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Giving people money turns out to be an incredibly effective tool in ending homelessness

A Vancouver study gave $7,000 each to 50 people living on the street. The effect was immense.

Giving people money turns out to be an incredibly effective tool in ending homelessness
[Photo: Peter Helm/courtesy Foundations for Social Change]
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In 2018, a Vancouver-based nonprofit decided to test a new approach to tackling the challenge of homelessness. What if when someone became homeless, they were given thousands of dollars to help get back on their feet?

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Like other cash transfer programs, the premise is simple: If someone needs money, the most effective solution might be to just give it to them, no strings attached. A randomized controlled trial of the new program, called the New Leaf Project, found this to be the case. The 50 people in the study who were given cash—$7,500 in Canadian dollars, or roughly $5,800 U.S.—got into stable housing faster than the control group. Their food security increased immediately. And at the end of one year, they still had savings left. The program cost less per person, the study found, than the government would have spent caring for the people, while helping participants get farther ahead.

The cofounders launched the program after watching a 2017 TED talk from Dutch historian Rutger Bregman, who made the case for ending poverty with a universal basic income. As they looked into the idea afterward, they saw the example of a small trial in London that gave cash to 13 homeless men. A year later, 11 of the men had stable housing. “We just got to thinking, Would something like that work here?” says Claire Williams, cofounder and CEO of Foundations for Social Change, the new nonprofit running the New Leaf Project, who had noticed an increasing number of people living on the street in Vancouver.

Williams dove into research on direct cash transfers, learning, for example, about the success that the nonprofit GiveDirectly has had in helping lift people out of poverty in Kenya by transferring cash to the poorest households (more recently, GiveDirectly started using the same approach to help people in the U.S. who are struggling because of the economic devastation from the pandemic). Williams, an urban planner, wasn’t an expert on homelessness. But as she continued researching the idea and spoke with others who work at homelessness organizations in Vancouver, they encouraged her to move forward. “The majority of folks said, ‘We need to try something different. You guys should go out there and be the risk-takers and give it a try,” she says.

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The first pilot, studied in partnership with the University of British Columbia, focused on people who had recently become homeless and who weren’t struggling to function because of serious mental illness or addiction. “Like any problem where you’re experimenting, you’re always going to start small, where you have the greatest degree of assurance,” Williams says. “And then as you can build your knowledge base and expertise, you start expanding your parameters and testing it with different groups . . . It’s an open question whether this would work with folks with more complex needs.”

One of the participants, named Ray, had been laid off a year earlier after decades working in construction and warehouses. He wanted to retrain for another career, but didn’t qualify for a government program that could have helped. When he couldn’t pay rent, he ended up in a homeless shelter, and even as he took on temporary jobs he couldn’t save up enough money to get a place of his own. The sudden gift of $7,500 from Foundations for Social Change changed everything: He was able to rent a room at an SRO (single-room occupancy) building and get training as a community service worker.

On average, half of the people who got cash had moved into stable housing within a month, compared to 25% of the control group. Nearly 70% were food secure in one month. Most of the money went to the basics—food, rent, medication, other bills, and clothing and transportation, along with some one-time household purchases like furniture, bikes, or computers. Spending on alcohol, drugs, and cigarettes dropped by an average of 40% over a year. After 12 months, participants had even saved some money, on average $775 left from the initial transfer.

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“There’s a narrative that you can’t give people living in poverty money and they can’t be trusted to make wise financial choices,” Williams says. “We just thought it was time to disrupt those excuses.”

Because they spent fewer nights in government-run shelters, the participants who got cash saved the government $8,100 per person in a year. The cash transfer was less expensive, but had better results. “It’s actually cheaper to give folks money up front than it is to maintain them and the existing shelter system of care,” Williams says. “The additional benefit is that our shelter system is at capacity, and so by allowing some people to quickly move on with their lives, you reduce pressure on that existing system, which then allows them to provide the wraparound support for those who have more complex needs.”

The system also gives participants agency over their own lives. “They’re like, ‘God, I just needed the money. I just wanted to feel empowered and make my own choices and decide how to move my life forward,'” Williams says. Now the organization is beginning to advise other groups in other cities that want to try something similar, and is raising money to move forward with new pilots.

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There are complexities—the group had to work with the British Columbia government to get a policy exemption so people in the program wouldn’t lose the smaller amount of money that they were getting through existing benefits, for example. In some cases, other nonprofits are also limited in how they can spend their grant money. “You’re not given permission to innovate,” Williams says. “One of the things that we are currently investigating is whether we can be risk-takers on behalf of the whole charitable sector.”

About the author

Adele Peters is a staff writer at Fast Company who focuses on solutions to some of the world's largest problems, from climate change to homelessness. Previously, she worked with GOOD, BioLite, and the Sustainable Products and Solutions program at UC Berkeley, and contributed to the second edition of the bestselling book "Worldchanging: A User's Guide for the 21st Century."

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