The Foundations for Social Change in Canada launched a cash transfer program that actually saved the local government money.
Researchers in Canada found 115 unhoused folks who were confirmed to not have serious substance abuse or mental health conditions. They then handed 50 of the individuals $7,500 each. An entire year later, most of them still had $1,000 in savings, and 67% of the recipients could still afford to feed themselves independently every single day. The study was conducted by Foundations for Social Change, a team of experts working on social impact, partnership development, research and policy, behavioral sustainability, organizational management, and finance. It was completed under their New Leaf Project, the world’s first direct cash transfer program.
Over the course of the study, the team took monthly and quarterly self-reported surveys on the recipients' conditions and expenditures. Though several people may have predicted that the money would be spent irresponsibly, perhaps on drugs or alcohol, the results depicted a very different picture of the homeless community in Canada. Once the 50 participants spent the funds on what they deemed to be important, average spending on alcohol or drugs actually went down by 39%. The researchers believe this is perhaps because the individuals recognized they had an opportunity to turn things around and build a better future for themselves.
Furthermore, the New Leaf Project found that those who received the $7,500 cash transfer moved into housing two months faster than those who did not receive the transfer. While two months may not seem like a long time for most people, this can make a large difference for those who have to spend that amount of time on the street. This also meant that other individuals who need emergency services had access to them. In addition to this, recipients were more frugal than non-cash participants in the control group. Spending was spread out over the year; 52% of the transfers were spent on food and rent and 15% on medication and transportation. An average of $700 was also spent on one-time cash purchases, such as a bike or computer.
Finally, the team found that direct cash transfers actually saved the government money. The province of British Columbia saved an average of $600 per person by handing cash directly to individuals rather than spending on emergency services like shelters for the unhoused. The impact report reads, "By spending fewer nights in shelters, the cash group saved the shelter system approximately $8,100 per person for a total of roughly $405,000 over one year. Factoring in the cost of the cash transfer, that’s a savings of $600 per person for society." The New Leaf Project's findings lead the team to a rather radical policy recommendation: "Cash transfers provide choice, control and purchasing power at a critical time in people’s lives. This is not merely a gesture of help. It is a signal that society believes in them."