Financial Incentive

The first fundamental problem with civil forfeiture laws graded by this report is that they often allow the same law enforcement agencies that seize property and the prosecutor’s offices that forfeit it to keep and spend some, or even all, of the proceeds. This financial incentive, which is also present in criminal forfeiture laws, is problematic for at least two interrelated reasons: It (1) infringes on legislatures’ power of the purse and (2) encourages the pursuit of property for the sake of revenue.

First, separation of powers requires that legislatures—from city councils and county commissions to statehouses to Congress—decide how the government spends money. Yet funds obtained through forfeiture are often discretionary for agencies, giving them wide berth to spend as they please. This self-funding, where agencies can acquire and spend funds outside the normal legislative appropriations process, subverts the legislature’s power of the purse.

This problem might sound theoretical, but it is not. Law enforcement agencies frequently use forfeiture proceeds to buy things legislatures did not contemplate—or perhaps did contemplate but rejected, whether because of budget shortfalls or active disapproval. When asked how his department spends forfeiture funds, a Missouri police chief put it memorably:

Similarly, a Massachusetts district attorney admitted law enforcement “are very dependent on this drug forfeiture money to buy those extras that they can’t get allocated within a state or a municipal budget.” ²  

The problem goes beyond stories of outlandish forfeiture fund spending that make headlines from time to time: a fancy coffee maker, muscle cars, luxury travel, a face-painting clown, or an ice cream truck. ³

For example, forfeiture funds have been linked to police militarization, as police departments across the country use these funds to purchase military-grade vehicles, weapons, and other equipment. ⁴  To name two, the Douglasville Police Department in Georgia and the Linn County Sheriff’s Office in Iowa used hundreds of thousands of dollars in forfeiture funds to purchase BearCat armored vehicles. ⁵

Second, in giving law enforcement agencies the ability to self-fund, the financial incentive makes it tempting for agencies to see forfeiture as a moneymaker and act accordingly. That is, the financial incentive creates a conflict of interest that may induce agencies to pursue financial gain over public safety or justice.

Research validates the concern. For example, two studies by economist Brian Kelly of Seattle University, one from 2019 and one from 2021, found evidence that when local budgets are tight, law enforcement agencies may ramp up forfeiture activity. ⁶  More recently, a 2024 study found that when local governments provide greater subsidies for the construction of sports facilities, squeezing local budgets, agencies increase their forfeiture activity. ⁷  

Courts, both state and federal, are beginning to recognize these problems. In 2018, a federal court found that Albuquerque, New Mexico’s vehicle forfeiture program gave local police and prosecutors an unconstitutional institutional incentive to seize and forfeit vehicles. The court noted that there was a “realistic possibility” that police and prosecutors’ “judgment w[ould] be distorted by the prospect of institutional gain—the more revenues they raise[d], the more revenues they c[ould] spend.” ⁸  It quashed the program on this and other grounds.

Similarly, in a 2021 forfeiture case, a Washington state appeals court declared, “We scrutinize the constitutionality of civil asset forfeitures more closely because individual law enforcement agencies, and the state government in general, stand to benefit by millions of dollars each year from forfeiture.” ⁹

Two federal circuit courts have echoed these concerns. In Cristal Starling’s case, the Second Circuit observed, “All this is driven by incentive: The authorities can pocket what they can seize by forfeit.” ¹⁰  And in another Institute for Justice case, a Sixth Circuit judge lambasted Wayne County, Michigan’s vehicle forfeiture program, through which the county seized thousands of vehicles and charged owners fees to avoid forfeiture and get them back. Of the program, the judge asked: “Does this sound like a legitimate way of cleaning up Wayne County? Or does it sound like a money-making scheme that preys on those least able to fight it? To ask the question is to answer it.” ¹¹

Five sitting U.S. Supreme Court justices have also voiced discomfort with the financial incentive baked into modern civil forfeiture. Justice Gorsuch, in his concurrence in Culley joined by Justice Thomas, noted that “law enforcement agencies have become increasingly dependent on the money they raise from civil forfeitures” and exhibited concern about the effects of the incentive on agencies’ behavior. ¹²  And Justice Sonia Sotomayor in her dissent, joined by Justices Elena Kagan and Ketanji Brown Jackson, lamented that forfeiture’s financial incentives “not only encourage counties to create labyrinthine processes for retrieving property in the hopes that innocent owners will abandon attempts at recovery, they also influence which laws police enforce, how they enforce them, and who they enforce them against.” ¹³  

Unfortunately, most states and the federal government give law enforcement, both police and prosecutors, a large financial incentive to seize and forfeit property, whether civilly or criminally. See Figure 1. In 32 states and at the federal level, between 90% and 100% of proceeds go to funds controlled by law enforcement. Another 12 states award between 45% and 80% to law enforcement. The remainder must be sent to neutral (i.e., non-law enforcement) funds.

Only six states—Maine, Maryland, Missouri, New Mexico, North Carolina, and Wisconsin—and the District of Columbia bar law enforcement from receiving forfeiture proceeds, instead directing 100% of proceeds to neutral funds.

Figure 1: Financial incentives in civil forfeiture laws