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A landmark Australian study by the Melbourne Sustainable Society Institute has concluded that it’s cheaper to provide last resort housing to homeless people than to leave them sleeping rough. Oftentimes Social Enterprises rely on humanitarian arguments to secure government funding and to solicit private donations, but this type of cost-benefit analysis could be more successful since it is framed in the language of economics and business.

The key finding of the study is that for every $1 invested in last resort beds, $2.70 worth of benefits are generated for the community over a 20-year period. This is mainly through reduced healthcare costs ($8,429 savings per bed per annum), reduced crime ($6,182 savings per bed per annum), and helping people get back into employment or education ($4,236 savings per bed per annum). The report’s lead author, Ellen Witte, explains “If you are able to provide people with a roof over their head the key drivers that we saw are savings in terms of demand for health care especially emergency department admissions; the reduced crime rate – people who are homeless especially sleeping rough are more involved in crime as both victims and perpetrators; and importantly also improved human capital. So people are better able, once they have a roof over their head, to re-engage with the workforce and education and contribute to society.”

The study was commissioned against a backdrop of a 70% increase in the number of people sleeping rough in Melbourne streets in the last two years. Key causes are the unaffordability of housing, people escaping domestic violence and a structural lack of social housing. In the last four years, 460 beds have been taken off the emergency accommodation market as rooming houses are redeveloped as private dwellings. As this report illustrates, it is crucial that we leverage available analytics capabilities to understand the longer-term macroeconomic impacts of the microeconomic decisions we are making every day.

I encourage you to read the report at http://sustainable.unimelb.edu.au/case-investing-last-resort-housing

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