There are, by varying estimations, some 400 to 700 chronically homeless people in Rhode Island who cost the state and its taxpayers an average of more than $30,000 each per year in service program, incarceration and medical costs.
But when the chronically homeless are placed in permanent housing programs with support services, the savings is close to $8,000 per person, per year, according to research produced by Providence College sociology professor Eric Hirsch and Roger Williams University anthropology professor Irene Glasser. That represents a total possible taxpayer savings of $5.6 million per year and Hirsch estimates those figures, from a study that measured the effectiveness of the Housing First Rhode Island program back in 2006, are a gross underestimation.
Now Hirsch and others are asking if there’s a way capture that savings while providing minimal risk of lost taxpayer investment. “I think the state and elected officials only seem to be worried about the bottom line and aren’t willing to invest money now to retain a savings down the road,” Hirsch said.
One funding possibility being investigated is using social-impact bonds to form a partnership between the state, investors and nonprofits to fund rehabilitation programs in order to provide measurable progress in social programs.
It’s a relatively new funding mechanism that is in place in only two other states.
Social Enterprise Ecosystem Economic Development, a partnership of entrepreneurs and social investors working to drive social-enterprise development in Rhode Island, is working with Boston-based Social Finance Inc., to study what it would take to bring a social-impact bond program, also called pay-for-success contracts, here to invest in chronic-homelessness rehabilitation programs.
“Rhode Island is small and [it is] easy to get everybody in the room and sit down and talk,” said Diane Lynch, a SEEED collaborator and a member of the board of directors of Social Venture Partners Rhode Island, which is closely aligned with SEEED. “I think it has the potential to be revolutionary.”
Social-impact bonds work by securing capital from private investors – from a business, a group of businesses, or a group of individuals – to fund service programs at local nonprofits.