November 1, 2015

Screening: Why We Don’t Invest in Private Prisons

Investing for social impact is sometimes about where you choose not to put your money. ELCA social purpose funds screen out companies whose business practices and products conflict with ELCA teachings and policies.

The ELCA’s newest social screen applies to investments in private prisons, and was approved by the Portico Benefit Services board of trustees at its Oct. 2015 meeting.

The push for a screen on private prisons began with the adoption of “Hearing the Cries”, the ELCA’s social statement on the Church and Criminal Justice, at the 2013 Churchwide Assembly. This social statement affirms the principles on which the American justice system is based, such as due process of law and the presumption of legal innocence, and spells out the negative impact incarceration can have on society. Hearing the Cries lifts up all those affected by deficiencies in the criminal justice system — from crime victims to the incarcerated to those wrongly convicted, and finally, to the community.

While many see the use of private prisons as a social justice issue, the ELCA’s Corporate Social Responsibility table uses a broader lens to object to the current trend toward privatization of the criminal justice system.

“The ELCA’s social statement on criminal justice objects to the use of private, for-profit prisons for theological, moral and economic reasons,” Pat Zerega, consultant to the ELCA on corporate social responsibility, said. For instance, the statement points out the inherent conflict of interest when “a corporation’s profits depend on a steady flow of offenders into or back into its prisons.” Our church teaches it is the government’s direct responsibility to humanely dispense justice on behalf of its citizens, Zerega said. “Therefore, investing in the operations of the private sector is in direct conflict with the stance of the church.”

The ELCA is concerned that privately owned, profit-motivated prisons are less likely to provide the services needed to properly care for and successfully reintroduce offenders. According to the screen, “Contracting with private firms invites problems with successful offender reintegration into society, and reduced services such as medical care, education, job training, and counseling.” In extreme cases, according to the screen, a lack of government oversight could lead to serious human rights abuses such as lack of medical and mental health care, lack of basic hygiene, or holding male and female prisoners in the same area. In addition, much of the revenue generated by private the prison industry is connected with immigration detention.

Zerega said there are currently two corporations running the majority of private prisons in the U.S., which makes this screen relatively easy for Portico’s investment managers to implement.

Read the ELCA’s social screen on private prisons at