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HUD Engages With Partners in Pay for Success Demonstrations

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Winter 2016   


HUD Engages With Partners in Pay for Success Demonstrations

On October 15, 2015, HUD, in partnership with the U.S. Department of Justice (DOJ), announced $8.7 million in demonstration grants to use Pay for Success (PFS) financing to reduce homelessness and prisoner recidivism. Although policymakers have made significant progress toward the federal goal to end chronic homelessness, 84,291 individuals were identified in 2014 as experiencing chronic homelessness. Because of their housing instability, many of these individuals cycle in and out of emergency rooms, psychiatric centers, and jails. Ex-offenders are particularly susceptible to homelessness, which may affect recidivism rates. According to the National Alliance to End Homelessness, 10 percent of people recidivating were homeless beforehand, and 20 percent of people leaving prison become homeless upon reentering the community.1

The DOJ/HUD PFS Permanent Supportive Housing Demonstration is an opportunity to test the effectiveness of using PFS to finance permanent supportive housing with a Housing First approach. The demonstration targets people experiencing homelessness who also have frequent contact with the criminal justice, homeless services, and healthcare systems. HUD will award a maximum of $1.3 million to each grantee organization to carry out one or more of the following eligible activities:

  • Feasibility analysis: Conducting an analysis to determine whether a PFS project implementing permanent supportive housing is feasible at a particular site.
  • Transaction structuring: Structuring a contract between all stakeholders of the PFS project.
  • Outcome evaluation: Evaluating and validating the outcomes of the PFS-financed permanent supportive housing intervention through a third-party evaluator.
  • Success payments: Some grant funding is available to partially cover the costs of successful outcomes of the permanent supportive housing intervention.2

These grants will build capacity in the PFS field for using permanent supporting housing as an intervention to address homelessness and reduce recidivism among people who are frequently involved with the criminal justice system. Achieving these dual objectives may help alleviate pressure on strained government budgets and meet the goal to end chronic homelessness.

Separately, HUD is designing another PFS demonstration, authorized through the Fixing America’s Surface Transportation Act, that will increase the efficiency of energy and water systems in multifamily rental buildings receiving HUD assistance. HUD will partner with Enterprise Community Partners, Inc., the Low Income Investment Fund, and Stewards of Affordable Housing for the Future for this demonstration, which is currently in development.3

  1. U.S. Department of Housing and Urban Development. 2015. "Pay for Success Permanent Supportive Housing Demonstration," 3–5.
  2. Ibid.
  3. Enterprise Community Partners. 2014. "Bipartisan Legislation to Increase Energy Efficiency in Multifamily Housing Introduced in Congress," press release (15 June).


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The contents of this article are the views of the author(s) and do not necessarily reflect the views or policies of the U.S. Department of Housing and Urban Development or the U.S. Government.