You’ve heard this before and probably thought it yourself — giving money to homeless people is not the best way to help them because it might be squandered, or spent on harmful habits.

But a new Canadian study makes a powerful case to the contrary. The Foundations for Social Change “New Leaf Project” gave a one-time cash transfer of $7,500 to carefully screened recently homeless people in the Vancouver area. They followed the cash recipients’ life over 12-18 months and compared their outcomes to that of a control group who didn’t receive the payment.

The facts fly in the face of our stereotypes

Housing

Fact 1: Cash recipients moved into stable housing faster than non-cash participants and overall, spent fewer days homeless.

Why it matters: Moving into housing provides stability, reduces the risk of trauma, improves health, and frees up shelter beds for others in need.

Spending

Fact 1: Cash transfer recipients prioritized and increased spending on recurring staples like housing/rent, food, transportation, and utility bills.

Why it matters: Cash transfers provided choice and enabled people to buy more goods, helping them meet their basic needs. Counter to some stereotypes, participants spent their money on essential items.

Fact 2: Cash recipients increased spending on one-time purchases of household items, such as furniture, computers, bikes, and vehicles.

Why it matters: A direct cash transfer empowers individuals with dignity and provides the choice to make spending decisions that best

“The approach was based upon scientific evidence and our bold action has paid off. By preventing people from becoming entrenched as homeless, NLP helps individuals to maintain dignity and regain hope. At the same time, community resources can be spent in other urgent areas.”

The study shows there are advantages for the taxpayer, too.

According to the research, reducing the number of nights spent in shelters by the 50 study participants who received cash saved approximately 8,100 Canadian dollars per person per year, or about 405,000 Canadian dollars over one year for all 50 participants.

The cost of doing nothing is higher.

Cash transfers provide choice, control and purchasing power at a critical time in people’s lives. This is not merely a gesture of help, it is a signal that society believes in them.

Listen to two participants

Project participants have seen measurable improvements in their lives after receiving the cash transfer and we are passionate about expanding our work.

“(Receiving the transfer) made me feel important. It’s like a silent cheering squad in the back of my mind. I know that the study is meant to help me so it has helped guide me. They have faith in me so I have faith in myself.” – Amy

“I got to buy Christmas presents for my family. I’ve never been able to do that so I got to really show them that I do care and I do try.” – Bethany

Base on material from the New Leaf website and a CNN article by Francesca Giuliani-Hoffman, CNN.