Direct Cash Transfers Can Deliver Housing Assistance More Efficiently and Equitably

There have long been gaps in America’s complex web of social programs, but the pandemic highlighted just how limited our social safety net is. This was especially true for the country’s renters, with more than 11 million households already rent burdened, and many working in industries hit hard by layoffs (PDF). But federal housing assistance lacked the funding to stabilize these households before or during the pandemic.

These limitations led to slow, unequal federal relief distribution, frustrating many communities and prompting them to turn to a seemingly new concept: targeted direct cash transfer (DCT) programs. These programs came as one-time payments, like the federal Economic Impact Payments, guaranteed income programs, a refundable tax credit, or monthly payment programs.

Cash assistance isn’t new in America. It used to be a more prominent fixture in the social safety net through programs like Aid to Families with Dependent Children, but racist and classist ideologies have led to increased administrative burdens, work or responsibility requirements, delivery delays, and barriers to use. These design choices impose strict limits on available benefits and add onerous restrictions to benefit recipients, disproportionately hurting people of color, who are more likely to access these programs because of structural racism.

It’s difficult to quantify exactly how these factors affect families seeking assistance, but many researchers point to low program take-up rates and varying utilization rates as an indicator of how restrictive program designs prevent relief from reaching the people they’re intended to support.

The COVID-19 pandemic forced localities to test innovative ways to provide immediate and impactful relief (PDF) to residents during the emergency. We saw a rise in direct cash payment programs, at both the local and national levels, that helped stabilize renters at risk of eviction.

The pandemic showed DCT programs can help get communities the relief they need and the flexibility to adapt in a crisis. Now, local policymakers can consider bolstering these programs for housing so relief can more effectively reach people facing housing insecurity.

How DCT can reduce housing instability

DCT programs are a good fit to improve housing stability because they reduce access and utilization barriers to increase efficiency and equity in programs. Here are a few ways they break down assistance barriers recipients usually face in other programs:

• DCT programs can reach people typically excluded from federally funded programs. Many social assistance programs have strict eligibility requirements that bar those in need from receiving assistance, including people with undocumented immigration statuses. Localities recognized this oversight and developed programs that provided assistance to excluded community members.
• DCT programs can reduce application barriers. People face significant administrative burdens when attempting to access assistance programs, including navigating the various eligibility and documentation requirements. During the pandemic, local cash programs purposely designed low-barrier programs that relied on community relations and self-attestation.
• DCT programs can reach those with the greatest need. During the pandemic, many programs specifically gave to families of color to address not only the disproportionate racial and ethnic effects of COVID-19 and exclusion from federal stimulus payments but also the legacy of structural racism. Other programs targeted excluded workers who were denied from pandemic relief programs because of their immigration, tax, or returning citizen status.
• DCT programs give recipients much-needed flexibility. Even when recipients have access to typical assistance, they still face challenges to using benefits. For example, the Housing Choice Voucher Program provides critical relief for millions of families, but it comes with significant barriers for use, including around landlord acceptance, market navigation, and availability. Recipients also have the choice to cover housing costs however they believe best suits their urgent needs (PDF), including for rent, mortgage payments, and moving costs.

In addition to reducing these barriers, evidence shows DCT programs effectively reduce housing instability. An evaluation of a program that provided one-time payments to people experiencing homelessness found that recipients spent fewer days unsheltered and moved into stable housing faster. Another program noted that one-time payments helped delay evictions for families (PDF), but additional support was needed to further stabilize households.

What would it take to boost housing stability with cash transfer programs?

The pandemic showed DCTs can help localities stabilize the families most in need, especially in the face of a worsening housing affordability crisis. Here are a few considerations for adopting programs in your own community:

• Leverage federal funding and private interest 
   
  Localities can use a variety of federal funding sources, including State and Local Fiscal Recovery Funds (PDF) and Temporary Assistance for Needy Families (TANF), to provide cash assistance in their own communities. Before federal pandemic rental assistance was passed, Boulder, Colorado, used TANF funds to provide rental assistance (PDF). Philanthropic donors are also a critical source of funding, as interest in these initiatives expanded during the pandemic, and practitioners can highlight the opportunity to give directly to individuals.

• Design programs targeted to specific community needs 
   
  Administrators can develop initiatives to target people or communities with the greatest need, like many programs did during the pandemic. Families with children could also benefit from additional support, particularly in the wake of the end of the expanded child tax credit and a sharp increase in child poverty.

• Address benefit cliffs
  
  Cash assistance can push recipients beyond benefit cliffs, making them ineligible for other relief programs and reducing the impact of the cash transfer. Federal, local, and philanthropic funds interact differently with requirements for other benefit programs, so programs designers must understand the impact and inform recipients. Communities can provide participants with benefit navigators or reform other local programs to allow income increases over time, reduce the impact of a temporary increase, or allow for tapering of assistance.

• Plan for evaluation
  
  Such programs will likely be new for many communities, so developing methods to fully understand their effects and share findings is important. In Austin, the city council almost scrapped a proposal for a guaranteed income program over concerns about how it would be evaluated.

The pandemic highlighted the limitations of our social safety net, and the consequences of allowing racist and classist ideologies to inform program design. Local leaders and organizations have an opportunity to capitalize on this broader acknowledgement and momentum around DCT to support housing stability in their communities.