NPR’s Planet Money podcast first shared the story of Fredrick Hutson in March 2015 and recently updated his progress in their “The Prisoner’s Solution” episode. Hutson’s story illustrates the heart and foundation of social enterprise and impact investing.
During Hutson’s 5 years in prison, he faced an unexpected yet common struggle for those incarcerated and their families – paying to talk to each other over the phone. After leaving prison, Hutson decided to start a business that would meet this need more fairly. He is also likely saving all of us tax payers a lot of money and our communities a lot of harm.
Numerous studies over more than 40 years have consistently shown that prisoners who maintain close contact with their support network while incarcerated have better post-release outcomes and lower recidivism rates. Nevertheless, our prison system often moves inmates far from their support networks. Prisoner communication services are often provided by sometimes predatory private companies who pay millions of dollars in commissions to correctional facilities for the opportunity to do the business.
Communication between prisoners and their support networks are a public benefit, reducing future costs of incarceration and the numerous monetary and social harms done when released prisoners return to crime. However, both correctional facilities and phone service providers treat phone calls as purely a profit making opportunity. Financial benefits are being privatized while lower income families are financially burdened and deep social costs are being externalized to communities and tax payers.
Enter: Fredrick Hutson.
The podcast (http://www.npr.org/sections/money/2017/06/14/532964973/episode-610-the-prisoners-solution) tells the story best, but I will highlight what was most striking to me. Pigeonly has launched two products addressing communication barriers between inmates and their support network of family and friends. As Hutson was in prison, he saw the financial burden born by his family and girlfriend just to talk to him, which often led to frustration and reduced connection. He personally knew and saw what both mail and phone calls meant to him and other prisoners, especially on their path back to their communities. Despite the numerous resource and networking limitations that all former felons face, Hutson has shown the grit to build his vision.
Hutson created Pigeonly whose first product was Fotopigeon, which allows users to send printed photos to their incarcerated loved one directly from their cell phone, tablet or computer. Telepigeon, a VoIP phone service, provides inmates a cost effective alternative to otherwise expensive prison phone calls. The company is currently sending approximately 5,000 photos a day and facilitating 2 million minutes of phone calls a month.
I suspect Pigeonly may be doing more to reduce recidivism and prevent future crime than any other for-profit company in the country. Hutson is likely saving our country millions of dollars in future incarceration costs. Unfortunately, we do not operate in an economy that would shows such values on their income statement. So, he will continue to compete against deeper pockets, high paid lobbyists, and established industry networks, but I would be willing to bet on him and his team as others have.
1. According to Crunchbase, Pigeonly has raised over $5 million since 2012, with close to $2.5 million closing in June of 2016. Y Combinator was the lead in their 2014 funding round.
2. The primary providers of prison phone call services in the U.S. are Securus Technologies, Global Tel Link, and CenturyLink. See if they are in your portfolios; then review their practices and decide if you want to continue to profit from their work.
3. In 2015, the FCC moved to place caps on phone service fees as some rates approached $1.50 per minute. As the Trump administration began, the FCC dropped its defense of these new rules against the legal challenges brought by the industry. In June of 2017, the D.C. Circuit Court of Appeals said in 2-1 decision that the FCC overstepped its authority by trying to set limits on intrastate phone call rates. The court, though, found that an FCC rule capping interstate rates is permissible.