Can Pay for Success Reduce Homelessness and Prison Reentry in Los Angeles?

In recent years, more foundations have looked to pay for success models to achieve social gains. We've reported on some of these experiments, as well as philanthropic investments to strengthen research and learning in this area, including by the Laura and John Arnold Foundation.

The latest pay for success effort to catch our eye is unfolding in Los Angeles County and involves the nexus between homelessness and the criminal justice system.

The new program launched by Los Angeles County with backing from the Conrad N. Hilton Foundation and UnitedHealthcare is called Just in Reach (JIR), and it’s addressing the troubling link between homelessness and repeat jail stays. Over the next four years, the goal of JIR is to place 300 homeless individuals currently in custody within the county jail and who have a mental health and/or substance use disorder into permanent supportive housing. The hope is that providing a real home, along with social and health services, to former inmates will prevent future homelessness, new offenses, and incarceration.

Hilton and UnitedHealthcare are investing a combined $10 million into the program. Other key partners are the Los Angeles County Department of Health Services, the National Council on Crime & Delinquency, the Los Angeles County Sheriff’s Department, and the County CEO’s Office.

Aside from the complex nature of such a public-private partnership, something that makes this program unique is that it’s the first pay for success financial model being used in Los Angeles County. With upfront money from private investors, the hope is that these dollars will maximize public resources and reduce the government’s financial risk for such a program. Another California-focused funder, the James Irvine Foundation, awarded a grant to pay for the feasibility assessment and financial modeling prior to the program launch. Similar pay for success initiatives to expand supportive housing are being implanted in Santa Clara, Denver, and Massachusetts.

As we've reported often, many grantmakers are excited about the potential for permanent supportive housing to offer real and lasting solutions to homelessness. In turn, the promise of pay for success models has also tantalized funders. So it's interesting to see these two areas converge, along with a third keen interest of foundations—criminal justice reform.

“Just in Reach represents an exciting opportunity for LA County because it is so heavily grounded in what works to reduce recidivism,” Kathy Park, CEO of the National Council on Crime & Delinquency, said in a press release. “The Pay for Success financing structure also relies on what works, ensuring that services lead to improved outcomes while also reducing housing and jail costs down the road.”

Critics say that pay for success has been way overhyped and yet to really deliver on expectations. More experimentation and evaluation is likely to deliver a clearer sense over time of of whether foundations are on the right track here. But it's been intriguing to watch the innovation going on, including using PFS models to expand housing mobility from segregated communities and provide more short-term options for low-income individuals. We'll be curious to see how this latest effort pans out in Los Angeles.

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Ending the cycle of homelessness has been one of Hilton’s biggest causes in Los Angeles. The foundation has committed over $87 million to ending chronic homelessness in Los Angeles County since 2010 and has repeatedly shown a willingness to try new approaches to tackling this problem. While criminal justice reform hasn't been a Hilton priority, substance use prevention is definitely on the top of this funder’s list of local concerns and the links between these areas are well documented.

In related news, the Conrad N. Hilton Foundation approved 14 grants totaling $26 million for the third quarter of 2017. The largest grant of this round ($8.5 million) went towards homelessness, and more specifically to the United Way of Greater LA to support the Home for Good Initiative over the next three years. Meanwhile, the New Venture Fund received $1.2 million to support a cross-sector, non-partisan, national housing collaborative.

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