Urban Wire Creative Financing Could Help Cities Like Portland, Maine, Integrate Asylum Seekers and Tackle Other Challenges
Matthew Eldridge, Charles Cadwell
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This summer, several hundred asylum seekers—most fleeing violence in Angola and the Democratic Republic of the Congo—arrived in Portland, Maine, igniting a debate on how to support these new arrivals, most of whom have immediate housing and service needs, as well as issues related to trauma and navigating a new country, and whether to encourage more immigration to bridge local labor shortages.

The responsibility of providing services for asylum seekers—unlike refugees, who have access to some supports—falls into a gray area without clearly delineated roles for local, state, and federal government agencies. If granted asylum, these individuals would be eligible for federal supports, but that process could take months or years. Capacity constraints among local service providers are limiting their ability to expand services to meet these new needs.

Although there may be long-term, quantifiable benefits for integrating these new, mostly younger residents into communities with workforce needs, the short-to-medium-term integration and support costs, coupled with unclear funding responsibilities and tight budgets, present barriers to action.

City and state officials have committed their support, including a municipal fund for asylum seekers (PDF) and new commitments from the governor. But these funds are limited and alternative funding vehicles oriented around longer-term outcomes could help, especially in places with fewer state and local supports than Portland.

Tackling complex challenges through an innovative funding approach

Scenarios like the one in Portland—those requiring upstream spending without a clear responsible party but offering potentially large downstream community benefits—may be ideal fits for an innovative funding approach modeled off pay for success (PFS). In PFS, investors cover the upfront service provider costs for an intervention addressing an identified need. If, after an implementation period, outcomes are independently evaluated and meet preagreed targets, an end payor, typically a government entity, will repay the investors with interest.

This model works when there’s an outcome payor with clear incentives to invest in those outcomes and when that payor is already responsible for at least part of the problem. For example, city government agencies responsible for addressing homelessness, public safety, and public health may be good outcome payers for a permanent supportive housing project.

When the link between a given problem and a responsible government entity is less clear (as in Portland’s case), a modified version of PFS may be necessary, one that enables other interested parties, such as local foundations, businesses, and citizens, to support solutions to local social and environmental challenges. This type of solution, similar to impact securities, could apply to problems that meet the following criteria:

  1. Significant upfront program costs. Many social and environmental problems are solvable but require upfront investments that may be difficult to secure.
  2. Likely but uncertain longer-term benefits. Investing in priorities like resettlement and integration can yield many longer-term benefits for communities, including filling labor gaps, but there is also a risk that the intended outcomes may not materialize.
  3. Benefits that can be tracked and attributed to the program. Data systems that enable measurement and track a comparison group for robust evaluation are critical to proving the program caused the outcomes being observed.
  4. No clear government end payor(s). Many problems with diffuse or unclear responsibility fall into a gap between public and private entities and, therefore, are either not addressed or inadequately addressed. Nongovernmental entities with incentives or interests that align with the outcomes (for example, foundations with a related mission or private interests with a stake in seeing an outcome materialize) may be willing to bring money to the table but need a coordinating vehicle to do so.

Forming a community effort to address pressing public needs

In Portland, a local or national foundation and local employers could use this model and agree to serve as outcome payors while national investors, local philanthropies, and local community members could serve as project investors. Forging an ad hoc community to invest in outcomes of interest for a similar population has precedence (such as community-based sponsorship in Canada) but has not been applied in the US. This hypothetical approach could include the following elements:

  • The project could help new arrivals stabilize their situation and position them for success in their new community.
  • Investor capital could fund a multiyear program that provides services such as legal assistance, case management, housing, language and job skills training, and access to other services.
  • Available evidence could be used to select an actual service mix and set outcome targets.
  • Tracked outcomes could include employment, stable housing, and measures of successful integration, like improved English proficiency.

A project integrating asylum seekers would face this vulnerable population’s unique risks, however. Asylum seekers are free to travel in the US, but they have no permanent residency or rights to stay, so program participants may not stay long enough to benefit from program services or demonstrate measurable outcomes.

And although a third-party intermediary can help with financial structuring, one or more partners with resources, convening power, patience, and tenacity will need to take the lead on organizing others to establish a shared vision of success, develop appropriate programming, and set outcome metrics.

Applying this approach to other challenges

Portland’s challenge is an urgent one—albeit dwarfed by the ongoing asylum crisis on the nation’s southern border—but it is not the only community or issue area to face a pressing public need without a clear responsible funder.

Disaster mitigation and resilience could attract insurers as end payors to reduce or limit their liabilities from storm surges and forest fires through green infrastructure and other solutions. A recently proposed “rhino impact bond” would be the first performance-linked financial instrument tied to the survival of a species. And communities and foundations could hypothetically raise funds to purchase in-classroom supplies or technologies for schools in underresourced areas, measuring links to outcomes such as student achievement.

Thinking outside the box and engaging a wider set of partners may offer one way to address complex challenges with potential benefits and promising solutions. Creative funding models don’t solve problems themselves, and they carry their own costs and risks. But they can provide space for testing and proving innovative solutions, encourage an emphasis on outcomes, and offer a useful workaround to funding hurdles.

Justin Milner and Hamutal Bernstein contributed to this post.

Research Areas Immigrants and immigration
Tags Immigrant access to the safety net Federal, state, and local immigration and integration policy
Policy Centers Research to Action Lab