FreeCap Financial

There are 2.2 million people incarcerated in the US, most of whom are minorities. The prison industrial complex exacerbates the problem. Companies lobby for policies that lead to higher incarceration rates to secure vending contracts with correction departments, access cheap (or unpaid) prison labor and maintain monopolies on services like telephones. The discrimination formerly incarcerated workers experience leads to unfairly high unemployment rates and increases recidivism rates. This contributes to racial inequality in the US and cyclical patterns of economic and societal violence. 

FreeCap offers a data-driven solution to this problem. We monitor companies’ supply chain and hiring policies to assess their impact on inequality and rate them based on their performance. Our research brings unprecedented transparency to corporate involvement in fair chance hiring and empowers investors to divest from companies with discriminatory practices, increasing reputational risk for bad actors. To reduce this risk, companies will end exploitative practices.  

Mass incarceration is one of the biggest racial injustices of our generation. With roots tied to slavery, Black codes, chain gangs, and now prison labor (still legal through the 13th amendment), ending mass incarceration is a crucial step towards racial justice. The 2.2 million people incarcerated in the US represent over 20% of the global incarcerated population, with over 10M admissions to jails annually across the country (Prison Policy Initiative 2018). The harm of mass incarceration extends beyond the inhumane and poorly compensated working conditions behind bars. Nearly 1 in 2 people in the US knows a formerly incarcerated individual and the economic toll of incarceration is nearly $1 trillion with factors such as loss of wages, loss in productivity (GDP), government spending on incarceration, and family expenses to keep in touch with incarcerated loved ones (Fwd.Us 2019) 

Moreover, the over 600,000 individuals who return home from prison annually are economically disadvantaged and discriminated against upon their release, unemployed at a rate higher than any other population in the US during any given economic downturn. FreeCap’s first ratings are aimed to increase employment opportunities for these groups and as we grow, replicate our methodology for other racial justice issues.

Our solution aligns financial and social justice returns in unprecedented ways. Currently, we measure several different indicators, along the themes of fair chance hiring and prison risk mitigation. Soon, we will expand our ratings to better understand how companies promote diversity and inclusion in their workforces. Companies with higher scores in these categories are more likely to produce financial returns for investors as discriminatory hiring practices and prison labor in a company’s supply chain pose a threat to their long-term sustainability. For example, if the public discovers that a company unfairly discriminates against individuals with a criminal background, a reputational risk that can undermine its sales and brand arises. We weight information like this and score each company, synthesizing unstructured information into structured datasets. Users then benchmark companies against their industry peers and make more informed investment decisions.  

This July, we are piloting our solution in the form of a comprehensive report that compares the S&P100 on their interactions with criminal and racial justice. We then plan to transition our PDF to an interactive web-based platform, scale the number of social justice indicators that guide our research, and incorporate data scraping tools into our research process to scale our database.

Currently, we have two target populations: (1) currently and formerly incarcerated individuals providers. By reducing the commercialization of the criminal justice system and increasing profit incentives for companies that work to create racial and social justice, we can eliminate one of the drivers of mass incarceration and other inequity in the US. The US justice system perpetuates systems of violence and harms minority populations at a higher rate than it affects more privileged groups. Communities of color, who are disproportionally impacted by this injustice, can have more equitable access to jobs through our work. Fewer companies would spend money on lobbying efforts to keep prisons full, and fewer people would be forced into unpaid labor while incarcerated. Additionally, we demand company transparency on hiring practices and the implementation of fair chance hiring policies like Ban the Box. This will reduce discrimination from the very beginning of the employment process and create more inclusive work cultures in which every individual can grow their career.   

Our research is also transformational for investors. There are currently limited options available to investors who care about criminal and racial justice and want their money to align with their values. FreeCap’s ratings will enable them to act upon these values. Our data and research give investors the transparency they need to advocate for racial equality, criminal justice, police reform, and economic justice at the corporations where they are shareholders. Since our information is distributed digitally and the companies we rate are headquartered across the United States, our impact is nationwide.  

In order to engage with these two groups, we are mapping out our internal capabilities and firsthand experiences alongside outsourced expertise and research. Growing up in a small town in rural Florida, some of the smartest people I know went to prison instead of college. The absence of my incarcerated family members has been the single most traumatic part of my family's recent history. Prior to launching FreeCap, I worked on the business development team at an impact investing firm and traveled extensively to industry events. I met many people who wanted to invest in racial equity but could not find products on the markets. Around that same time, I reconnected with my younger brother who had just been released from a four-year sentence from prison. We talked about the unpaid labor he did while incarcerated and the multitude of ways that money intersects with the prison system. At that moment I came up with the idea for FreeCap, bringing together my passion for socially responsible finance and resolve to end mass incarceration and create a more equitable and just society. 

While there are numerous nonprofits and advocacy groups working on ending mass incarceration, few are leveraging capital markets to create systemic change and combat inequality caused by structural injustices that have existed in our country since its founding. FreeCap solves this problem: we help investors divest from the prison industrial complex and instead, invest in companies that support returning citizens making it possible for investors to use their shareholder power to create change.

Additionally, internally, our organization commits to holding ourselves to the same standards with which we judge the companies we rate. We actively partner with the Georgetown Pivot Fellow Program to recruit a pipeline of justice-involved individuals into our organization and Board. We also commit to paying all of our employees, including college interns, a living wage in exchange for the work they do for us. This allows our team to grow through diverse perspectives which ultimately shape our product and how we plan to serve our future clients. 

Formerly incarcerated individuals are unemployed at a rate over 27%. Companies are rarely held accountable for hiring practices that are explicitly and implicitly biased against justice-involved workers. FreeCap’s first product offering is aimed at changing the hiring narrative for this community. We identified hiring practices that companies can enact to create more equitable access to jobs and personal development and by sharing this information, investors and the public can hold companies accountable. As we expand our ratings, we will serve other communities and allow investors to intentionally invest in companies that work against systemic racism and toward social justice.

Over the past year, we have focused our efforts on (1) finalizing our research methodology and metrics, (2) aggregating quality research, and (3) prototyping distribution formats and vetting distribution channels. Currently, we have completed the ratings of the top 100 companies in the US with respect to their hiring practices and prison risk mitigation. We achieved this largely through the support of paid interns who conducted manual research through publicly available materials. Simultaneously, we worked alongside a General Assembly team to create a prototype of our web-based platform that will eventually allow access to our research in an interactive format. In the meantime, through the work of consultants at Georgetown University and through our own research, we have identified that a PDF version and report of our current research can temporarily be distributed to clients as we continue to grow. We plan to sell this report in August of 2021. 

Our long-term vision is to reach Bloomberg’s scale in the financial research industry while specializing in social justice issues, filling a gap in the current market. Traditionally, solutions to racial injustice and mass incarceration have been led by advocacy groups and other non-profits. Meanwhile, FreeCap offers a data-driven market-based approach to advancing social justice. Our ratings harness the research non-profits produce to create investible insights. This is an unprecedented approach to aligning social justice and financial returns with our specific focus on populations impacted by discriminatory hiring practices.  

FreeCap increases the ‘reputational risk’ of exploiting communities impacted by incarceration and discriminating against vulnerable populations. This "reputational risk" approach has been successful in the climate change movement—many fund managers are now "de-risking" themselves by diversifying their portfolios towards more environmentally sustainable investments. We’re confident that replicating this strategy with our metrics will be a successful approach to working against structural racism. As we replicate this approach across other social justice issue areas, we will scale our current database. By becoming the go-to source for social justice investing criteria, we will empower every investor to invest alongside their values and companies will begin to put practices into place that value workplace diversity. Similarly, other data providers in the market will begin to hold companies to a higher standard under new lenses of social justice impact. 

Our solution serves tens of millions of people that can be divided almost entirely into 3 groups: (1) justice involved individuals, (2) investors, and (3) our team. To begin, our inspiration for FreeCap is to serve justice-involved and other marginalized populations in order to create a more just and equitable society. There are over 2.3 million individuals incarcerated in the US today and over 600,000 individuals are released annually. When we pilot our first ratings and research in August of 2021, we will be serving this entire population by elevating issues that affect them. Our research also benefits the companies we rate. One year from now, we plan to aggregate data on over 500 companies, and in five years, over 10,000. 

The next group that we serve is investors. Our ratings allow investors to invest in companies that are offering opportunities to and shifting the employment narrative for marginalized populations. Over half of Americans invest in the stock market and increasingly, every 1 in $3 is invested with some kind of ESG lens. Because of this, at scale, FreeCap will be able to serve nearly 20%of the US population with social justice investing insights. Lastly, FreeCap serves our team. Between full and part-time employees to our interns, we are working to recruit a pipeline of individuals with identities historically underrepresented in the finance industry. While our impact scopes both large and small groups, we remain dedicated to offering and promoting fair employment opportunities that address systemic prejudices. 

FreeCap is validating our progress toward our impact goals through (1) demand for our thought leadership and industry recognition and (2) development of strategic partnerships. The impact we’ve made thus far has been through public awareness campaigns about the prevalence of prison labor and prison vendors in most investors’ portfolios. FreeCap’s CEO has spoken about our research at SOCAP, the largest impact investing conference in the United States, Stanford University’s Very Impactful People (VIP) series, Vassar College, Tufts University, Georgetown University, and Yale University. Our research lens has been published across prominent news outlets, including MarketWatch. Our work is supported by Echoing Green and Halcyon Incubator, and most recently, FreeCap’s Founder was named a 2021 Roddenberry Fellow and a “Group to Watch” by New Media Ventures. 

 
We've also seen indicators of success through the student divestment movements we have advised. One of our interns from Georgetown University was able to successfully launch a prison-industrial complex divestment campaign - gathering hundreds of signatures from Georgetown students to engage with the University’s Committee on Social Responsibility and Investments. Through her work, the University is considering tactical steps to invest with a criminal justice and racial equity lens. Moving forward, we plan to measure our success by the number of endowments following FreeCap’s guidelines, the number of companies we have rated in our database, growth in companies adopting fair chance hiring practices, and the reduction of the prison industrial complex.  

Full time: 2 

Part-time: 3 

Interns: 3 

Contract: 1 

Team total: 9 

Unlike many professionals in financial services, our lived experiences inform our commitment to racial justice. Growing up in rural Florida, some of the most brilliant people I know went to prison instead of college, including my younger brother. I spent over a decade studying this injustice, trying to find a way to understand how and why people I care about were pipelined into the prison system. I realized that the prison system is an example of how corporations profit from people's exploitation every day. This led me to a career in impact investing. I launched the marketing department at MicroVest Capital Management and developed its impact measurement framework for assessing impact in its investment portfolio. Working in that industry showed me that if people understood that they could direct their investments to companies that provided opportunity, rather than feed injustice, they would. 

I've recruited an all-star team to bring this vision to life. Chloe Quigley is FreeCap's Business Development Associate. A recent Georgetown University alum, as an intern, Chloe launched a university prison-industrial complex divestment campaign inspired by FreeCap's methodology. Our Data Science Lead, Jordan Brown, has a specialty in using data to inform public policy decisions, giving him a critical lens to leverage our data. Our Marketing Lead, Assefash Makonnen, has experience leading communications for small organizations scaling their social impact. Camille Darling, our Product Lead, previously created an impact measurement analysis of companies and provides unique guidance for our own niche dataset and development. 

FreeCap, being a company aimed to create more employment opportunities for marginalized and minority populations, is dedicated to offering employment opportunities to individuals with identities underrepresented in the finance sector. Building a diverse, equitable, and inclusive leadership team is ingrained in our company values. Most explicitly, FreeCap is an antiracist organization. This means that we value people power and freedom, and we are proudly women and people of color-led and informed. At FreeCap, we believe in the power of people to individually and collectively create and influence positive change and rely on the ability and necessity of women and people of color to be primary voices, actors, and influencers in the finance space. Moreover, we believe in freedom and the inherent right of all humans to seek, be, and feel free. As we build our team, we look for individuals that reflect and embrace these values. 

Further, our team’s power is in our lived experience. We value knowledge and believe in evolution and applying what we learn to our work to continue to grow. We seek team members that are solution-oriented because we believe that we have the agency to build a world that is aligned with our values. 

MIT Solve’s community and resources will spearhead the external growth that we built over the past year. Currently, our greatest barrier is scaling our product. Through the financial resources of the program and the technical expertise, we will be able to automate our research process and expand our company coverage to 3,000 companies by the end of 2022. This is essential for FreeCap to provide insights that allow investors to understand the complete landscape for social justice investing opportunities. Additionally, MIT Solve’s community will help more investors realize that investing in racial equity and justice is possible. In this way, we will be able to achieve our mission of empowering investors to invest alongside their values, making social justice investing the norm rather than the exception. 

Over the past year, we built a product that can begin to dismantle systemic racism in the workplace. Through MIT Solve and access to media outlets, we will bring this product to investors and companies will begin to change their practices, drastically changing the landscape for investors who want to create social change. For us, becoming a Solver means starting to scale. For the investment community, it means aligning financial and social justice returns. For marginalized populations, it means more employment opportunities and pathways to transformation for themselves and future generations. 

Our goal for this year is to bring FreeCap to scale. This means that we need to (1) transition to an automated research process, allowing us to exponentially grow our database, and (2) further establish ourselves as the premier source for racial and social justice investing insights. For these reasons, we look forward most to the partnerships that will help us get technical expertise for our machine learning transition. The technology partners will be integral to allowing FreeCap to rate thousands of more companies across our current fair chance hiring and prison mitigation metrics as well as other metrics that cover how companies can create a more justice and equitable society. For example, by working with our team, these partners can help us develop software that will run searches to highlight companies that are truly committed to creating and sustaining a more diverse workforce.  

Additionally, public relations partnerships can guide our Marketing Lead’s efforts and help us develop our brand. By connecting our team to more media outlets, we know that we will be able to reach more investors so that they are aware of social justice investing opportunities. We know this is integral to our growth as we saw last year through my Market Watch article. This effort, combined with the service distribution partnerships, will help us reach our greater goal of making social justice investing the norm in the investment community and ultimately shifting company hiring practices to work toward diversity and inclusion. 

Currently, we informally partner with nonprofits and advocacy groups that are also working to end mass incarceration and advance racial justice. Gaps in our current community include (1) individuals with technical expertise that can transition our research process to an automated process, (2) media outlets that can publicize our report, and (3) academics that can peer review our report and help guide the next iteration of our company ratings. We believe that MIT Solve will be able to fill each of these gaps in our current expertise and community. 

For example, with Laurene Powell Jobs in the Solve network, we can engage with her on Emerson Collective’s criminal justice initiatives and learn from their work. Additionally, we know that MIT faculty have robust experience with machine learning and their guidance would be instrumental to our further development. 

By providing transparency on company prison risk mitigation within its supply chain, FreeCap is working to create safer and more equitable work opportunities for currently incarcerated individuals. Further, by rating companies on their job flexibility options, our team is empowering investors to put their money into companies that better meet the needs and schedules of more diverse populations. In other words, we are helping to build the workplace for the society that we live in today, not overlooking but intentionally including the historically marginilized.

Through the Robert Wood Johnson Foundation Prize, FreeCap will be able to direct research and resources to develop our next data set which will focus on immigrant rights and how companies can help protect them and offer viable work opportunities for these populations. We will use the funding to (1) cover the salary of the research associate that develops our company assessment framework, (2) outsource the automation of these ratings, and (3) engage in media campaigns in order to educate investors on these new social justice investing opportunities. In all, our expanded company coverage and new metrics will enable a more just society, allowing for more equitable outcomes to arise personally and professionally for minority populations.

The combined support from MIT Solve and the Elevate Prize Foundation would be instrumental to developing FreeCap and guiding my trajectory as a social entrepreneur. At FreeCap, our team's mission is to empower every investor with the opportunity to invest alongside their values and make social justice topics an integral part of business development conversations at companies in the US. Through this prize, we will be able to rapidly scale our dataset in order to meet this goal.

More explicitly, we will be able to automate our research process and expand our company coverage to 3,000 companies by the end of 2022. This is essential for FreeCap to provide insights that allow investors to understand the complete landscape for social justice investing opportunities. Further, we will be able to transition our part-time Research Lead's role into a full-time Research Director role. Her expertise in creating rating metrics and assessing material risks for companies will allow FreeCap to continue to offer useful, practical insights for investors. Additionally, through this funding, FreeCap will be able to devote more resources to media relations and publicizing our research. Moreover, we will be able to offer several pieces of our dataset to the general public in order that the companies with the poorest practices are held accountable for discriminatory and unjust policies.

Through the GM Prize for Innovation in Refugee Inclusion, FreeCap will be able to direct research and resources to develop our next data set which will focus on another target population's rights and how companies can help protect them and offer them viable work opportunities. We will use the funding to (1) cover the salary of the Director of Research that will assist in developing our company assessment framework, (2) automate these ratings and cover the expenses for quality control, and (3) engage in media campaigns in order to educate investors on these new social justice investing opportunities. In all, our expanded company coverage and new metrics will enable a more just society, allowing for more equitable outcomes to arise personally and professionally for these historically marginalized populations.

Further, being a part of the GM community, with access to leaders that are working diligently to make GM the most inclusive company in the world, will be helpful to the FreeCap team as we work to understand how companies are working to create and sustain racial equity. We believe that engaging and learning from others that are the direct players in the changes that we aim to make will allow us to create more viable and practical solutions, better serving the investment community. In all, FreeCap is on a mission to empower every investor to invest alongside their values and through this prize, we will begin to make that possible.

Through FreeCap's corporate ratings, investors have the power unlike ever before to hold companies accountable for their practices, specifically those that are unjust or discriminatory. By highlighting which companies are actively recruiting formerly incarcerated individuals, therefore working to break the systemic and cyclical violence cycle in the US today, FreeCap is changing the investment landscape and shifting the employment opportunity narrative for these populations. 

Through the HP Prize for Advancing Digital Equity, FreeCap will be able to automate our research process in order to rapidly scale our ratings on how companies are creating more equitable employment opportunities for diverse populations. While our current dataset is focused on justice-involved individuals, we plan to expand our ratings to other groups that have and are traditionally excluded from certain work opportunities and therefore subject to systems of violence. As we do this, companies will begin to improve their hiring practices in order to score better ratings. In turn, these workforces will better represent the increasingly diverse communities across the US. Overall, this prize will help us achieve our goal of holding companies accountable, shifting the investment landscape to incorporate social justice considerations, and enabling a more just and equitable world.

As an Environmental, Social, and Governance data provider, it is essential for FreeCap to collect data on thousands of companies, translate these pieces of qualitative information into quantitative ratings for investors, and scale the metrics that guide these ratings. With a goal of empowering every investor to invest alongside their social justice values, it is integral that FreeCap transition its manual research and rating process into an automated one by the end of 2021.

Through the AI for Humanity Prize, FreeCap will be able to use machine learning to computerize its data collection process. By running searches for keywords like "equal opportunity" and "third-party risk assessment," FreeCap will be able to rapidly scale its current dataset and better understand the current landscape for fair chance hiring practices and company prison risk mitigation. As a result, we will be able to deliver thousands of more insights to investors, meeting their demands. Further, as more investors consider these social justice ratings, companies will begin to shift their behavior as financial and social justice returns align like never before. This, in turn, will change the norms for (1) the investment community, (2) company policies, workforces, and considerations, and (3) historically marginalized populations. By breaking these cycles of violence and disrupting structural injustice, FreeCap can use machine learning to transform society.