PLY: A look at homelessness in Santa Clara and the SIB opportunity ends the week.
Thanks to all who joined Young Markets yesterday, the next conference will again be held in Warsaw September 15th, 2016.
Can Social Impact Bonds Help Reduce Homelessness?
Bond Case Briefs
On any given night in Santa Clara County, Calif., more than 6,000 people are homeless. Annually, that’s costing the county more than $500 million. To Dave Cortese, president of the Santa Clara County Board of Supervisors, such a high cost should come with better results. The solution, he says, is obvious: “Devise a program that rapidly treats those folks and turns some from persistently homeless to consistently housed, and you cut down on the safety net they’re using.”
But that kind of prompt and comprehensive response is difficult for local government, in part because of the high upfront costs. Three years ago, Cortese heard about a new financing tool that tapped into the private and philanthropic sectors for early investors for otherwise cost-prohibitive public programs. If the program worked, the government would use future years’ revenue to pay back its investors. The tool, known as a social impact bond or “pay for success” program, was new to Cortese. Even though it was called a “bond,” it was more of a public-private partnership for experimental and expensive interventions in human services.
Last month, Santa Clara County announced Project Welcome Home, the latest local government initiative that leverages the social impact bond model. In the next six years, a nonprofit called Abode Services will provide housing and support services to between 150 and 200 long-term homeless people. The nonprofit will assign small caseloads to a multidisciplinary team with training in psychiatry, substance abuse, social work, nursing and vocational rehabilitation. The approach represents a combination of evidence-based practices, and is backed by academic research and recommended by the U.S. Department of Housing and Urban Development.
A group of funders is providing $6.9 million — mostly in loans — to make the project happen. Project Welcome Home’s goal is to house at least 80 percent of participants for a year or more. If the program is successful, the county will reimburse its lenders as each person hits certain tenancy milestones. For example, lenders will initially be paid $1,242 for every individual who stays housed for three months. The largest reimbursement comes after a formerly homeless person remains in housing for a year.