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Victim Compensation Funds


Governmental compensation for crime victims dates back to the ancient Babylonian Code of Hammurabi (c. 1775 B.C.), considered to be the oldest known written body of criminal law (Karmen, 1990 at 307). Along the same lines as restitution, compensation to crime victims diminished and extinguished during the middle ages, when, with the rise of the nation-state, government assumed the primary role as "victim".

Interest in compensation revived in the 1800s as concern for the plight of the victim attended the prison reform movement. Jeremy Bentham and Margery Fry argued that victims ought to be compensated by the government charged with the responsibility to protect them when it failed to do so. The society to which victims had contributed owed them this indemnity (307).

Government compensation funds were revived in the 20th century. Britain set up its program in 1964, as a result of the efforts of Margery Fry (307). New Zealand set up the first state-run victim compensation fund in 1963 (Elias, 1986 at 18). Soon after the British model, several Australian states and the Canadian provinces set up their own programs (Karmen, 1990 at 307).

The United States' interest in victim compensation funds grew out of the liberal political philosophy of the early 1960s that government should provide security and protection for society's vulnerable elements--in part, its victims of crime (308). Concern for the victim and public support for these funds increased as crime rates rose and the media increasingly publicized incidents of violence. The Warren Court's expansion of criminal defendants' constitutional rights only magnified the intensity of concern for victims (Elias, 1986 at 19-20. Considering that most violent crime victims were poor, interest in compensation programs also escalated as part of a welfare and social control approach to dealing with the urban unrest of the 1960s (19-20). State action began with California in 1965 when it set up its first compensation program. New York and Massachusetts followed with different ways of administering funds. Now, the vast majority of states have some form of compensation scheme. No federal compensation fund exists, but finally in 1984, Congress passed a bill to finance state compensation programs (Karmen, 1990 at 309).


Compensation refers to monies paid by the government, or by another party unrelated to the offender, to the victims of crime (Van Ness and Strong, 1997). The amount of monies paid typically reflects the nature and extent of the injury suffered by the victim.

Benefits; Purposes

Victim compensation funds can supplement restitution payments by the offender when the latter fails to completely repair the harm done to the victim. Since the vast majority of offenders are never caught, prosecuted or convicted, and given the inadequacy of private insurance, government compensation funds then become the only means of repairing the harm left in the wake of crime (Karmen, 1990 at 306).

Alleviating the financial hardships caused by crime can actually facilitate the healing process (Karmen, 1990 at 307). Some have argued that compensation is important to the healing process because it meets the victim's need for societal acknowledgment of the criminal event, and for absolution from responsibility (Danieli, 1992 at 200-201). But, while compensation can repair the economic harm, it has limited potential to repair the relational harms attending crime (Burnside and Baker, 1994 at 72).

Among the different rationales supporting victim compensation funds (Karmen, 1990 at 310); (Elias, 1984 at 24-26), those who advocate them as part of a comprehensive social insurance program posit that, since crime could befall any of us, we all ought to share the risk. Compensation funds, then, assure victims of crime a sort of insurance against the financial hardships attending victimization.

The welfare perspective argues that government ought to protect the disadvantaged segments of society. Since most crime victimizes the poor, compensation funds provide another welfare safety net to those who need it most.

Following in the footsteps of Margery Fry's reasoning, many advocates of compensation programs argue that since individuals have relinquished their rights to take justice into their own hands, government then is responsible for their protection. Crime represents a failure of that responsibility, for which the government ought to compensate victims.

Other advocates say that it is just a matter of social justice. Government must compensate victims to allow them to be vindicated, especially when offenders are accorded so many protections, rights and services.

However, critics of compensation programs attack them on these very grounds (Karmen, 1990 at 311-312); (Elias, 1984 at 22-24). Many are opposed to increased government and taxation. Others believe that compensation could actually increase crime as offenders justify committing crimes based on the fact that the victim will be compensated by the government. As far as the social insurance perspective goes, others say there is no reason why relatively safe suburban taxpayers should have to subsidize a compensation program predominantly catering to victims of poor, urban areas.


Countries with compensation programs include Australia, Austria, Canada, Denmark, France, Federal Republic of Germany, Ireland, The Netherlands, New Zealand, Norway, Sweden, the United Kingdom and the United States. Of these, New Zealand absorbed its victim compensation program into a comprehensive insurance scheme that covers any injury, accidental or otherwise. Hence, it has essentially none of the restrictions imposed in the United States (Karmen, 1990 at 308).

At least 45 states in the United States have victim compensation funds (Karmen, 1990 at 309). Most states use penalties to fund their programs. A smaller number use taxes only, while even less use both means to fund their programs (314-315). Only New York and Maryland set no limit for the awards given; most programs have an upper limit of several thousand dollars (315). One author has observed that upper limits are being raised; criminal penalties are increasingly used to fund the programs; means tests are being dropped; and coverage is being expanded for different types of crime, even non-violent crimes (314-315).

Expenses covered by compensation programs include medical and psychiatric expenses, lost earnings, funeral and burial expenses, and loss of support (Karmen, 1990 at 206).

However, certain basic features characterize most compensation funds, especially those run in the United States, which limit the types of victims eligible for aid (Karmen, 1990 at 313); (Elias, 1984 at 31-34). In order to recover, most funds require that the victim be (1) a victim of a violent crime (2) who was physically injured (3) required medical attention and/or missed work (4) whose bills were not reimbursed by public or private insurance and (5) were largely innocent--i.e., who did not precipitate the violent attack. Most programs also allow surviving dependents of such persons to recover in the event of the victim's death. These requirements largely limit the size of the pool of eligible recipients.

Some programs also have "means" tests which prohibit recovery to those who will still be financially secure in the absence of compensation (Karmen, 1990 at 314-315). Some programs deny or reduce recovery for those victims who share some of the responsibility for precipitating the crime. Some programs have a family-exclusion clause which does not allow victims related to the offender to receive compensation (317).

To prevent fraud and abuse of the fund, compensation programs require extensive documentation (321).


From the outset, victims face a huge hurdle in receiving compensation. Only those victims who can afford attorneys are able to secure legal representation since compensation does not cover court expenses (Elias, 1986 at 162).

Very small percentages of victims are actually eligible to receive reparation from victim compensation funds due to their restrictive requirements (Elias, 1986 at 238-239); (Wright, 1991 at 28). Moreover, compensation programs, on the whole, are heavily underfunded (Elias, 1986 at 238-239).

Administrative policies seem to plague the programs. The hardship (means) test results in such a high overhead in documentation that any savings are partially outweighed by the cost of enforcing the requirement (Karmen, 1990 at 316-317). The vast majority of victims--those of domestic violence--are unable to recover because of the family exclusion clause.

Among other problems of compensation programs, many victims are unaware of the funds; law enforcement and court personnel do not encourage victims to seek it; extensive filing and documentation requirements discourage its use; many restrictions limit its applicability; and even those who receive compensation may get far less than they anticipated (320). In fact, many applicants are turned down because they fail to satisfy the documentation requirements.

No appreciable, positive impact on victims seems to occur. In fact, victim satisfaction with compensation programs appears to be quite low (Elias, 1986 at 212-213). Victims indicate no change in willingness to participate in the criminal justice system, and many express even more frustration as a result of the compensation documentation procedures than before they entered the application process. For an in-depth analysis of victim attitudes toward compensation, see (Elias, 1986).

Maintaining a Restorative Vision

If reparation to victims is to be an overarching goal of restorative justice, compensation programs can serve a very valuable purpose: it can supplement restitution in those cases where offenders are unable to fully repair the harm done to victims. Those who are concerned that the costs of funding such a program could be astronomical might be placated by the aforementioned limited use of compensation. Moreover, in those cases where it would take years for offenders to pay back their victims, compensation funds could pay the victim immediately, and offenders would then pay into the fund.

Much of compensation programs' ineffectiveness can be ascribed to their administrative difficulties arising from their lack of vision as to their overarching aims. Different perspectives on whether they should be insurance schemes, means of redistributing wealth, or another net in the welfare system confuse their objectives and limit their application. If compensation programs were merely a means of repairing the injuries caused by crime, all injuries that could not be repaired by the offenders themselves, then these programs would probably produce more victim satisfaction than they already do, at less cost.

When debating whether compensation programs (and reparation schemes for that matter) are likely to function effectively within a restorative framework, one should consider the following assertion: "A commitment to reparation involves a commitment to making it feasible" (Van Ness and Strong, 1997 at 98).

For other resources on this subject

This document prepared by Christopher Bright. Copyright 1997 by Prison Fellowship International.


Community Service

Victim Compensation Funds



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