Giving cash to people who can’t pay their bills can stop them from becoming homeless. It’s a case where spending a little at the right time can prevent having to spend much more later on. New research, published in Science, shows that "buffering a financial shock" is a valid way to avoid further poverty and homelessness.
In most U.S. cities, emergency programs already exist to give people financial assistance. People on the verge of homelessness can call a hotline and get money for rent and security deposits, instead of losing their homes and being forced to live in a shelter. Until now, the efficacy of these cash grants was uncertain. This study, from the University of Notre Dame, looked at the Homelessness Prevention Call Center (HPCC) in Chicago, from 2010 to 2012. The study sample was 4,448 calls, and the HPCC handles 75,000 calls a year.
The researchers took data from the HPCC, and combined it with data on the number of entries and exits at Chicago's homeless shelters. The amount of money the HPCC has available to give away varies daily, so the researchers were able to work out the effects the grants were having, by comparing shelter-entry rates on days where funding was or wasn’t available.
The result? When calling on a day where funds are available, callers are 76% less likely to enter a shelter within six months than those who call in on a "no-money" day when. "Notably, even a year after calling, people in the first group are significantly less likely to become homeless," says Notre Dame’s Brittany Collins Kaufman.
Just giving away money to poor people seems like the most liberal, un-American thing possible. But the savings made by helping people meet unexpected debts, and by keeping them off the streets and in their homes, are significant enough that even the most fiscal conservative has to admit that these grants are a good investment. Another study estimates that it costs over $5,000 to put somebody in a shelter for a year, and that’s the just immediate financial hit. The long-term costs due to the negative health effects and mental health troubles caused by homelessness could add up to much more.
The HPCC study puts the figure of averting a homeless spell at $10,300. The actual cost of helping somebody out, when a caller is referred to get financial assistance? The average is $720 per referred call, including not only the assistance itself, but also the "operating costs of the call center and delegate agencies." That’s a huge financial saving, but in human terms the benefits are even bigger, allowing people to remain in their homes instead of being kicked out onto the streets.
Thankfully, these programs already exist. Now, though, we have some good justification to keep them going, and to increase the money they have available to help people.
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