Vancouver gave homeless people $5,800 and it completely changed their lives

Ray was homeless and struggling to find a job to make ends meet when he was given $5800 out of the blue. He was one among 50 homeless people chosen to be given a lump sum amount of cash as part of a pilot project organized by Foundations for Social Change (FSC) in Vancouver, British Columbia. The aim was to give a no-strings-attached sum of money to people to help themselves achieve a better quality of life and stability. “It took me about a week to really sink in that this money was for me,” said Ray. “You know, CAD $7,500 ($5800 USD) bucks is a fair bit to be giving to someone in my situation.” The money was given out in 2018 and the early results of the pilot project are so impressive that many cities across America and Canada are looking to implement the project. 

Claire Williams, the co-founder of FSC, said receiving cash empowered them. “There’s a wide body of research that if you give someone a larger sum of cash it triggers long-term thinking,” said Williams. Ray was struggling to stay afloat after being laid off in 2017. After a 37-year-long career of heavy-lifting in the warehouse and construction industries, his body was failing him. A host of issues made it harder for Ray to get back on his feet. He didn't qualify for re-training as his high school English grade was two percentage points short of qualifying. The bureaucratic hurdles of employment insurance, saw the government cut his payments. Ray was struggling to make rent now. “My hands were kind of tied. I just wanted to give up, I really did,” said Ray, reported Reason to be cheerful. 

He was working odd jobs from a local homeless shelter but with the poor wages, he was being paid, surviving itself became a luxury. “By the end of the day, half of that money was gone,” he says. He felt he would never be able to get back to having a roof over his head. That's when he was approached by Foundations for Social Change and selected for New Leaf Project. The project was a partnership between the University of British Columbia led by Canada’s research chair in behavioral sustainability, Jiaying Zhao, and FSC. The project aimed to evaluate the effects that a one-time lump-sum gift had on people’s lives over the course of a year.

The project selected recipients from local shelters and they chose people who were recently homeless and were functional in their daily lives. This was done to ensure the funds didn't drive people deeper into addiction. The key factor was that there were strings attached to the money. They weren't instructed what to do with it. Usual charitable donations or government programs released money in parts on the basis of certain criteria they met which often included getting medical, or addiction treatment, filing monthly reports, or spending on particular services. “We inherently do not trust people living in poverty,” said Claire Williams, co-founder of FSC. “If you think of something like income assistance, welfare, even employment insurance, we make the burden of proof so high for people to access those benefits because we fundamentally assume that people are trying to cheat the system.” All the participants were asked to do was answer questionnaires, and give interviews about their spending and experiences. This information was used to compare with a control group. The aim was to find if simply giving homeless people money would drastically improve their lives.

Having received a lumpsum amount, Ray started planning ahead. “I really wanted to get into this frontline work with addiction and vulnerable people, because I mean, I’ve been there,” said Ray. “I felt that I could turn that around and do the same for people that are in my shoes.” Within a month, he had a room at a single-room occupancy hotel. He got training outreach and found temporary work with one of the local shelters. He was soon working for a construction company, but he values his training. “Having a community service worker certification under my belt opens up doors for me.” Ray's life had significantly improved as did so many others who were selected for the project.

Half of the cash recipients had found stable housing within a month, compared to 25 percent of the control group. “That was phenomenal,” said Zhao. Close to 70 percent were food secure in a month with a chunk of their spending allocated to essentials such as food shelter and bills. On average, the cash recipients spent a total of three fewer months in a shelter than those in the control group, whose days spent homeless had increased. The stability in their lives also saw reduced spending from them on alcohol, drugs, and cigarettes by an average of almost 40 percent. This was a key highlight that goes against the "widespread misperception that people in poverty will misuse cash funds,” the report stated. And to boot, a majority of the recipients had an average of $1,000 still left in the bank. It makes you wonder how America failed its people as it sanctioned a meager $600 as direct payments to fight the pandemic. 

“For someone who just became homeless, who does not have a severe level of substance use or mental health issues, then the government should distribute a one-time cash transfer to help them move out of homelessness quickly,” said Zhao. She called on more financial assistance to be given to people to help them move out of homelessness. “These people trusted me. Let me prove to them that I can be successful,” said Ray, before adding, "When people look at us as homeless they think immediately that it has to do with drugs and alcohol. It’s not. It’s all kinds of different avenues.” Williams and Zhao confirmed they were sharing information and resources to support U.S. nonprofits and government entities across America and Europe.