OPINION: Cash transfers can help alleviate extreme poverty in Atlanta

In January 2022, there were 2,017 unhoused people living in the city of Atlanta.

Of those, 640 were sleeping on the streets, totally unsheltered.

These are the kind of clients that Project Community Connections Inc. (PCCI) has served for more than 20 years. The nonprofit offers services including housing placement, advocacy and rental assistance to help individuals and families find stable housing. But during the pandemic, a time when the needs of the organization’s clients were at an all-time high, PCCI staff polled families and asked them what they needed most.

“We realized they didn’t have money for groceries, to put gas in the car or to pay for services such as cell phones,” said Margaret Schuelke, co-CEO of PCCI.

While attending an online webinar, Schuelke learned about an intriguing program. A national nonprofit that focuses on reducing youth homelessness was using cash transfer payments to help unaccompanied homeless youth meet their needs.

“They said providing these payments directly to the household was critical in order to maintain some stability,” she said. The program also benefited youth by empowering them to make choices. “They were giving people the ability to make the decisions they need to make.”

Cash transfer programs have been growing globally since the mid-1990s as a cost-effective way to improve the lives of people living in poverty. More than 300 studies around the world have offered evidence to support the effectiveness of such programs and more importantly, debunk the myths that have prevented more cash transfer programs, particularly in the U.S., from taking root.

Federal social safety net programs that offer nutrition, housing and health assistance are valuable and needed to help low-income residents, but come with restricted use. Cash transfer programs may also come with conditions, but the programs provide money directly to individuals to use as they see fit.

Despite evidence of the effectiveness of cash transfers at reducing poverty, only 18% of humanitarian assistance and 2% of major government funders globally provide direct cash transfers, according to Give Directly.

Critics of cash transfer programs argue that those in poverty do not make good decisions about how to spend money, that recipients work less as a result of receiving cash transfers and that programs are too short-term to break the cycle of poverty.

But unlike the traditional safety net programs that have been in place for decades, cash transfers are still in their infancy. Programs like the one implemented at PCCI add to a growing body of research that demonstrates the benefits of cash assistance.

With funding from the Annie E. Casey Foundation, PCCI launched a direct payment program for its youth clients based on a program that was operating in California. Though spending was unrestricted, they tracked client purchases with client consent. Most youth spent a disproportionate amount of money on food but the most immediate measurable impact was relief of stress, Schuelke said.

The program showed enough promise to make them want to try something longer term with a broader segment of their client population.

Researchers at Emory University helped PCCI determine that a program which provided $400 each month for 12 months would show statistically significant outcomes in terms of moving people out of poverty.

In November, the Bezos Day 1 Family Fund granted PCCI $2.5 million, $750,000 of which they used to scale the program over three years to serve a total of 150 households. The program is embedded in their existing programs for PCCI clients and the only cost was purchasing the reloadable cards.

“We think we will see folks stabilize faster and roll off our caseloads faster and secure housing quicker,” Schuelke said. Data that has already been collected has shown expenditures on food, transportation and professional services. “They aren’t going on wild and crazy spending sprees,” she said.

PCCI also recently engaged a team of researchers to help track the outcomes and evaluate the program.

Schuelke said the organization hopes to share its body of research in a nonpartisan forum to help demonstrate to local and federal leaders the success of cash assistance programs and how they can be sustainable, publicly funded programs.

She said cash transfer programs will help people get out of the spending cycle that we created in this country — a cycle in which we tell those most in need, “we don’t trust you, so we are going to make decisions for you.”

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