Why Should Delaware Care?
Homelessness has increased in Delaware by 16% since last year. With the number of unhoused residents rising, the need for more support in the First State is critical. In an attempt to find new solutions, New Castle County has decided to test a pilot program that would involve using federal dollars to provide cash assistance and support to unhoused families through the HOPE Center.
Last year, New Castle County announced that it would receive an $11 million federal grant to provide services for homeless families. But, to get that money, county officials first need to raise private dollars to prove the effectiveness of their plan, which aims to increase permanent housing placements and decrease shelter stays.
County leaders call it an innovative model that leverages the wealth of private foundations to access government funding.
And it has already begun with a $2 million, no-interest loan from the prominent du Pont family nonprofit, the Longwood Foundation.
That money and other private contributions will fund case management services and two years of rental costs to families with children under the age of 15. It will also subsidize their stays at the Hope Center, the county’s shelter for unhoused people.
New Castle County officials said they will begin working with the first families in the seven-year program before the end of the year. Still, the county won’t receive federal dollars to reimburse the private contributions until about two years from now.
Expansion of ‘pay for success’ grant
The federal program backing the the county’s homeless pilot initiative, Social Impact Partnerships to Pay for Results Act (SIPPRA), is an expansion of a funding trend known as “pay for success.”
As explained by the Urban Institute, pay for success “shifts financial risk from a traditional funder — usually government — to a new investor, who provides up-front capital to scale an evidence-based social program to improve outcomes for a vulnerable population. If an independent evaluation shows that the program achieved agreed-upon outcomes, then the investment is repaid by the traditional funder. If not, the investor takes the loss.”
It differs from traditional grant-making for social programs, which are front funded, typically using taxpayer dollars, and may or may not hit intended outcomes.
New Castle County pioneered pay for success programs in Delaware three years ago when it teamed with the Longwood Foundation to fund care for first-time mothers.
If the latest New Castle County program is successful and federal funds are disbursed, $9.6 million will be given to the county to reimburse its lenders and used to pay Social Finance, a third-party company that will manage project finances on behalf of the county, for their services. The remaining $1.4 million will go to Tech Impact, the independent evaluator chosen to assess the project’s outcome.
The county could also potentially keep a chunk of the federal grant money to support operations of the HOPE Center, which recently experienced budget pitfalls amid disputes with the center’s previous operations manager, Hersha Hospitality Management.
“Basically, [foundations are] betting on us and the Hope Center’s past record that this project is going to work and show statistically significant outcomes, to be able to unlock those payments from the U.S. Treasury,” said Mike Bowser, grants director for New Castle County’s Department of Community Services.
The program has already received $2.3 million from private foundations, including the Longwood Foundation’s $2 million, in addition to smaller traditional grants from WSFS Bank and the Welfare Foundation.
Officials are working to secure another $4 million to $5 million, with a $5 million goal to at least kickstart the project, Bowser said.
“It’s a really innovative public-private partnership to test and look at a new model for what works in solving family homelessness,” he said.
Coalition of partners join together
In late September, New Castle County Council approved a partnership between the county and Delaware Family Hope to launch the county’s Family HOPE Project, an initiative to provide support to 120 homeless families in Delaware.
Delaware Family Hope, a limited liability company created for the initiative, is run by Social Finance, a Boston-based nonprofit financial advisory firm that helped design the project and will manage both fundraising and finances on behalf of the county.
The partnership was solidified months after the U.S Department of the Treasury awarded New Castle an $11 million grant as one of six recipients of the SIPPRA program, which was created under the Trump administration in 2018.
To get federal funds, New Castle County’s initiative must prove that it has increased permanent housing and lowered the amount of shelter stays.
To do this, the county will offer unhoused families who are already staying at the HOPE Center the opportunity to have a 90-day stay, two years of direct cash payments to pay for rent, and case management.
The program will operate on a first-come, first-served basis, and is open to families staying at the HOPE Center that have children under the age of 15. Each family will be required to continue case management throughout the program, which includes financial counseling and working with a housing navigator.
The county will continue to monitor the progress of each family, even after all of the payments are disbursed, for a total of seven years.
Cash payments to families in need
One of the most unique parts of the initiative will be the distribution of two years of direct cash assistance, which will equal up to 90% of fair market place rent, per family, according to Carrie Casey, general manager of New Castle County Department of Community Services.
That would equate to at least $1,000 a month per family, according to the county’s most recent fair market rent rate chart.
While some families may already qualify for Section 8 housing vouchers, many landlords will refuse to accept them for various reasons, leaving families who have them without secure housing, Casey noted.
The distribution of cash assistance will allow those families to find shelter regardless of their eligibility for other housing assistance.
Casey acknowledged that there is no guarantee that families will spend their funds on housing-related needs, but she emphasized that continuous case management will play a key role in helping families learn how to budget and manage their finances effectively.
She also noted that the county is working with the state to ensure families do not lose their food stamp or Medicaid benefits by receiving the cash assistance.
“The goal is to lift people out of poverty and to stabilize them long term,” Casey said.
A similar direct-cash rental assistance program is currently being done in Philadelphia. So far, researchers have found that households receiving such assistance experienced a 75% reduction in evictions and the program significantly reduced the chances of a household experiencing homelessness.
After New Castle fully begins its program, Tech Impact will create a report on the initiative’s findings, which county officials expect to be completed by mid-2028.
While they continue to raise funds for the initiative, New Castle County officials, County Executive Marcus Henry and other stakeholders plan to host a launch event at the HOPE Center on Friday to discuss the initiative with community members.
“We feel that we have the resources and the expertise to test this experiment,” Casey said. “And we’re hopeful that it provides a blueprint to be replicated, not only in Delaware, but all over the country.”