In 2018, a Vancouver-based charitable organization called Foundations for Social Change started a groundbreaking research project that gave cash payments of $7,500 CAD ($5,660 USD) to 50 homeless people. The idea was to check on recipients over the course of a year to see how they were faring.
Those 50 people were chosen at random out of a pool of 115 participants, with the other participants forming a control group. All the participants were homeless for at least six months and were not struggling with serious substance use or mental health issues. What the researchers found after 12 months was “beautifully surprising.”
Not only did those who received the money spend fewer days homeless than those in the control group, but they also moved into stable housing after an average of three months, compared to those in the control group, who took an average of five months.
As reported by CBC, cash recipients spent 52 percent of their money on food and rent, 15 percent on other items such as medications and bills, and 16 percent on clothes and transportation. Almost 70 percent of the people who received the payments were food secure after one month. In comparison, spending on alcohol, cigarettes, and drugs went down, on average, by 39 percent.
Claire Williams, CEO of Foundations for Social Change, said that people dismiss the idea of giving homeless people money because they assume it will be mismanaged. This study, however, challenges that idea and shows how financial support can help people living on the margins.
Here’s another interesting piece of data from the project: Apparently, finding stable housing meant more space was freed up in shelters, which saved the shelter system $8,100 CAD per person over those 12 months.
Just like we see in basic income experiments, this Canadian study goes to show how investing directly into people can help municipalities save money while improving the lives of people dramatically.