Hundreds of people experiencing chronic homelessness housed and supported with services through innovative financing program saw increased well-being, decreased use of costly emergency services
DENVER – When hundreds of people experiencing chronic homelessness were offered housing and provided the supportive services they needed to thrive, they remained housed and reduced their interactions with costly emergency services years into the program, according to a new independent analysis of Denver’s innovative Supportive Housing Social Impact Bond initiative (SIB).
Calling the program a “remarkable success,” the final evaluation report on the Denver SIB by Urban Institute researchers showed participants improved their well-being through increased access to and use of preventive healthcare to address their underlying diagnoses and decreased their use of costly emergency care. The evaluation found more than half of the total per-person annual cost of the program was offset by reductions in the costs of other public services, such as jail, detox and other emergency care. As a result of the program’s success, investors in the Denver SIB will be fully compensated for their original investment.
“Denver’s Supportive Housing Social Impact Bond program shows that with housing first and the right supports in place, people can and will exit homelessness, remain housed and achieve stability in their lives,” said Mayor Michael B. Hancock. “Through the Denver SIB, almost all of the supportive housing costs were offset by reductions in costs in places such as the criminal justice and emergency care systems. More importantly, the health and quality of life of hundreds of our most vulnerable residents was greatly improved, and those impacts are immeasurable.”
In 2014, the city estimated it spent approximately $7 million a year to serve 250 people experiencing chronic homelessness who were frequently interacting with expensive emergency systems not designed to support their long-term needs. Through the SIB initiative, announced by Mayor Hancock at the 2014 Clinton Global Initiative and launched in 2016 in partnership with the Colorado Coalition for the Homeless and the Mental Health Center of Denver, Denver leveraged local housing resources and $8.6 million from eight private investors to deliver supportive housing to people experiencing chronic homelessness and frequent mental and behavioral health crises. According to the SIB contract, if the program met its goals for keeping people housed and reducing their number of days in jail, the city would make outcome payments to the investors. If the program did not meet its outcome goals, the city would not repay the investors. The Urban Institute researchers—with research partners from the Evaluation Center at the University of Colorado Denver and with support from the City and County of Denver, Arnold Ventures, and the Robert Wood Johnson Foundation—tracked implementation of the Denver SIB and evaluated its effects.
“Rather than paying for the consequences of leaving people in homelessness, communities could learn from Denver and invest in housing and supportive services that end the harmful homelessness-jail cycle,” said Mary Cunningham, the Urban Institute’s vice president for metropolitan housing and communities policy. “Results from our evaluation of the five-year Denver SIB show how both people and public budgets benefit when communities take this proactive approach.”
The evaluation used a randomized controlled trial to track outcomes over three years for 724 people, including 363 people who were in the treatment group (referred to the supportive housing program) and 361 people who were in the control group (received services as usual in the community).
“This partnership proved what we’ve always known - housing is the solution to homelessness especially when the appropriate supportive services are made available,” said John Parvensky, President of the Colorado Coalition for the Homeless. “CCH is proud to have been a part of this project which created lifelines and stability for hundreds of Denver residents and we look forward to continuing this critical work until all of our neighbors have a safe place to call home.”
“Providing supportive, trauma-informed housing integrated with behavioral health services in this program model not only gets people the help they need for their recovery, it also helps reduce the strain on our emergency room and law enforcement systems,” said Carl Clark, MD, president and CEO, Mental Health Center of Denver. “It ends up saving money and freeing up public resources for other priorities, all while we’re serving people in a more effective and appropriate way. That’s a win-win.”
The innovative “pay for success” arrangement was managed by an intermediary entity comprising the Corporation for Supportive Housing and Enterprise Community Partners, both of whom helped to conceive of and design the program.
"The Denver SIB initiative is another proof point that supportive housing helps people who have experienced homelessness or have a history of institutional care thrive in housing and the community. It also demonstrated what public and private sectors could accomplish when they work together for the greater social good," said Deborah De Santis, President and CEO at Corporation for Supportive Housing.
As of October 2020, the city had made four payments totaling $3,913,932.96 to investors for housing stability outcomes achieved from January 1, 2016, to June 30, 2020. The Urban Institute’s fifth and final assessment looked at both housing stability outcomes and the program’s impact on the number of days participants spent in jail between January 1, 2016 and December 31, 2020. As a result of the outcomes achieved, the city will pay investors a fifth and final housing stability payment of $620,978. In total, Denver paid $9.6 million;$4.5 million in housing stability payments and $5.1 million in the jail day outcomes payment. These payments represent the full initial investment plus an additional $1 million based on the project’s outcomes. The project was so successful, it passed the contract threshold in which investors agreed to share success payment with providers. $251K of Northern Trust’s portion of the $1 million in success payments will be shared with providers.
“We are pleased to have been an integral part of this groundbreaking and successful project in a community where we have had a local presence for more than 20 years,” said John Couzens, Wealth Management President of the Rocky Mountain Region at Northern Trust, one of the project’s investors. “We are thankful to the City of Denver and Mayor Hancock for undertaking this project, and to Colorado Coalition for the Homeless and Mental Health Center of Denver for proving that housing the homeless can work to create better outcomes for all.”
The evaluation, led by the Urban Institute researchers, includes a look at Housing Stability Outcomes, Criminal Justice System Outcomes, Health Services Outcomes, and Program Cost Findingsall of which are available on the Urban Institute’s project page.
Among the findings, the evaluators determined:
- When people experiencing homelessness were offered housing, most took it and stayed for the long term. Of those housed through the program, 86 percent remained in stable housing at one year. At two years, 81 percent remained in stable housing, and at three years, 77 percent remained.
- The SIB significantly increased participants’ access to housing assistance. Over three years, people referred to supportive housing received an average of 560 more days of consistent housing assistance per person than those who received services as usual in the community.
- SIB participants spent significantly less time in shelters. People referred to SIB supportive housing experienced a 40 percent reduction in shelter visits and a 35 percent reduction in days with any shelter stays when compared with those in the control group.
Criminal justice system outcomes
- The SIB helped people reduce their interactions with the criminal justice system. In the three years after being randomized into the evaluation, people referred to supportive housing had a 34 percent reduction in police contacts and a 40 percent reduction in arrests because of supportive housing when compared with those who received services as usual in the community.
- SIB participants spent less time in jail. In the three years after being randomized into the evaluation, participants referred to supportive housing had a 30 percent reduction in unique jail stays and a 27 percent reduction in total jail days when compared with those in the control group.
Health services outcomes
- Supportive housing helped people use less emergency health care and more office-based health care. Two years after SIB participants were referred to supportive housing, they had a 40 percent decrease in emergency department visits, a 155 percent increase in office-based visits, and a 29 percent increase in unique prescription medications to support their wellbeing when compared with those who received services as usual in the community.
- The SIB helped people reduce their use of short-term, city-funded detoxification facilities. In the three years after participants were randomized into the evaluation, they had a 65 percent reduction in the use of detoxification facilities, which aren’t equipped to provide follow-up treatment, when compared to people receiving services as usual in the community.
While the final payment to investors signifies an end to the formal program, Denver is continuing to invest in and support the supportive housing implemented through the Denver SIB through the City’s General Fund budget. The City recently extended contracts with providers and evaluators to further deliver supportive housing and evaluate its outcomes for all current participants in SIB to remain housed and eligible for supportive services in 2021.
“This research proves what we know from our tireless efforts to resolve homelessness: when you combine housing with services, it works, it saves us money, and we need to do more of it,” said Britta Fisher, Executive Director of the Denver Department of Housing Stability. “We are excited to put these findings to work in pay-for-performance investments going forward as we provide housing and services to people in need.”
The partners involved in this program include:
- Colorado Coalition for the Homeless (Service Provider)
- Corporation for Supportive Housing (Project Manager)
- Enterprise Community Partners, Inc. (Fiscal Agent)
- Mental Health Center for Denver (Service Provider)
- Social Impact Solutions (Project Development)
- Urban Institute with local partner University of Colorado Denver (Independent Evaluator)
- Colorado Access (Managed Care Organization)
The investors involved in this contract include:
- The Denver Foundation
- The Piton Foundation
- The Ben and Lucy Ana Walton Fund of the Walton Family Foundation
- Laura and John Arnold Foundation
- Living Cities Blended Catalyst Fund LLC
- Nonprofit Finance Fund
- The Colorado Health Foundation
- The Northern Trust Company
Additional Support Provided by:
- Harvard Kennedy School Government Performance Lab
- Colorado Division of Housing and Colorado Governor’s Office
- Colorado Housing Finance Authority
- Denver Housing Authority
- Denver Crime Prevention and Control Commission
- Feasibility Grants: The Piton Foundation, Kaiser Permanente, The Denver Foundation, The Colorado Health Foundation, and the Rose Community Foundation
- Transaction Structuring Grant: Nonprofit Finance Fund and the Social Innovation Fund at the Corporation for National and Community Service