United Way
of Massachusetts Bay
and Merrimack Valley

January 17, 2017

Pay for Success: the innovative approach that could end chronic homelessness

Imagine someone who has spent years on and off the streets, in and out of shelters, hospitals, and temporary homes, navigating this vicious cycle over and over again and hoping each time that it would be the last. He is so used to sleeping on the ground, that even given the opportunity to sleep in a bed for a night, he prefers the floor.

This is the reality for the 1,272 people in Massachusetts currently who fit the State’s definition of “chronically homeless”:

an unaccompanied homeless individual with a disabling condition who has been continuously homeless for a year or more, OR (2) an unaccompanied individual with a disabling condition who has had at least four episodes of homelessness in the past three years.

And that is in addition to the 3,700 families who are currently homeless in Massachusetts, living in shelters or motels.

A BIGGER PROBLEM THAN YOU MAY THINK

When you consider all the complex factors that can contribute to a person becoming homeless – and the many obstacles people face to getting back on their feet – it’s no surprise that the overall homelessness numbers are trending upward over the past few decades.

But the “Pay for Success” initiative to end chronic homelessness in Massachusetts is proving that those numbers can be reversed.

Launched in 2015, the innovative program is a partnership between the Commonwealth of Massachusetts and the Massachusetts Alliance for Supportive Housing, comprised of United Way of Massachusetts Bay and Merrimack Valley, the Massachusetts Housing and Shelter Alliance and Corporation for Supportive Housing.

The goal of the program is to create at least 500 units of stable, supportive housing for 800 chronically homeless individuals over six years.   And our latest numbers released last week show that the program is well on track toward that goal, having helped 410 people secure permanent housing to date.

HOW (AND WHY) THIS APPROACH WORKS

Operating as a “Pay for Success” model means that initial funding is raised from private and philanthropic investors (Santander Bank, Corporation for Supportive Housing and United Way) and the state repays the investment only if certain benchmarks are achieved – so the state and the taxpayers only pick up the bill if the program is proven to work.

This promise of additional dollars as a reward for success incentivizes a higher level of coordination and collaboration among multiple partners and stakeholders, while prioritizing limited resources toward a common goal. It also allows the State to take a risk on an innovative new approach without having to put the money up front and risk public money on an unproven solution.

On the ground, the program works by coordinating non-profit providers who are already serving this population to help screen people who qualify. Individuals are then matched with a long-term case manager to help them navigate a host of resources to not only get them in a safe home, but provide the skills and support to stay there.

For example, of the 410 people who have secured housing, 330 also now have healthcare through MassHealth and have broken the cycle of ER visits and shelters. Many of these partners also offer job training and other important resources.

The economic factor

Not surprisingly, the chronically homeless population is one of the most reliant on publicly funded services like emergency rooms and state-run shelters, often entering a cycle where they are going from one service to another, creating very high costs for local government.

Helping these individuals to secure long-term, stable housing would end this cycle and result in significant cost savings, allowing resources to be allocated to other services, including prevention programs to keep others who are struggling with instability from becoming homeless.

It turns out, in addition to being a humane way to care for a vulnerable population, the investment makes good economic sense as well.