Promising Practice:
Direct Cash Transfers

Direct Cash Transfer (DCT) is an anti-poverty tool that places money directly in the hands of people who are experiencing homelessness or housing instability and empowers them to utilize the funds in the way that meets their most pressing financial needs.

This blog provides an overview of Direct Cash Transfer, its evidence base, and how it is being used across the country to address homelessness and housing instability.

WHAT ARE DIRECT CASH TRANSFERS?

Direct Cash Transfers are a form of assistance in which financial resources are transferred directly to individuals or households. The recipients are often members of economically vulnerable groups including but not limited to low-income households, transitioning age youth, and people experiencing homelessness. Direct Cash Transfers can be conditional where recipients must meet certain conditions to receive the money and unconditional where the recipient is not required to meet any conditions and is empowered to utilize the funds in the manner that best meets their self-determined needs. Direct Cash Transfers not only allow financial resources to be targeted to persons who might most benefit from the assistance, but also are associated with increased administrative efficiency because they reduce the impact of bureaucratic processes and increased flexibility for recipients because they are able to spend the money in alignment with their individual needs.

ARE DIRECT CASH TRANSFERS EFFECTIVE?

Research suggests that Direct Cash Transfers are effective in reducing poverty, facilitating the economic empowerment of recipients, and improving physical and mental health. The following examples demonstrate the effectiveness of this intervention.

The Stockton Economic Empowerment Demonstration (SEED)

SEED was the first mayor led guaranteed income initiative in the United States. Launched in 2019, the program provided unconditional cash transfer payments of $500 to 125 residents of Stockton, California for a period of 24 months. Preliminary findings from the evaluation study found that program recipients increased employment and month to month income stability and decreased incidence of depression and anxiety.

King County Basic Income Pilot

In 2022, the Workforce Development Council of Seattle-King County implemented a 10-month guaranteed basic income pilot and evaluation to explore the impact of unconditional cash transfers for low-income residents in King County, Washington. The pilot was targeted to 102 people being served by four Workforce Innovation and Opportunity Act providers and three Justice Involved Adult Program providers. Pilot participants received $500 direct cash payments monthly and were also enrolled in a poverty reduction program called Economic Security for All. The Economic Security for All program provided career coaching, helped participants set employment goals, and coordinated wrap around services for participants. During the 10-month pilot, the employment of participants almost doubled and newly employed participants reported higher incomes and improved benefits. In addition, participants reported improved financial stability, improved quality of life, reduced physical pain, and reduced fatigue.

DCTs AND HOMELESSNESS AND HOUSING INSTABILITY

Direct cash transfers can be effective in helping people who are homeless or unstably housed. There are multiple programs that have implemented direct cash transfers to people experiencing homelessness and seen promising results. One example is the Denver Basic Income Project.

Denver Basic Income Project

The Denver Basic Income Project provides unconditional cash transfers to people experiencing homelessness in Denver, Colorado. In the first year, the project served 807 people who were randomly placed into three intervention groups. Group A received $1,000 a month direct cash payment, Group B received $6,500 the first month and $500 for the following months, and Group C received $50 a month. All three groups showed improvements in housing outcomes with increases in home rental or ownership, increases in perceived housing stability, and decreases in the number of nights spent unsheltered. Groups A and B reported increases in full-time employment and improved ability to pay their bills. In addition, while there was variation across groups, from a systems perspective, there were substantial reductions in both public service utilization and public service interactions.

While DCTs can be effective in addressing homelessness and housing instability, they should ultimately be part of a multi-faceted solution that includes services, housing support, and other community resources.

DCTs AND YOUTH HOMELESSNESS

In addition to the programs that have been mentioned, the prevalence of using Direct Cash Transfers as an intervention to address youth homelessness is growing. Point Source Youth has partnered with six cities and states to implement Direct Cash Transfer programs to support youth in ending their homelessness and achieving housing stability. In addition, building on the Homeless Prevention and Diversion Fund Model established by A Way Home in Washington State, Point Source Youth is working to scale direct cash transfers as a prevention model to prevent and divert youth homelessness in Atlanta, Austin, Grand Rapids, New York, and Tucson.