonomous business.

There are hundreds of individuals released from prison who possess the intellect, business prowess and entrepreneurial spirit to grow a business. Among the greatest challenges are capitalization and a supportive network.

The formation of a business incubation origination that is operated by ex-offenders for ex-offenders would build successful corporations and would provide good paying jobs to other ex-offenders. It is the quintessence of the people with the problem becoming their own solution.

The economies of scale increase exponentially as additional incubators are deployed throughout North America. A single business incubator developed with 25 business enterprises creates substantial buying power when all purchasing is centralized through the incubator. These economies of scale are greatly magnified with all purchasing centralized through the parent incubation organization for all business incubators and all enterprises within those incubators. With a conservative deployment strategy, by the tenth year, the buying power of the parent business incubation organization is that of over 1,200 businesses.

Further, all of the products and services offered by each business can be cataloged in a database. When the parent organization, or any of the business incubators, or any of the incubator enterprises needs a product or service, the first purchasing source will be the database of incubator enterprises. The entire organization becomes self-patronizing.

Following initial private placement financing, the parent incubation organization becomes self-funding by retaining a small equity position in each of the incubated enterprises, and through an overhead sharing agenda. A portion of the total overhead to operate the parent organization and each of the business incubators will be shared equally among the population of enterprise businesses.

This strategy accomplishes six major objectives:

  • It holds the parent organization accountable to its entire constituency;
  • It cultivates team effort and peer accountability among all enterprise businesses to practice spending discipline and use resources prudently;
  • The cost to each enterprise decreases as the population of enterprise businesses grows;
  • It creates a financial incentive to carefully review and approve the sponsorship of all incubator businesses;
  • It creates a synergy whereby all CEO's have a vested interest in the success of one another;
  • The entire organization is self-policing.

Among its objectives, the parent incubation organization will build an endowment from the success of its incubated businesses that will in turn provide seed and growth capitalization for a continuing and self-perpetuating business incubation agenda.

According to the National Business Incubation Association (NBIA) the Client FY 2000 average income was $7,770,341 (the median was $3,514,978). The average number of client companies served per incubator was 22 and the median, 13. Startup firms served by NBIA member incubators annually increased sales by $240,000 each and added an average of 3-7 full- and part-time jobs per firm.

Using substantially more conservative projections than actual averages from NBIA, the total income of all ex-offender incubated businesses generated during the initial nine-year deployment is $367,744,167, and will have created tens of thousands of good jobs for ex-offenders. Given current recidivism rates that range from 36 to nearly 60 percent, and even taking the low end of that range, suggests that recidivism costs society $350 billion each year.

Melding the principle of "people with the problem becoming their own solution" with proven business incubation agendas can provide a solution to a recidivism epidemic that feeds its own growth and presents an unbearable cost for our nation.

A more detailed outline of this program is available for download at my Website. David Koch, a former Inc 500 fiber telecom executive, is currently the primary financier at Green Lab Holdings, Inc., a firm re-inventing the generation and distribution of energy in the U.S. Koch, accompanied by his yellow labrador, Buddy, also provides informative, inspirational and motivational seminars in correctional facilities for working staff, and both adult and youthful offenders.

Copyright 2016 Joe Shea The American Reporter. All Rights Reserved.

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