‘Reality Check’ on Alternative Funding for Homelessness – Report

Sources of non-government funding, such as philanthropy, corporate sponsorship or social impact bonds, are unlikely to provide a significant contribution to reducing homelessness in the foreseeable future in Australia, according to new research.

The research from the Australian Housing and Urban Research Institute (AHURI) found that homelessness services received funding from diverse sources, primarily government, but also philanthropy, corporate sponsorship, donations and new forms such as social enterprises and social impact bonds, but the funds raised were relatively small.

The research found that while diverse funding created benefits, such as the ability for homelessness services to pilot new initiatives, it also came with additional administrative and accountability costs.

“Managing multiple sources of funding has real costs for these organisations, which in turn affects the delivery of their services,” the report found.

The report, The Funding and Delivery of Programs to Reduce Homelessness: The Case Study Evidence was undertaken for AHURI by researchers from Swinburne University of Technology, the University of Western Australia and the University of New South Wales.

It revealed that investment by homelessness services in early intervention and in breaking the cycle of homelessness were associated with cost savings over time but that these two strategic policy areas remained underdeveloped.

Associate Professor David MacKenzie, from Swinburne University of Technology is the research’s lead author.

“The report’s findings serve as somewhat of a ‘reality check’, identifying some promising possibilities but also signalling the limitations of alternative sources of funding for the delivery of homelessness services,” MacKenzie told Pro Bono News.

The research focused on nine case studies that used different service models, organisational forms and potential new ways of funding services for the homeless.

“Homelessness services are largely funded by government through the specialist services program and while there have been ideas, particularly in government circles, that perhaps there’s a huge amount of philanthropic and corporate funding that could underwrite recurrent services, that’s not proven to be the case,” MacKenzie said.

“Where services have got grants from philanthropy… they are generally used for special purposes to pioneer something new, to develop something that is not going to ever be funded by the routine funding they get.

“We also investigated new forms of non-government funding such as social enterprises and social impact bonds. Typically, social enterprises underwrite ancillary or additional support services. Few homelessness agencies are in a position to develop financially successful social enterprises.

“We were positive about exploring the possibilities for those but we warned against the illusion that this could mushroom into a huge and significant thing.”

He said there were a number of trials underway throughout the world of social impact bonds, which promote a business investment model for obtaining private capital investment.

“Our research shows that, to be effective, agencies must work out what is most appropriate for this kind of funding, what its limits are and how the outcomes can be measured,” he said.

“It is still early days in terms of assessing what the scope and limitations of this approach will be in the longer term.

“It has been experimented in in several areas and we think we should look further into that, I guess we were counselling caution and trying to dampen down expectations that there are all these other untapped sources of funding.”

He said department people and government ministers were concerned that homelessness just keeps increasing.

“But we have had for sometime the understanding about what early intervention is. But there has been relatively modest investment in stemming the flow of people into homelessness,” he said.

“There has to be some shift in government thinking here and there’s got to be some investment in early intervention and a much bigger commitment to affordable housing.”

The report formed part of an AHURI inquiry into the funding and delivery of programs to reduce homelessness and found that:

• Philanthropic grants are used by homelessness agencies for new initiatives and innovation but are not available to recurrently fund service provision.

• Fund raising from the community has preconditions such as strong brand recognition, location, and target groups that appeal to funders. Some homelessness agencies such as faith-based non-government organisations (NGOs) or agencies working with particular target groups or providing services such as foodbanks or material aid have more opportunities than others.

• There is some evidence of social enterprise development but usually for ancillary activities and services such as revenue raising in an associated area of expertise and, employment services for those who are experiencing homelessness. This sector would benefit from capital start-up funding from government.

• Social impact bonds are a growing area, but for much wider application this will require a more sophisticated and rigorous approach to outcomes measurement.

• Partnership arrangements are an important alternative where agencies do not have the funds or expertise to deliver an integrated suite of homelessness services.

As a result of the research, MacKenzie said a number of policy implications emerged from the case studies:

• early intervention and postvention strategies are necessary to reduce homelessness and thus reduce the upward pressure on the homelessness budget
• integrated cross-sectoral and cross-departmental funding packages could achieve greater efficiencies than current arrangements
• co-funding of time-limited special projects and innovation by government with the philanthropic sector.

The research comes on the heels of a media report last week which suggested that the federal government was about to axe the National Affordable Housing Agreement (NAHA) which funds the maintenance of Australia’s social housing system as well as homelessness services provision.

The report said axing the agreement in the May budget would save the government $1.5 billion a year.

Peak affordable housing body National Shelter said: “If true, this will be an act of vandalism by the commonwealth against a vital essential funding program which supports the most vulnerable including funding two thirds of all the homelessness services in Australia.”

National Shelter Executive Officer Adrian Pisarski said: “The NAHA wasn’t well conceived and has not been well managed but axing the only funding for public housing and homelessness services without discussion, consultation or any alternative plan amounts to vandalism against many of the most vulnerable in our community.”

The research report is available to download from the AHURI website at http://www.ahuri.edu.au/research/final-reports/274