Massachusetts Launches Pay for Success Initiative to Address Chronic Homelessness

Massachusetts has a lot to cheer about this week, from the Patriots big win on Sunday to recent efforts to end chronic homelessness through a statewide initiative. The Super Bowl victory was all about teamwork and leadership and the new initiative will require these same virtues.

On December 8, 2014, I was proud to join an excited gathering of representatives from the public and private sectors as former Governor Deval Patrick announced the launch of the Massachusetts Pay for Success (PFS) initiative to address chronic homelessness. Held at the South Middlesex Opportunity Council (SMOC) in Framingham, Massachusetts, this groundbreaking initiative leverages philanthropic and private capital investments to provide 500 units of stable supportive housing for up to 800 chronically homeless individuals over six years.

The Pay for Success initiative is based on the demonstrated success of Home & Healthy for Good (HHG), a statewide permanent supportive housing program administered by the Massachusetts Housing and Shelter Alliance (MHSA). MHSA has served as the state’s leading advocate for supportive housing and has advanced Housing First approaches to end homelessness.  HHG has demonstrated that providing low-threshold housing and supportive services to chronically homeless individuals is less costly and more effective than managing their homelessness on the street or in shelter. As of January 2015, HHG has placed 813 chronically homeless individuals into permanent supportive housing.

The Massachusetts PFS initiative to address chronic homelessness uses an innovative form of financing to begin bringing the HHG model to scale in Massachusetts. Also known as Social Innovation Financing, the PFS initiative relies on up-front funds from private investors to expand a social innovation—in this case, low-threshold permanent supportive housing. If the program is successful, private investors are paid back with public dollars. This model ensures that taxpayers only pay for programs that actually produce results.

In order to implement the project, the Massachusetts Housing and Shelter Alliance (MHSA) has partnered with Corporation for Supportive Housing (CSH) and United Way of Massachusetts Bay and Merrimack Valley (UWMB) to form the Massachusetts Alliance for Supportive Housing (MASH), a subsidiary of MHSA dedicated to expanding permanent supportive housing in Massachusetts. The initiative leverages $1 million in philanthropic funding and $2.5 million in private capital investments from Santander Bank N.A., CSH and UWMB.

State partners for the initiative include the Executive Office for Administration and Finance (EOAF), the Department of Housing and Community Development (DHCD) and the Executive Office of Health and Human Services (EOHHS). The Harvard Kennedy School Social Impact Bond Technical Assistance Lab provided technical assistance to the Commonwealth throughout the development of the project. EOAF will make success payments if the third-party evaluator – Root Cause – verifies that service providers have housed a formerly homeless tenant for one year. DHCD is also contributing state resources to the initiative, including Massachusetts Rental Voucher Program housing vouchers. Finally, MHSA has been working closely with MassHealth, administered by EOHHS, to encourage managed care entities to amend their contracts to provide PFS tenants Medicaid-reimbursable services through the Community Support Program for People Experiencing Chronic Homelessness (CSPECH) program.

The launch of the Massachusetts PFS initiative to address chronic homelessness is the culmination of nearly three years of collaboration among a multitude of public and private sector partners. With its unique combination of private investments and leveraged public resources, the PFS initiative is a nationwide model for innovative financing to scale up what we know works – low-threshold permanent supportive housing.

As the effort moves forward, the Patriots mantra of “Do Your Job” that carried the team to their Super Bowl victory can also be the charge for all the players in Massachusetts’ unique social innovation experiment.  Indeed, success will require a commitment to get the job done through execution and hard work.

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Robert Pulster is a Regional Coordinator with USICH, based in Boston, Massachusetts.