Part II: Former Inmates Need Comprehensive Financial Capability Supports for Life After Incarceration


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Marlysa Thomas is a program manager at the Corporation for Enterprise Development, where she builds capacity in non-profits that work directly with low-income communities. She specifically focuses on narrowing the racial wealth divide, and believes that part of narrowing this divide requires that we also financially empower formerly incarcerated individuals. This article originally appeared on CFED’s Inclusive Economy blog, which you can read here.


In my last blog, I highlighted the importance of building credit for returning citizens to help remove barriers they face in becoming employed and securing housing—two factors that are critical in becoming financially stable. But just like we need more than ‘banning the box’ to support this population, we also need more than building credit—we need to help formerly incarcerated individuals achieve financial capability.

This can start with building good credit, but it doesn’t end there. Financial capability supports are critical to helping returning citizens move towards long-term financial stability.

But what are these supports and how would they help returning citizens achieve full financial inclusion? There are a lot of financial capability supports out there. In short, these supports help smooth out income gaps, increase one’s financial knowledge and skills and provide access to asset-building opportunities. Supports include benefits screening, financial coaching, credit-building and debt reduction services and access to checking and savings accounts. These are just a few, but in the case of returning citizens, arguably the most important financial capability supports.

With other financially vulnerable populations, practitioners have found that bundling services is the most effective strategy for moving their clients toward long-term employment, higher income levels, greater job retention and overall financial stability. While some reentry programs do bundle services, this is very rare. Moreover, these programs usually bundle job training opportunities and work supports but typically ignore the importance of integrating other financial capability supports, such as those outlined above.

The Financial Clinic offers a promising example for how reentry programs can integrate financial capability services to best support our returning citizens. With the support of the Mizuho Foundation, The Financial Clinic launched the New Ground Initiative—an innovative two-year project that incorporated financial capability supports into twenty existing reentry programs across New York City. The initiative trained reentry service providers to address financial obstacles that newly-released individuals face in becoming financially secure. Returning citizens often face outstanding debt upon release and may be apprehensive about opening a bank account out of fear that income gained from employment may be garnished, not leaving them with enough to get by. In this initiative, The Financial Clinic trained service providers to address these unique circumstances and help returning citizens modify their payments.

In addition to training service providers, The Financial Clinic also engaged in systems change to integrate financial capability supports in the case management and service delivery systems of each reentry program. One of the biggest lessons learned was to not only focus on the severity of debt and other financial issues that returning citizens face, but also to inquire about how the individuals entered prison and identify who had access to the individuals’ finances while incarcerated. Having this conversation at the beginning of the intake process, the Initiative discovered, helped returning citizens, case managers and financial coaches alike flag important issues and made integrating financial capability during reentry more worthwhile for the client.

While we need more reentry programs to integrate financial capability supports—in New York City and across the United States—service integration alone is not enough. To help released individuals achieve financial stability, we must expand access to the financial supports that are currently barred from them, including the Earned Income Tax Credit (EITC), public benefits and affordable housing. We need to enable this population to benefit from these federal and state supports to fortify their ability move out of financial vulnerability and decrease rates of recidivism.

Thousands of released individuals go back to jail or prison because of their inability to pay mandatory fees and fines and lack of access to affordable housing. This tells us that more supports are still needed to facilitate stable reintegration. To successfully rejoin society, former inmates need to gain and retain employment that enables them to earn income, save and pay down debt. One of the most robust income supports for low-income working Americans is the Earned Income Tax Credit (EITC)—a tax credit for low-income workers that helps to smooth income gaps. If most low-income workers earn poverty-level wages or below, we know that earning prospects are even worse for returning citizens. Expanding the EITC to childless workers and workers ages 21 and up (EITC eligibility currently doesn’t start until age 25), would afford the majority of released individuals to have the security of earning enough income with their job to cover bills, pay down debt and use the financial capability tools and services gained in their reentry program to start saving for the future.

But what about other benefits, like food or cash assistance? What happens if they are called back for the job? Are they making enough to cover food as well? Unfortunately, the 1996 federal welfare reform law prohibits the majority of returning citizens from receiving federally-funded food and cash benefits, like SNAP and TANF. In fact, 42 of the 50 states in America have a complete or partial ban.

These restrictions are compounded by public housing authorities, which often discriminate against returning citizens. Despite the fact that the Department of Housing and Urban Development sent a letter in 2011 encouraging public housing authorities to allow people with criminal records to rejoin their families in public housing programs, housing discrimination still poses a serious barrier to returning citizens. That means that even after former inmates improve their credit scores and get a job and smooth out their income through an expanded EITC, they may still have a difficult time securing adequate income and affordable housing. So, where does this leave returning citizens after they have served their time? How are we enabling them to become productive members of society?

Let us not forget that enabling financially vulnerable populations, like returning citizens, to achieve financial stability has led to

  • Higher levels of employment for longer periods of time
  • Better projected credit scores and higher earnings to start saving and building assets
  • Expected individual sustainability with less reliance on government assistance

These benefits reduce recidivism and help make reentry more successful. But to obtain these benefits, we must integrate financial capability in reentry programs, expand eligibility for the EITC and public benefits and prohibit discrimination within public housing. Without these reforms, we will be unable to fully realize the potential of our returning citizens.