Cash for the homeless?
Effective Compassion | What one nonprofit learned from giving handouts
by Charissa Koh
Posted 12/22/20, 03:59 pm
A Canadian charity got unexpected results when it decided to test whether giving a hand up really is better than giving a handout.
Foundations for Social Change recently released the findings of a study in which it gave homeless people thousands of dollars and followed them for a year. News outlets said the results contradicted stereotypes about the harms of cash payments to the homeless, but those reports overlooked some important features of the study.
The Vancouver-based foundation started New Leaf Project in 2018. It identified 50 homeless people to receive 7,500 Canadian dollars (nearly $5,700) plus coaching and a self-affirmation workshop. It gave a second group money and the workshop. A third received only the workshop and coaching, and the last group received nothing. The charity surveyed them every three months and interviewed each after one year. It said the groups that received cash found housing more quickly and saved more money than the others, as well as spent 39 percent less on drugs and alcohol than they did before.
“Researchers gave thousands of dollars to homeless people. The results defied stereotypes,” CNN declared in its coverage of the study, and other news outlets treated the story similarly. Steve Berg, a vice president with the National Alliance to End Homelessness told CNN, “People can be relied on, if they get the money upfront, to take care of the problem themselves.”
But Nathan Mayo, membership director for the True Charity Initiative, pointed out how most news coverage skipped the fact that “project participants were carefully screened for program eligibility to ensure the highest likelihood of success,” according to the study. Researchers excluded those with mental health or drug problems. Citing data from the U.S. Substance Abuse and Mental Health Services Administration, Mayo said the project might have screened out between 55 percent and 90 percent of all homeless people.
“The study participants do not resemble the average homeless person on a street corner,” Mayo wrote. “Cash transfers may work for someone in a temporary crisis and may harm someone with a chronic addiction, destructive habits, or a mental disorder. Effective charity should offer different solutions for different situations.”
Mayo extends that philosophy to buying Christmas gifts for needy families: Instead, he recommends churches sell toys at a deep discount, so parents can have the dignity of providing for their kids and the children can be grateful to their parents, not strangers.
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Charissa is a WORLD reporter who often writes about poverty fighting and prison reform, including profiling ministries in the annual Hope Awards for Effective Compassion competition. She is also a part of WORLD's investigative unit, the Caleb Team. Charissa resides with her husband, Josh, in Austin, Texas. Follow her on Twitter @CharissaKoh.