If you have a 401(k), there’s a good chance that it’s invested in private prisons or the companies that support them. A new tool, Prison Free Funds, will help you find out if that’s the case and then switch to a different mutual fund.
“The prison-industrial complex has kind of crept into our economy and has become part and parcel of the economy,” says Andy Behar, CEO of As You Sow, the nonprofit that built the new platform, the seventh in a series of tools for investors. “And so people don’t realize what’s inside their 401(k) plan.”
Private prisons didn’t exist in the U.S. before the 1980s, and in 2016, the Justice Department said that it planned to end their use; that plan was reversed months later by the Trump administration. Corporate-run prisons have several problems, including the basic business model. “The way it works is kind of like a hotel,” says Behar. “You’re going to make money when all your rooms are occupied. So the best way to keep your rooms occupied is to use your financial resources as a company to lobby for mandatory minimums. People could have three minor infractions, and they’re in jail for 20 years. That’s how you keep rooms filled.” The investing tool also screens for companies that use prison labor, as well as companies that run or support border detention facilities. “Microsoft is on here because they make a lot of equipment for the border detention facility,” Behar says.
Without the platform, the information would be difficult to find. “You basically would need a Bloomberg terminal and weeks to figure it out,” he says. As You Sow partnered with American Friends Service Committee, which collects detailed data about all companies involved with the prison system, from phone services providers to bail bond insurers, and then built the platform to make it easy to access. Investors can also now use the tool in combination with the nonprofit’s existing tools, which screen for issues like deforestation and gender equality along with financial performance. “We built these systems because nobody knew [what was in their 401(k)], and the economic system is built to hide it,” says Behar. “We believe in transparency.”