Cash Can be Effective for Helping the Homeless
Recent projects and studies have demonstrated that well-administered basic income programs can be incredibly effective at helping to permanently stabilize homeless individuals. Keeping people on the streets costs between 45-180K (accounting for inflation) because they, “randomly ricochet through very expensive services” such as hospitals, addiction treatment services, police arrests, jail time, and court time.
Miracle Money: Run by Miracle Messages in California, Miracle Money provided $500 per month for 6 months to 12 individuals suffering from homelessness.
- 66% of the recipients attained stable housing, making it the single most effective anti-homelessness program on a dollar to impact basis that we’ve found.
New Leaf Project: A basic income experiment run by Foundations for Social Change helping homeless individuals in Canada, the New Leaf Project gave over 100 recently homeless individuals $7,500 of unconditional cash.
- The experiment resulted in a 39% reduction in spending on drugs, alcohol, and cigarettes. Furthermore, the cost savings to the shelter system paid off the cost of the cash transfer after just 12 months. We should also note that corporal and medical costs are far higher in the US than in Canada, so transfers in the US would pay for themselves far faster.
In experiments so far, basic income has proven extremely effective at reducing homelessness
| Homeless Cash Assistance Pilots | Year | Cash / Person | Participants | Housing Success | Notes |
|---|---|---|---|---|---|
| London Rough Sleepers | 2009 | £3,000 | 13 | 69% | Personalized Budget; Helped Worst Case Population: 4-45 Years Homeless |
| New Leaf Project | 2018 | $6,000 | 115 | 75% | Used Single Bulk Transfers, RTC Study, Drug/alcohol spending went down 39% |
| Miracle Money | 2021 | $3,000 | 9 | 66% | Housing was not a stated goal, It was achieved nonetheless |
| Denver Basic Income Project | In-Progress | $12,000 | ~520 | ? | Monthly & bulk transfer schedules = Most comprehensive RTC study to date |
| Trust Youth Initiative | In-Progress | $30,000 | ~35 | ? | Flexible $1,250/month for 2 years |
| Our Maximum Impact Pilot | 2023 | $6,000 | ~24 | Success = 50%+ | Flexible $1,000/month for 6 months Most Vulnerable Population |
Findings From the New Leaf Project
Fact
Cash transfer recipients prioritized and increased spending on recurring staples like housing/rent, food, transportation, and utility bills.
Cash transfer recipients prioritized and increased spending on recurring staples like housing/rent, food, transportation, and utility bills.
Data
On average, cash recipients spent 52% of their budget on food and rent, 15% on “other” items such as medications and bills, and 16% on clothes and transportation.
Why it matters
Cash transfers provided choice and enabled people to buy more goods, helping them meet their basic needs. Counter to some stereotypes, participants spent their money on essential items.
The Worst-Case Case Study:
Simon From London’s Experiment
Simon was sleeping rough (homeless) for 18 years. He moved into accommodation ten months ago after engaging with the personalized budget pilot. He has been on a methadone script for four months, engaging with drug treatment after 20 years of heroin use.
The script is great. I don’t know what to do with myself. I have breakfast, go to the clinic to get my script, then watch telly. I think: what can I do today? – instead of going out begging for money for gear. I’m concentrating on getting it together. I’m trying to go for rehab and detox. I just want to get myself steady first.
For some reason, for the first time in my life, everything just clicked, it feels like now I can do something. Now I’m thinking of going back home. I’ve got two kids. Hopefully by Christmas I’ll get it together. I want to get myself sorted first.
I’m happy as Larry. I never thought about going back out. [The quality of my life has improved] a lot. I’m starting to look after myself, wash and shave. I’ve got a better life, I’m starting to do something with my life.
Simon
“The most efficient way to spend money on the homeless might be to give it to them”
– The Economist
Our Vision for Arizona
After the pilot is competed, we will produce an impact report and integrate lessons learned into our phase two expansion project. Then we will begin raising the funding that will be needed to take on the homelessness crisis in Arizona at scale.
Scaling our program to $50 Million would enable us to directly help half of the homeless population in Arizona, and would dramatically mitigate the homelessness crisis.
We are helping the most vulnerable people in America with the most cost effective assistance.