The Same Side of the Table: Why Recidiviz is a Nonprofit

After seven years, it's still one of the first questions we get asked: why is a software company a nonprofit? In a sea of for-profit tech companies, our approach is different—both because of the business model and what it offers our agency partners.

When I first began working in corrections, I quickly learned that corrections is a space where the usual models don’t apply.

Corrections is an inherently lopsided market, with a customer base that is constrained and fragmented. There are 50 state systems, each operating under different laws and policies that effectively make it a unique market of one. Demand is limited as well. Spending on corrections is often an unpopular choice for legislators, so even when the need is great and the payer—in this case, government—is large, the dollars are small. And these buyers have distinct obligations, including a public duty to run their systems of record continuously, without interruption.

Under these circumstances, it's difficult for any tech company to sustain the kind of engineering investment this sector deserves. As a result, agencies often run systems designed for corrections systems of the past, making it harder for today’s corrections departments to deliver on their mandates.

A company that needs to turn a profit in corrections tech then has two options: underinvest in the technology or shift costs onto the people with the least ability to pay, including the families of incarcerated people.

I didn't like either of those options. Several of us at Recidiviz have family members who have been or are incarcerated. I wanted Recidiviz to build exceptional software for government—software that makes corrections leaders' and staff members' jobs easier while driving better outcomes for everyone involved—people in the system, staff, and the communities they both return to. A nonprofit, funded by earned revenue from agency partners and bolstered by philanthropy, was the only model I saw that supported that vision.

A nonprofit structure benefits our partners. 

Because we’re a nonprofit, it changes the incentives of every person on the team. Nobody at Recidiviz holds equity. There is no valuation to protect, no incentive to lock agencies into proprietary systems, and no reason to squeeze extra dollars out of renewals. My own performance is measured on impact, not return. Every dollar we bring in gets funneled back into developing even better products.

Here's what those incentives look like in practice for the agencies we work with:

A team that shouldn't exist in this market.
Our team is here because they believe in our mission: to make the criminal justice system smaller, fairer, and safer. Out of 115 staff, 70% of Recidizens are software engineers, data scientists, and product developers—all focused on building better tech for corrections. 

Aligned definitions of success.
Our board holds us accountable for impact, not revenue. Every quarter, we report to our board the way a for-profit reports revenue, except our metrics are outcomes-based. We look at things like transitions and recidivism rates. Across the states we partner with, recidivism is down 16%. And we're increasingly able to measure new success metrics, like time to stable employment and time to stable housing, allowing us to report on not only whether people are being released, but are set up to succeed and contribute to their communities.

Technology built to keep agencies in control.
Since we don't optimize for profits, we can build software that is open source, modular, and interoperable. This architecture works in governments’ favor: it lowers risk and reliance on a single vendor, increases transparency, and keeps agencies in control of their own systems.

R&D that agencies benefit from.
Nonprofits sometimes lack the resources to innovate, but our funding model flips that on its head. A high share of our philanthropic funding is unrestricted, meaning funders back our mission and trust our ability to deliver results, rather than earmarking every dollar. That trust allows us to invest in research and development, building the next generation of corrections technology before any agency contract pays for it. For our agency partners, that means new capabilities, like Case Note Insights, are part of our services, and not billed as change orders or upgrades. 

A bench that's bigger than us alone.
As a nonprofit, we partner with other organizations we trust to deliver outcomes in this space, growing the bench of partners that agencies can draw on. Earlier this spring, we launched a reentry resource network to help ease people’s transition back into their communities. This network is just getting started, but it already includes four organizations with a track record of addressing common obstacles to reentry stability—support that soon people preparing for reentry will be able to tap into from Recidiviz products directly.

I’d make this bet again.

To be clear, I don't think being a nonprofit is the only effective way to work in this space. There are for-profit companies that do good and important work. But the space makes this a narrow path. 

When I co-founded Recidiviz, I made a specific bet: that the fastest way to make corrections a stronger, more effective institution was to put a skilled engineering team on the same side of the table as government, one that has no financial incentive pulling it elsewhere. 

Seven years and twenty states later, I’d make that same bet again.