We Provided $7,500 to Individuals Facing Homelessness—Discover the Outcomes That Followed

Homelessness is a complex and often misunderstood issue. It’s commonly associated with mental illness or substance abuse, leading to stigmatization and dehumanization of those experiencing it. However, the reality is more nuanced.

In 2020, a count by the BC Non-Profit Housing Association in Metro Vancouver revealed that 3,634 people were homeless, with 1,029 unsheltered and 2,605 sheltered individuals. Surprisingly, only about half of them had mental health or substance use challenges. Notably, this count didn’t include the “hidden homeless” who couch surf or sleep in their cars.

Problems worsen the longer someone remains homeless, often leading to trauma, substance abuse, and mental health issues, resulting in long-term health consequences. Current approaches have proven ineffective, as evidenced by the growing number of homeless individuals. Thus, exploring alternative solutions is imperative.

In 2016, in collaboration with Claire Williams, co-founder of Foundations for Social Change, we initiated a unique approach. We provided a one-time cash transfer of $7,500 to people experiencing homelessness in Vancouver, equivalent to the 2016 annual income assistance in British Columbia. This financial support aimed to empower them to pay rent and cover living expenses, offering a dignified way out of homelessness.

Over two years, we garnered support from partner organizations and donors. We established a policy agreement with the B.C. government allowing cash recipients to retain the $7,500 while remaining eligible for social assistance. Additionally, we collaborated with Vancity to offer free checking accounts for fund distribution.

In 2018, we initiated the world’s first pilot randomized controlled trial to evaluate the impact of cash transfers on newly homeless individuals, who were in dire need of financial assistance to avoid prolonged homelessness.

Our participant selection process involved visiting 22 shelters in B.C.’s Lower Mainland. We screened individuals who had been homeless for less than two years, were Canadian citizens or permanent residents aged 19-65, and did not exhibit severe substance or alcohol use or mental health issues. Our sample represented 31 percent of the shelter population in Vancouver.

Out of the 229 people who passed the screening, we were unable to reach 114 due to unstable contact information. Consequently, 115 participants were recruited, with 50 assigned to the cash group and 65 to the non-cash group in the randomized controlled trial. The cash group was informed about the transfer after the baseline survey.

We tracked participants for a year to assess the effects of the cash transfer. During this period, we lost contact with approximately 30 percent of participants, while some relocated.

Surprisingly, the cash transfers yielded significant positive impacts. Recipients spent 99 fewer days homeless on average over a year, resulting in net cost savings of $777 per person annually, thus saving government and taxpayer money. Importantly, they increased spending on essential needs like rent, food, and transportation, dispelling the stereotype that they would misuse the money on alcohol and drugs.

Around 50 percent of participants secured housing within a month of receiving the cash transfer, highlighting their readiness for stability. However, substantial improvements in food security, employment, education, and overall well-being were not observed, possibly due to the limited amount in the expensive city of Vancouver.

The study also indicated that the workshop and coaching had minimal impact due to compliance issues and a mismatch between the support offered and participants’ needs. Instrumental support, such as obtaining identity documents and job assistance, was crucial, and this couldn’t be adequately addressed through workshops or coaching alone.

This study reinforces the global body of evidence supporting the need to increase the income floor for marginalized individuals. It serves as a promising starting point for future research and policy development. Governments and experts should explore cash transfers as a means of supporting homeless and marginalized populations.

Source: The Conversation

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