A USC study has found that paying $750 a month to individuals within a small group of unhoused people in Los Angeles and the Bay Area didn't significantly reduce homelessness rates among them, according to results released this week.
But the study also found recipients spent nearly all the money on basic needs like food and transportation, countering a narrative that many unhoused people would likely spend it on drugs or alcohol.
"The results demonstrate that concerns about this population’s use of unrestricted money were unfounded and that the cash plus approach can be considered a viable policy option to address homelessness,” said Ben Henwood at the University of Southern California’s School of Social Work, who led the study.
The Miracle Money: California study was conducted in partnership with San Francisco-based Miracle Messages, a nonprofit that provides social support for unhoused people, including a “phone buddy” program.
It was among the first randomized controlled trials tracking basic income for unhoused people in the U.S., according to USC.
Nearly $1 million in cash assistance was distributed to 103 participants between 2022 and 2024, with each getting $750 a month for one year.
The study found that the payments did not result in statistically significant improvements in housing, loneliness, employment or substance use, but they did provide recipients stability and help them manage unexpected crises.
Cash payments to unhoused people likely won't end homelessness, but recipients spent wisely, California study says
According to researchers, 48% of cash recipients eventually exited homelessness during the study period, but that percentage wasn't statistically different from control groups.
The report acknowledges that the monthly payments were not enough to cover the high cost of rental housing in California.
Spending patterns
The USC study expands on a previous informal pilot program conducted by Miracle Messages in 2021. It was funded by Google’s philanthropic arm, the Wayfarer Foundation, The Eli and Edythe Broad Foundation, the Hilton Foundation and others.
It tracked three groups of people over time: those receiving basic income and social support through Miracle Messages’ phone buddy program, those receiving social support only, and a control group who were waitlisted.
That program pairs unhoused individuals with volunteers for weekly calls and text messages to foster social connection.
People who received the $750 each month spent most of that cash on food (26%), housing costs (24%) and transportation (13%), according to the study. Less than 5% of funds went towards alcohol, cigarettes or drugs, what researchers call “temptation goods.”
“Overwhelmingly, people used the funds to meet their essential needs, creating stability, hope and dignity,” Miracle Messages CEO Mary Carl said in a statement.
“We have started to shift the hearts and minds of the community,” she added. “Direct cash assistance plus love is a simple and profound act of trust and humanity.”
The study also found no increase in self-reported substance use over time among those who received cash. Rates of drug and alcohol use remained similar across all groups, including those who received no cash payments.
Social supports
Employment rates also stayed steady among cash recipients, countering another common concern that cash payments would discourage people from seeking work.
The study is the first randomized controlled trial of basic income in the country to specifically test the role of social support, researchers said. It tracked whether pairing recipients with volunteer phone buddies would reduce loneliness.
Results showed that while participants valued the relationships provided through the Miracle Messages program, self-reported loneliness remained high across all groups.
To pull people out of homelessness, the report recommends combining cash assistance with social support and direct pathways to permanent housing.
“While providing funding that cannot cover high housing costs will not necessarily reduce rates of homelessness, the flexibility of cash, when paired with relational supports that affirm dignity and agency, can restore a sense of control and connection,” the report concludes.
In L.A. County, the fair market rent for a one-bedroom apartment tops $2,000, according to the U.S. Department of Housing and Urban Development.
