50 Homeless People Were Given a One-Time Sum of $7,500. Here Is What Happened Next...

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BREAKING THE STEREOTYPES

Some of us give money to homeless people. Others - don't. Yet, even those who are willing to give cash, don't really believe in the effectiveness of such kind of help. A new study though, conducted in Canada, proves us wrong... And gives a hint (to say at least) how to deal with homelessness.

"The New Leaf Project (is) the world's first direct cash transfer program to empower people to move beyond homelessness". The concept of the program is to make one-time cash transfers of $7,500 CAD (the equivalent of about $5700 USD) to people who recently got homeless in the Vancouver area, and then see what the results would be. And the results are astonishing...


Game/Life-changers

The program is organized and conducted by the Foundation for Social Change, together with the University of British Columbia. "While many would balk at the thought of disbursing large sums of cash to people living in homelessness, our approach was based upon scientific evidence and our bold action has paid off,  -  the people behind "The New Leaf Project" (NLP) say on their website. - "By preventing people from becoming entrenched as homeless, NLP helps individuals to maintain dignity and regain hope. At the same time, community resources can be spent in other urgent areas. Cash transfers provide choice, control and purchasing power at a critical time in people's lives. This is not merely a gesture of help, it is a signal that society believes in them."

The Model of Direct Giving

The model is simple. And it simply works! People who have become homeless, get a lump amount of money, directly to their bank account. The money can be spent freely by the recipient. " The direct giving model has been proven to empower recipients to find housing and purchase goods that improve their lives, while restoring dignity, confidence and a sense of well-being. Further, research has found that cash transfers do not increase spending on goods, such as alcohol, tobacco and drugs... It applies advances in behavioral sciences, cognitive psychology, and behavioral economics to direct cash transfers in a way that has not been done before."

The Research

Here is what the organizers explain about their research methodology: "In spring 2018, Foundations for Social Change launched our Vancouver pilot project to rigorously evaluate the impact of our approach to direct cash transfers to recently homeless individuals. We conducted the project as a Randomized Controlled Trial, which is the gold standard of scientific research and allows us to compare our supports to business as usual." 

115 participants have been chosen to take part in the project. Half of them, randomly selected, received a one-time cash transfer of $7,500 CAD (those who didn't have a bank account by that time, were given one). Then, for one year, the researchers followed the life of the participants...

How were the cash-receivers chosen? Here is the answer: "Project participants were carefully screened for program eligibility to ensure the highest likelihood of success. Our goals in designing these criteria were to support participants to the highest degree possible, assess their readiness for change, and reduce any risk of harm."

The eligibility criteria included: 19+ years of age; newly homeless and living in a temporary shelter situation; Canadian citizen or permanent resident; low risk of mental health challenges and substance abuse.

The Methodology

Here is a detailed information about the process, directly from the researchers:

"115 participants,  who had been homeless for an average of 6 months ,were randomly assigned to a "cash-recipient" and a "non-cash recipient" group. Participants completed questionnaires at 1, 3, 6, 9, and 12 months and completed open-ended qualitative interviews after 6 and 12 months. The average age of participants was 42 (range 19 to 64). 60% were men, 40% - women. 1/3 of them had children. 1 in 4 participants were employed..."

The Results

And the results were astonishing!

"HOUSING

Fact 1: Cash recipients moved into stable housing faster than non-cash participants and overall, spent fewer days homeless.

Why it matters: Moving into housing provides stability, reduces the risk of trauma, improves health, and frees up shelter beds for others in need.

Data: For the cash group, days homeless dropped from 77% to 49% in the first month. For the non-cash group, days homeless increased from 64% to 78%.The cash group spent 4,396 fewer nights homeless over 12 months. 

On average, cash recipients moved into stable housing in 3 months (96 days) while participants who did not receive the transfer, moved into stable housing after an average of 5 months (144 days).


SPENDING

Fact 1: Cash transfer recipients prioritized and increased spending on recurring staples like housing/rent, food, transportation, and utility bills.

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.

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.

Fact 2: Cash recipients increased spending on one-time purchases of household items, such as furniture, computers, bikes, and vehicles.

Why it matters: A direct cash transfer empowers individuals with dignity and provides the choice to make spending decisions that best suit their needs.

Data: Cash recipients spent an additional $700 on one-time household items during the first 3 months, compared to non-cash participants.


MONEY MANAGEMENT

Fact: Individuals spent their cash over time, not all at once.

Why it matters: Money management challenges assumptions that cash recipients will spend impulsively

Data: After 1 month, cash recipients have an additional $4,000 in savings. Cash recipients retain an additional $1,000 of the $7,500 cash transfer through 12 months.


FOOD SECURITY

Fact: For those who received the cash, food security* increased in the first month and remained steady over time

Why it matters: Food security is critical for health and well-being

Data: 67% of cash recipients were food secure after 1 month, an increase of 37 percentage points from baseline. The non-cash group only increased 2 percentage points during the same period. Cash recipients maintained greater food security across the full 12 months,

*Food secure means having consistent access to food (e.g. three meals a day). Severely food insecure means frequently eating smaller meals or fewer meals, or not having consistent access to food (e.g. one meal a day or less)


FINANCIAL CHOICES

Fact: There was a 39% reduction in spending of goods such as alcohol, drugs or cigarettes.

Why it matters: The reduction of spending on these goods challenges the widespread misperception that people in poverty will misuse cash funds.


COST BENEFIT

Fact: By spending fewer nights in shelters, the cash group saved the shelter system approximately $8,100 per person for a total of roughly $405,000 over one year. Factoring in the cost of the cash transfer, that's a savings of $600 per person for society.

Why it matters: The cost savings to the shelter system pays off the cost of the cash transfer after just 12 months. Overall, cash transfers save money, making them a powerful tool to combat homelessness.

Data: Cash recipients saved a total of $17,571 compared to their baseline shelter use. Non-cash participants only saved $9,399 compared to their baseline shelter use/ In total, cash recipients saved an additional $8,172 compared to non-cash participants.

Human Lives. Not Just Numbers...

Every night 35,000 Canadians don't have a home.
235,000 Canadians will love their home for some period of time each year.
There are about 7,600 homeless people in British Columbia.
The average life expectancy among homeless people is about 17.5 years less than for the general population.
The average cost of social and health services for homeless individuals is around $55,000 per person, per year.


You can read the full report here (its findings will be peer viewed next year).

Meanwhile, you can support the cause of The New Leaf Project by making a donation here.

source: forsocialchange.org


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