Independent Evaluator Reports “Early Success is Promising” for Denver’s Social Impact Bond Program
Analysis of innovative financing tool to support 250 of city’s chronically homeless with housing and services results in first payment to investors
DENVER – Oct. 30, 2017 – Partners of Denver’s first ever Social Impact Bond (SIB) to provide chronically homeless individuals with permanent housing and supportive services today released the results of the first independent evaluation and first subsequent payment to investors. According to the report from the Urban Institute, the program has been successful in its first year, and will result in a first payment of $188,000.
"The early findings are very promising: program participants are getting housed and staying housed. We know these are important milestones in achieving the program's ultimate goal of breaking the homelessness-emergency services cycle,” said Mary Cunningham, Codirector of the Urban Institute’s Metropolitan Housing and Communities Policy Center.
The Denver SIB program, first announced by Mayor Michael B. Hancock at the Clinton Global Initiative in June 2014 and launched in 2016, is an initiative aimed at measurably improving the lives of people most in need by driving resources towards better, more effective programs. Denver’s SIB program uses funds from lenders to provide housing and supportive case management services to 250 chronically homeless individuals who frequently use the city’s emergency services, including police, jail, the courts and emergency rooms.
“Denver’s Social Impact Bond program pairs health and home to provide those who are most in need with the support they need to improve their lives and wellbeing,” Mayor Hancock said. “These initial successes, and the great work of a phenomenal slate of partners, are a promising beginning to what we know will be more positive path forward for those we are serving and will serve through this innovative program.”
To date, nearly 200 individuals have been housed and about 50 more participants are expected to be housed by early next year. Mayor Hancock’s proposed 2018 budget also calls for an additional $670,000 to add 100 more permanent supportive housing units to the existing 250 apartments financed through the city’s innovative Social Impact Bond program.
The Urban Institute found that 100 people from the target population were referred to the initiative from January to December 2016. This group was primarily made up of men in their 40s and 50s who had an average of 16 arrests per person in the three years prior to entering the program. The Colorado Coalition for the Homeless worked to locate and engage each referred person in 2016.
For the first 100 participants, the Urban Institute looked at six months of data after each person’s referral to the initiative. Of those 100 referrals:
- 93 people were located
- 88 people were engaged by service providers
- 73 people had their housing applications approved
- 66 people signed a lease and moved into housing
“The Colorado Coalition for the Homeless is honored to continue our critical mission through the Social Impact Bond program which is helping to elevate our work to assist chronically homeless individuals. Through the partnership with the city, the Mental Health Center of Denver, and the philanthropic community, we are able to work towards a common-sense solution to ending chronic homelessness by providing housing, healthcare, and critical support services,” said John Parvensky, President of the Colorado Coalition for the Homeless.
According to the report:
- After six months, 95 percent of participants who entered housing had no exits from the program, meaning they did not leave the program for planned or unplanned reasons.
- After one year, 89 percent of participants who entered housing had no exits, meaning they did not leave the program for planned or unplanned reasons.
- Of the 40 participants who could have been in housing for at least one year or had a planned exit (such as death), 33 were stably housed during this period, and six had a planned exit from the program.
Many of the program participants are still approaching the one-year milestone, and only one participant had an unplanned exit (including jail stays or any other interruption that caused the participant to be out of housing for more than 90 days). This compares favorably to initial project projections which presumed approximately 80 percent of participants who entered would stay housed or have a planned exit during the first year.
Through the social impact bond contract, the city agreed to pay investors $15.12 for each day each qualifying participant was stably housed and not in jail. Qualifying participants are those who spent at least one year in housing or had a planned exit. By the end of June 2017, 39 qualifying participants had spent a total of 12,457 days in housing, resulting in just over $188,000 in the city’s first payment to investors.
“The number of individuals who remained stably housed for at least a year is significantly higher than expected. This means that year one, despite challenges relating to the original leasing plan, was quite successful in terms of identifying program participants and in those participants staying housed,” said Tyler Jaeckel, Program Director at Harvard's Government Performance Lab and project lead from the City and County of Denver. “We are pleased with the outcome and are hopeful that we will continue to see this kind of success in housing stability.”
Over the course of the evaluation of the program, and as more individuals are housed, the Urban Institute will analyze the benefits of the program to taxpayers in areas related to criminal justice and health. Those analyses are planned for later parts of the project.
Social Impact Bonds are a unique type of performance-based contract where private and/or philanthropic lenders loan funds to accomplish a specific objective, and are repaid based on whether the program achieves its goals. The total private investment in the program is nearly $8.7 million, with an additional $15 million in federal resources being leveraged over five years. Repayment to investors is contingent upon the achievement of the program’s outcome targets.
Based upon previous studies, the expected outcomes of 35 to 40 percent reduction in jail bed days and approximately 80 percent increase in housing stability among the target population would result in a payment near $9.5 million. The repayment will be less if outcomes are not achieved.
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 partners University of Colorado Denver and the Burnes Institute (Independent Evaluators)
- 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