Vancouver gave people experiencing homelessness £4,500. It changed their lives.
From a blog by Next City
50 people experiencing homelessness in Vancouver, British Columbia were selected in 2018 to receive a lump sum of cash deposited into their personal bank accounts — no strings attached. The gift of about £4500 was part of a pilot project and the early results are so impressive that cities across Canada and the U.S. are looking to try it themselves.
Here is the story of Ray, one of the recipients. After a 37-year-long career of heavy lifting in the warehouse and construction industries, his body was failing him. In 2017, he was laid off and had to chase his employer for owed wages. When he sought re-training, his high school English grade was two percentage points short of qualifying. Suddenly, Ray couldn’t pay his rent.
Ray was used to supporting himself. The loss of agency was a big blow. “My hands were kind of tied,” says Ray. “I just wanted to give up, I really did.”
From a local homeless shelter, he continued his fight but even taking jobs at £60 a day in warehousing, he just couldn’t get ahead. Without a fridge to store food or money for a monthly bus pass, Ray was paying the poverty premium.
Ray was approached by members of the New Leaf Project, run by the charity Foundations for Social Change (FSC). Through a research partnership with the University of British Columbia, the pilot was designed as a randomized control trial to measure the effects that a one-time lump-sum gift had on people’s lives over the course of a year. Participants were recruited from local shelters and screened to ensure they were recently homeless and functional in their daily lives to reduce the risk of potential harm that funds might bring if they drove people deeper into addiction.
Every three months, recipients completed questionnaires and interviews about their spending and experiences. That data was then compared with a control group. Through repeated interviews over the year, the FSC sought to answer a poetically simple question. Would the lives of homeless people improve if we just gave them what they needed: cash?
Typically, charitable and government efforts to help people like Ray are conditional on certain behaviours, like getting medical or addictions treatment, filing monthly reports, or spending on particular services. And most often, it’s distributed in small, incremental amounts.
“We inherently do not trust people living in poverty,” says Claire Williams, co-founder of FSC. “If you think of something like income assistance, welfare, even employment insurance, we make the burden of proof so high for people to access those benefits because we fundamentally assume that people are trying to cheat the system.”
Within a month, Ray found his own room at an S.R.O. — a single room occupancy hotel, which are run-down buildings often used as stepping-stone housing in Vancouver’s Downtown Eastside. With stable housing, he was able to make the three trips it took to get approved for an education loan, jumping bureaucratic hurdles he never would have been able to clear if he were taking day labour jobs and scrambling from shelter to shelter. He got training in the kind of outreach work he dreamed of, and even found some temporary work with one of the local shelters. While he’s back working for a construction company, he says, “Having a community service worker certification under my belt opens up doors for me.”
Though the formal research has yet to be published, the early results are staggering. Half of the cash recipients moved into stable housing one month after they received the money, compared to 25 percent of the control group. Almost 70 percent of them were food secure in one month.
Like Ray, they spent most of the money on the essentials — food, shelter, bills. On average, the cash recipients spent a total of three fewer months in a shelter than those in the control group, whose days spent homeless increased. After one year, cash recipients reduced their spending on alcohol, drugs and cigarettes by an average of almost 40 percent, challenging “the widespread misperception that people in poverty will misuse cash funds,” the report stated. At the end of the year-long study, participants had an average of £600 still left in the bank.
A major takeaway is the potential cost savings of a programme like this for the government. Because of the reduced nights spent in emergency shelters, each cash recipient saved the government roughly £4,800 over the course of the year. Less the cost of the cash transfer, each cash recipient produced a net savings of more than £300 and were substantially further along the path of pulling themselves out of poverty, experiencing a much more balanced life than they might have in the shelter system.
One of the reasons the cash transfer proved so effective is practical. When you consider what rent costs in an expensive city like Vancouver, income from assistance or employment will barely cover a damage deposit, let alone first month’s rent. With a larger sum, a person can pay a deposit and rent for a few months. Since many of the participants were either working or on income assistance, monthly expenses were more manageable.
Receiving the cash is also empowering. Ray puts it, ”That energy of believing in myself again and that these people trusted me. Let me prove to them that I can be successful.”.
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