05/07/2014 05:36 pm ET Updated Jul 07, 2014

Social Impact Investment & Supportive Housing: A Promising Solution

Over the last 20 years, CSH has learned a lot about supportive housing and what works. In dozens of studies across the country, supportive housing, which pairs affordable housing with support services, has been repeatedly proven to be an effective intervention. Among the benefits supportive housing offers are housing stability, reduced usage of expensive crisis care and improved outcomes even for the most vulnerable individuals with complex needs.

Lack of upfront funding is often a barrier for an investment in supportive housing by state and local governments even though we know it offers a solution that both more efficiently uses limited resources and delivers improved outcomes, particularly for populations that are most costly to public systems.

A new model has been gaining traction across the country that in many ways offers the perfect solution for this problem. Social impact investment is a compelling new way for state and local governments to invest in solutions, like supportive housing, that make sense, improve the lives of individuals and families and in the end build a stronger, healthier community.

By pairing a performance based contract (that ensures government pays only for success) with upfront working capital provided by institutional and philanthropic investors, social impact investment represents a low-risk option for governments. This new model changes how governments address social problems and leverages the resources and expertise of institutional and philanthropic sectors in a new way.

For investors it offers an opportunity to achieve the desirable "double bottom line" of providing both positive social impact and the potential to generate returns on investment. For a state/local government it offers a innovative way of testing solutions.

In working to solve complex social problems, the "holy grail" is finding solutions that leverage the combined potential of the public, private, and nonprofit sectors. Few initiatives, however, truly succeed in doing so. Social impact investment represents a new path forward that uses the unique strengths of each sector to truly create lasting change. CSH is excited to be part of the leading edge of this important innovation.

CSH has been working with several states including Minnesota and Massachusetts that have recognized the potential of this model. In Minnesota the state is looking to improve outcomes and provide new housing opportunities for persons who are unnecessarily residing in institutions, like nursing homes. And in Massachusetts, the Commonwealth is addressing the needs of individuals who are experiencing chronic homelessness.

In a resource constrained environment, social impact investment provides a mechanism for attracting new and diversified financing that can help unlock real costs savings in public systems.

For CSH, social impact investment is a means to an end. We think it can be a lever to affect long-term institutional change in the way government allocates resources, which is our goal - using money more effectively to serve more vulnerable people, better and impact how services are delivered to make sure that everyone has a stable place to call home.