Investors front the money for the programs and are refunded if the initiatives save governments money.
The Ending Community Homelessness Coalition hopes to find new ways to pay for homelessness reduction.
The Ending Community Homelessness Coalition of Austin announced Tuesday that it won $1.1 million in federal grants to continue its development of a homeless housing program that aims to decrease homelessness in the city while also cutting down on public spending by partnering with private investors.
The grant money is the next step in the group’s effort to bring a “Pay For Success” program — in which service providers, local governments and private investors create new funding strategies for social services — to Central Texas. In this funding model, investors front the money for the programs and are refunded with a return on investment if the initiatives save governments money.
Local governments benefit by paying less for social services under the initiative.
ECHO, as the group is known, proposed a project that would house 250 homeless people through an approach that prioritizes the neediest people regardless of mental health, substance abuse or other outstanding issues, and provides them social services to address those issues. Providing this support, the theory goes, helps expedite a person’s road to self-sufficiency.
The group received $881,376 from a federal partnership between the Department of Housing & Urban Development and the Department of Justice to promote innovative housing approaches for people who frequently use public systems like emergency medical services and jails.
It also received $250,000 from the Nonprofit Finance Fund as part of a federal effort to tackle long-standing social challenges, such as homelessness. That grant requires ECHO to seek out a $250,000 match, which would bring the group’s total funding to develop the Pay For Success initiative to $1.3 million.
ECHO, which would bring social services support to affordable housing units already in the city rather than building new housing units, hopes to convince investors that its approach will reduce public spending.
“We know when folks are housed and off the street they reduce the costs,” said Ann Howard, ECHO’s executive director. “They won’t spend a bunch of nights in jail, they’ll have less interaction with (police) and (emergency medical services). All of that reduces costs typically paid by taxpayers.”
Most of the grant money, Howard said, would go toward creating a “Pay For Success” fund that would help ensure investors get their money back. The rest of the money, she said, would go toward hiring staff to draw up contracts for the initiative’s structure and metrics to determine whether the program had reached its goals.
About the Author
JAMES BARRAGAN James Barragan covers Latino issues, community affairs and nonprofits.