Grantee Spotlight:

PEP's newest earned income venture will create quality job opportunities for PEP graduates while also helping the organization become sustainable.


The Prison Entrepreneurship Program (PEP), founded in 2004, seeks to transform inmates and executives by unlocking human potential through entrepreneurial passion, education and mentoring. This entrepreneurial approach is at the core of everything PEP does. When PEP's founders realized that former inmates were not being hired due to their records, the founders resolved to equip inmates with entrepreneurial and business development skills as an alternate means of supporting themselves. Similarly, PEP is channeling an entrepreneurial approach by pursuing earned income ventures in alignment with both its mission and its desire for long-term sustainability.

The Need

The United States has the highest incarceration rate of any country in the world. There are currently over 2.2 million people behind bars nationwide.[1] Texas is home to approximately 10% of the prison population, ranking fifth in US incarceration rates. The growing prison population faces significant hurdles upon release. Former inmates have difficulty finding employment and housing. Nearly 60-75% of ex-offenders are jobless up to a year after release.[2] Without stability and access to resources, many prisoners return to their life of crime in order to survive. Within three years of release, about two-thirds of former inmates are arrested, and more than half are arrested by the end of the first year.[3]

PEP Overview

With these challenges in mind, PEP designed an "inside-outside" strategy to help transform the lives of men and release their potential. PEP provides both in-prison and post-release services to nearly 500 clients per year. The in-prison services include a three-month Leadership Academy where clients engage in character development, followed by a six-month mini-MBA program that culminates in a Business Plan Competition. Upon graduation, inmates receive a "Certificate in Entrepreneurship" from the Baylor University Hankamer School of Business. PEP's post-release services start as soon as inmates are released - they are met at the gate by their Re-Entry Coordinator. In addition to case management services, PEP graduates receive help with: affordable housing, employment search assistance, a continuing education program, and business start-up support services. The continuing education program consists of "eSchool," a series of lectures where PEP graduates learn about different aspects of running small businesses. At the Communitas Business Center, PEP grads have access to consulting, community, and capital for their business ideas.

In addition to skill-building and character development, PEP offers continuity, a sense of camaraderie and employment assistance that help stabilize PEP graduates when they enter the "free world". In 2015, recidivism among the organization's clients remained very low, at just under 7% (compared to the nearly 25% state average and 50% national average). More impressively, for 5 consecutive years, PEP has experienced a 100% employment rate within 90 days of release. Over 90% of PEP graduates remain employed one year after their release. PEP graduates are able to find higher-paying jobs-50% above the minimum wage-that allow them to make a living wage and support their families.

Communitas Auto Group

PEP has experienced impressive results thus far, but its leaders know there is much work to be done. In order to transform, reconnect, and bring hope to more imprisoned men, PEP aspires to become self-sustaining. That is why PEP created Communitas Ventures, a for-profit entity to incubate new business ventures that will provide jobs to PEP graduates while also boosting PEP's earned income.[4]

PEP's newest earned income venture, Communitas Auto Group (CAG), is an important step toward achieving sustainability. CAG is the master franchisee of Auto-Lab Complete Car Care Centers (Auto-Lab Texas) in Texas (see Figure 1). The first two locations opened in northwest Houston in 2015, with plans for a third location later this year. CAG chose car care centers as its earned income venture because it aligned well with its mission to create quality job opportunities for PEP graduates, and market analysis indicated that the auto repair industry is steadily growing. Because it is a high-wage field with low barriers to entry, CAG ultimately hopes to be able to sell franchises to PEP graduates.

Figure 1. Relationship between PEP and CAG

   PEP And CAG Relationship

 In addition to providing sustainable income for the organization and creating more quality job opportunities for PEP graduates, Auto-Lab Texas presents a unique opportunity for community engagement. Auto-Lab Texas created the "Give Back 5"® Program to be a good neighbor and partner with local nonprofit organizations, churches and school groups in the community. Through this program, Auto-Lab Texas rebates 5% of all pre-tax purchases by supporters of eligible, enrolled organizations. Since PEP graduates can be employed by Auto-Lab Texas, this program will be an additional way for PEP supporters and the general community to learn more about PEP and interact with its graduates. The hope is to strengthen relations with the community and provide it with a different perspective on former inmates.

PEP and CAG have learned a lot about developing and implementing earned income ventures. Some of the common challenges include mission creep, conflicting priorities, and a lack of business perspective.[5] However, the benefits of having unrestricted and reliable revenue sources can be attractive for nonprofits. For other nonprofits considering adopting a similar entrepreneurial approach, Bert Smith, PEP's CEO, highlights the importance of having alignment between your mission and money. Nonprofit organizations should consider how an earned income venture will contribute to their mission first rather than solely consider its financial potential.[6] In the case of PEP, Auto-Lab Texas is a natural extension of the organization's mission and strategy to help create new job opportunities for PEP graduates.

Looking Forward

PEP's comprehensive approach to supporting and transforming former inmates has helped change the lives of many men. There are a couple of exciting things on the horizon - a new unit will be opening in East Texas, a third Auto-Lab Texas will be opening, and PEP hopes to reach at least 4,300 men by 2025. In order to achieve these goals, PEP realizes the importance of pursuing sustainable income. CAG was created with the dual purpose of supporting PEP's mission and sustaining the organization. This earned income venture will allow PEP to increase its reach until every inmate who is truly committed to change has the choice and the chance to reboot his life.[7]





[1] The Sentencing Project (2016). Interactive map. Retrieved from:

[2] Petersilia, J. (2003). When prisoners come home: Parole and prisoner reentry. Chicago, Ill.: University of Chicago Press; Travis, J. (2005) But they all come back: Facing the challenges of prisoner reentry, Washington D.C.: Urban Institute Press.

[3] Durose, M. R., Cooper, A. D., & Synder, H. N. (2014) Recidivism of prisoners released in 30 states in 2005: Patterns from 2005 to 2010, Bureau of Justice Statistics Special Report, NCJ 244205.

[4] Prison Entrepreneurship Program (2016). Retrieved from:

[5] Foster, W., & Bradach, J. L. (2005). Should nonprofits seek profits?Harvard Business Review,83, 92-100.

[6] Foster, W., & Bradach, J. L. (2005). Should nonprofits seek profits?Harvard Business Review,83, 92-100.

[7] Prison Entrepreneurship Program (2016). Retrieved from:



PEP Graduate

PEP graduate now running his new business in Dallas


Auto -Lab Texas

Two new Auto-Lab Texas stores in NW Houston