Pay for Success initiative to reduce chronic homelessness launched in Massachusetts

June 9, 2015

The Massachusetts Housing and Shelter Alliance (MHSA) today announced the full launch of the Massachusetts Alliance for Supportive Housing with the goal of placing nearly half of the state’s chronically homeless population in supportive housing. The program will operate as a Pay for Success (PFS) initiative, whereby initial funding is raised from private investors and the state repays the investment only if certain benchmarks are achieved. MASH will be run as a partnership of the MHSA, the Corporation for Supportive Housing (CSH), and the United Way of Massachusetts Bay and Merrimack Valley.

First announced in December 2014, this initiative marks the implementation of Massachusetts’ second Pay for Success model. The program expands upon MHSA’s flexible funding approach to permanent supportive housing, Home & Healthy for Good, which has significantly lowered the Commonwealth’s public emergency expenses by securing long-term housing and supportive services for more than 800 chronically homeless individuals since 2006.

The Pay for Success initiative will operate roughly 500 units across Massachusetts after two years. Based on past experience with Housing First initiatives, MHSA predicts the Massachusetts Alliance for Supportive Housing could serve upwards of 800 individuals throughout the Commonwealth.

As a result of the partners’ advocacy throughout the Pay for Success contracting process, another MHSA innovation will also be involved in this initiative: the Community Support Program for People Experiencing Chronic Homelessness (CSPECH) will be available through additional health insurance providers in Massachusetts, enabling more chronically homeless individuals to have access to Medicaid-reimbursed supportive services once placed in permanent housing.

“The launch of this supportive housing initiative and growing support for the Pay for Success model cements Massachusetts’ role as an innovator on the cutting edge of efforts to end homelessness,” said Joe Finn, President & Executive Director of MHSA. “Average Medicaid, shelter, and incarceration costs drop significantly once a chronically homeless individual has a stable place to live and access to support services, as evidenced by Home & Healthy for Good and CSPECH.”

“Long term homeless persons with histories of cycling in and out of emergency and acute care are best served by being housed,” said Jeff Hayward, Chief of External Affairs, United Way of Massachusetts Bay and Merrimack Valley. “This ends their homelessness and their reliance on emergency resources, ultimately serving as a more cost-effective and efficient approach to tackling the issue and creating change that lasts.”

“As national leaders in advising communities on how best to structure Pay for Success to create supportive housing, we are constantly on the lookout for progressive ideas and partners we know have a good track record, “said Ryan Moser, Managing Director Eastern Region, CSH. “We found both in Massachusetts where MHSA’s emphases on accountability and results have attracted other investors for this promising effort to finance housing and services that end and prevent chronic homelessness.”

MHSA’s Pay for Success housing program will leverage $3.5 million from philanthropic and private capital investments from Santander Bank, N.A., CSH, and United Way of Massachusetts Bay and Merrimack Valley. The partners involved in this project have created Massachusetts Alliance for Supportive Housing as an LLC.

“This initiative is an example of the difference we can make when the private and public sectors join together to find thoughtful ways to reduce chronic homelessness in Massachusetts,” said Gwen Robinson, Community Reinvestment Act Director at Santander Bank. “In addition to housing, individuals will receive vital resources like job training and health care that will help them become self-sufficient.”

In addition to private funding, the initiative leverages public resources to incentivize the redirection of finances from the traditional emergency shelter response to funding for permanent supportive housing. An independent evaluator, Root Cause, will determine if the Pay for Success initiative has achieved its goals, upon which the state will repay the money along with a return to the investors.