Urban Wire Behind the Numbers: What Does It Take to Weave Together Funding for a Successful Supportive Housing Program?
Emily Peiffer, Alyse D. Oneto, Sarah Gillespie
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Renaissance downtown lofts, an affordable housing project in Denver.

Homelessness is a costly problem, for both people experiencing chronic homelessness cycling in and out of jail, detox centers, and emergency rooms and for the public budgets that fund those services.

An Urban evaluation of Denver’s Supportive Housing Social Impact Bond Initiative (Denver SIB) reinforced what other evidence has shown: supportive housing, through a Housing First approach, ends chronic homelessness. By providing people with a stable home and then offering them services to address other challenges, the program has seen remarkable success in helping people find stability and reducing the public costs of the homelessness-jail cycle.

The Denver SIB showed that shifting resources to address the root causes of homelessness, rather than sticking with the status quo of punitive and short-term approaches, is a better long-term investment for people and communities. But addressing decades of disinvestment in housing and services requires an intensive, comprehensive solution, and providing supportive housing requires ongoing funding from a variety of sources.

The Denver SIB drew attention for its innovative use of a social impact bond payment structure, in which Denver leveraged financing from private investors and public funding sources and agreed to pay the investors back if the program achieved successful outcomes. But that upfront investment was just one small piece of the funding puzzle needed to help people get and stay housed and to offer them crucial supportive services. The chart below illustrates the program’s three key funding sources for supportive housing, along with the per unit cost to each.

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What did it take to weave together resources from each of those funding sources? We talked with Denver SIB stakeholders about the work behind the numbers to explore what other local leaders can learn about the resources needed to stand up a successful supportive housing program.

Secure housing vouchers that prioritize people in the program

Because Denver has an extremely tight housing market, the Denver SIB obtained financing for the construction of two new buildings that offered 160 units of supportive housing. Those buildings were necessary to ensure the program had enough units for participants, but housing costs don’t disappear once someone moves into a home.

To pay monthly rental costs for all program participants (including those who were placed in other buildings across the city besides the two new buildings, called scattered-site housing), Denver SIB service providers had to secure housing vouchers from the state. But because of a lack of federal funding for housing assistance, vouchers can be extremely difficult to obtain.

To secure those vouchers, program leaders worked closely with the Colorado Division of Housing and the Denver Housing Authority to build trust over time. Through robust data analysis and the program’s ongoing evaluation results, they showed that the Denver SIB would use vouchers effectively to serve people with the greatest needs.

“The state was committed to serving people with high needs, and we could demonstrate that no one was serving this group,” said Katie Bonamasso, senior program manager for the Corporation for Supportive Housing and the project manager for the Denver SIB. “We also had the funding to provide services for the program. No other program was coming to the state saying they could bring such a robust service model.”

The Denver SIB’s mix of project-based and scattered-site vouchers also helped set it apart from other programs and ensure a variety of housing options for different people’s needs, according to Deanne Witzke, vice president of community services for the Colorado Coalition for the Homeless (CCH).

But stakeholders involved in the Denver SIB emphasized that expanding this type of supportive housing program to serve everyone experiencing chronic homelessness in Denver would take significantly more funding—for both new housing development and ongoing rental subsidies—than is currently available.

Design flexible funding for supportive services

Housing First doesn’t mean housing only. Supportive housing programs also provide wraparound services to help people find stability—including for mental health, substance use, and other areas of need.

Financing for a portion of the Denver SIB’s supportive services came from the city’s budget, which repaid investors for their upfront payments under the SIB contract. The city and the SIB contract purposely gave service providers more flexibility in how they spent the funding, rather than stipulating at the start of the project exactly how they should spend the funds (as is common in traditional government funding for housing programs).

This flexibility helped the providers adapt as needs arose and was key to the success of the program, according to Carrie Craig, vice president of supportive housing for CCH. “The flexible funding was huge,” she said. “You have a lot of challenges with traditional grants when you have to spend money a certain way. It can be extremely challenging to predict that well in advance of starting a project.”

With this new way of financing a services contract through the city, data and evidence were crucial to securing support from the Denver City Council and residents to provide flexible funding for services.

“In the end, having data-driven analysis on the problem we were addressing, potential cost-avoidance numbers of a successful program, and a clear plan and methodology for program delivery helped the Denver SIB be one of the longest-running and most successful SIB programs to date,” said Margaret Danuser, deputy CFO for the department of finance of the City and County of Denver.

Build capacity to receive Medicaid reimbursement for other supportive service costs

Local funding for Denver SIB supportive services was crucial, but it didn’t cover all costs for wraparound services. To fund an additional portion of these costs, service providers worked with Medicaid to bill certain services to the program and get reimbursed.

The Denver SIB service providers negotiated with their local and state Medicaid offices to determine what services could be billed to Medicaid. Because the two organizations (CCH and the Mental Health Center of Denver) are designated as different provider types, their reimbursement costs varied. Despite those differences, both providers increased their organizational capacity to bill Medicaid for mental health, substance use, pharmaceutical, and other supportive services for participants receiving Denver SIB housing and services over the course of the program.

For both service providers, combining resources from Medicaid and the SIB contract helped ensure they could cover the full cost of supportive services. “We had the investor dollars to cover the gap for what Medicaid wouldn’t cover,” said Lisa Thompson, chief operating officer of CCH. “The project wouldn’t have been successful without those.”

Craig added that to improve the program and reach even more people, Medicaid could consider expanding what it reimburses beyond traditional health care services to also include housing services, such as searching for housing units and recruiting landlords. “That could help SIB programs be successful in other places,” she said. “Because housing is health care.”

By weaving together funding from local, state, and federal funding sources, the Denver SIB showed how to sustainably fund a successful supportive housing program.


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Research Areas Housing
Tags Homelessness Housing subsidies State and local tax issues Impact investing
Policy Centers Metropolitan Housing and Communities Policy Center
States Colorado
Cities Denver-Aurora-Lakewood, CO
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