Can $100 Million Change San Francisco’s Response to Homelessness? One Grant Maker Tried. Here’s What Happened.

A decade ago, Linda Lockhart moved to this city from the Northern California town of Chico on a mission to get sober.

She lived in the Salvation Army’s Harbor Light Center, which provides in-patient treatment programs and transitional housing, while saving money to rent her own apartment. More than once she moved into her own place, but within a month she’d start drinking again, lose the apartment, and wind up back in a shelter or treatment facility.

Lockhart, who struggles with substance-abuse problems and disabling arthritis that prevents her from working, says she was in a vicious cycle. “I didn’t know when things were going to start clicking for me.”

In May of 2021, she was living at the Hotel Whitcomb, which provided temporary housing during the pandemic and was paid for with government aid. When government subsidies evaporated, Lockhart had to find another place to live. She found an apartment through a new trial housing program funded with $8 million from Tipping Point Community, a group that attracts funds from many of Silicon Valley’s wealthiest residents. The program was later expanded with city funds.

Lockhart is one of more than 375 people who have found housing throughout the city as part of the program. It takes advantage of existing rental housing around the city, while pairing residents with a case manager who helps them get services like health care or counseling. The extra assistance supports them so they’re more likely to keep their new homes.

The program is one of several that received some of the more than $100 million in donations that Tipping Point Community distributed since 2017 to help the city reduce by half the number of people who, like Lockhart, are considered chronically homeless. The goal: No more than 1,056 would be chronically homeless by 2022.

Final estimates aren’t available yet, but all signs suggest the city didn’t meet its target. In early 2022, the chronically homeless population remained larger than five years earlier. But that doesn’t mean it was a failure.

What it shows is just how hard it is for philanthropy to change entrenched government policies — but how much it can do to help localities do better in dealing with social issues. Tipping Point and its financial support was a catalyst for bringing city government and nonprofit service providers together to work in new ways. Its $100 million contribution helped spur innovation and legitimized promising solutions before government dollars could follow.

Since its founding in 2005, Tipping Point has become a fundraising powerhouse in the Bay Area. It gets money from tech entrepreneurs and other philanthropists in the region to support education, employment, and housing, among other issues. This $100 million, raised primarily from a group of 14 donors and known as the Chronic Homelessness Initiative, is the largest charitable pledge to address homelessness in the city’s history.

Ramin Rahimian for The Chronicle

It also targeted resources to a population that philanthropy has historically neglected. Adults who are chronically homeless are among the most vulnerable and costly segment of the homeless population to serve.

Tipping Point’s grants went toward programs to quickly create more housing, look for ways to prevent homelessness, and make the city’s response more effective and transparent. For instance, the grants supported research to better understand how to help homeless people who are struggling with mental illness or addiction. Some of the money was used to help expand psychiatric treatment options. But Tipping Point’s contributions went beyond dollars.

The grant maker was involved in helping plan and carry out new efforts. It also helped nonprofits and city agencies connect — something that had never happened at this level before. In addition, Tipping Point created an advisory board that included people who had been homeless so they could have a hand in shaping the programs aimed at helping them. City officials and organizations running the program that helped Lockhart find housing met weekly to assess progress and clear roadblocks.

“It was not write a check, we’ll read the report in six months,” says Andrea Evans, who led the Chronic Homelessness Initiative for Tipping Point from 2021 to 2022.

Tipping Point staff organized those meetings to make sure they would happen. That effort by Tipping Point was especially valuable during the first years of the pandemic, when many nonprofits were stretched thin.

“Having a funder take on that role can give others confidence and some financial support for the evolution of an approach to be more collaborative,” says Rosanne Haggerty, president of Community Solutions, a nonprofit that encourages communities to set public goals and deadlines to reduce homelessness. As the 2021 winner of the MacArthur Foundation’s 100&Change competition, Haggerty’s group received $100 million for its approach, which promises “real and measurable progress in solving a critical problem of our time.”

While the effort didn’t reduce chronic homelessness by half, Sam Cobbs, Tipping Point’s CEO, says, “The city fundamentally serves and thinks about how to serve chronic homeless individuals differently than when this initiative started."

He adds that “when you work on large societal problems like homelessness, it’s going to take longer to see the transformational change you want.”

Cobbs says the partnership created momentum, and he expects to see continued progress. Since 2019, the number of chronically homeless people in San Francisco decreased by 11 percent. “We’re going to see those numbers drastically go down,” he predicts.

‘A Solvable Number’

When the city set the goal to reduce the number of people who are chronically homeless by half, it seemed achievable based on information about the need for housing, mental-health care, and other factors, according to Cobbs.

“It really is a solvable number if you’re just looking at it mathematically,” he says.

But its estimates didn’t account for a pandemic and just how many more people would become homeless largely due to the severe shortage of affordable housing and a failure to build enough new housing. Officials now estimate that for every person who moves into housing through a city program, four more will become homeless. The city hasn’t been able to keep up.

Tipping Point‘s largest grant — $50 million — was used to build a rent-subsidized building with case managers and other services. The idea was to test an approach to building faster and at less expense than it normally takes. The 145-unit building was completed during the pandemic, and 147 residents now call it home.

Despite the success of some of the homelessness programs Tipping Point funded, overall progress was held back by various challenges, many of which predated the pandemic and were exacerbated by the city’s and nonprofits’ response to the public-health crisis, according to a 2021 evaluation by the Urban Institute. Tipping Point funded a team of evaluators to help track progress.

The evaluation found that the city’s pace of referring people for housing was inconsistent. That created challenges because housing providers were unable to predict demand. Sometimes housing remained vacant even though the need was there.

In addition, the big challenges that can lead to homelessness, like the city’s high cost of living and limited supply of affordable housing, haven’t gone away.

Another factor, according to nonprofits and city leaders: It takes time to build successful partnerships and launch programs with government agencies and a mix of nonprofits, each with their own organizational cultures and expectations. The payoff for Tipping Point’s work could become far more visible in a few years.

‘Wildly Different Organizational Cultures’

San Francisco’s Department of Homelessness and Supportive Housing was formed in 2016 by Ed Lee, then the mayor of the city. He wanted to consolidate programs working to reduce homelessness. Lee welcomed Tipping Point’s collaboration with the city, and discussions about the public-private partnership began that year.

Tipping Point’s founder, Daniel Lurie, modeled the group after New York’s Robin Hood Foundation, the anti-poverty charity where he worked for two years. Previously Tipping Point had funded 43 groups working on causes including housing and education.

Now, through the Chronic Homelessness Initiative, the grant maker wanted to also hold city leaders accountable. An anonymous $5 million donation to Tipping Point kick-started the fundraising.

Tipping Point “brought the flexibility, the creativity, the energy, to an issue that we’ve been struggling with for a long time,” says Shireen McSpadden, who became executive director of the city’s department of homelessness in May 2021.

While Tipping Point and the city came together with the same goal to reduce chronic homelessness, they had different communication styles and assumptions about transparency.

“The expectations of the pace at which we all want to move has probably been the hardest part,” said Emily Cohen, a spokeswoman for the city department. “That was the frustration point with our wildly different organizational cultures.”

Differences came up as Tipping Point pushed for changes in how the city collected and shared data in an effort to increase accountability and effectiveness, says Samantha Batko, principal research associate in the Metropolitan Housing and Communities Policy Center at the Urban Institute.

Initially city staff hesitated to share data because they did not understand how it would be used, says Batko. Even now, while the department’s website shares data on housing placements and progress toward shutting the city’s shelter-in-place hotels, there’s no easily accessible central place for the public to measure progress toward goals.

Todd Johnson, San Francisco Business Times

“The city doesn’t move very quickly,” McSpadden, the department’s director, acknowledges. “We’re still working on our data and our transparency now, and it’s been six years” since the department was formed.

Tipping Point and city staff had difficult conversations behind closed doors, but when there were successes, the grant maker made a point to spread the word.

“We were the first to trumpet them and really acknowledge some of the hard work that they were doing,” says Evans, the former Chronic Homelessness Initiative director.

That helped build trust that Tipping Point wasn’t in it to take credit for progress and, Evans thinks, helped combat some of the cynicism about the idea that chronic homelessness in the city could be solved.

Innovation Dollars

More than half of San Francisco’s $672 million homelessness budget is earmarked for programs that provide housing. The city previously has focused on ensuring that people moving off the streets had access to case managers and other services in the buildings where they are housed. Those buildings are mostly clustered in the city’s Tenderloin neighborhood, an area that is an epicenter for drug use, poverty, and homelessness.

The program that helped Lockhart find her apartment is a new approach. Rather than grouping people in the same building, the Flexible Housing Subsidy Pool program, or Flex Pool, allows them to choose their apartment and neighborhood.

Lockhart wanted to continue living in the city’s South of Market neighborhood near her doctor and case manager. She chose the first apartment she saw and quickly moved in. “It just suited me perfect,” she says.

The Flex Pool is based on a similar effort in Los Angeles, which has helped more than 10,000 people find housing since 2014. The work there has been backed by the Conrad N. Hilton Foundation, which has been funding a range of efforts to end long-term homelessness in Los Angeles County since 1990.

Tipping Point, Dignity Health, and Crankstart Foundation, a fund started by venture capitalist Michael Moritz and his wife, the sculptor Harriet Heyman, provided $11 million to the nonprofit Brilliant Corners, which also manages the Los Angeles Flex pool, to launch the San Francisco program in July 2020.

The nonprofit’s staff identifies landlords who are open to renting to tenants who may have low incomes, poor credit, or an eviction on their record. Tenants contribute up to 30 percent of their incomes toward rent, and the remainder is subsidized, ensuring that landlords receive market-rate rents. Tipping Point paid the rental assistance for the first 200 people to help demonstrate that the program could work. The city took over payments at the end of 2022 and committed to pay rent subsidies for 525 additional people.

Tipping Point’s investment helped to legitimize the program for the city, says McSpadden, with the homelessness department.

“We can’t just go out and try a brand-new intervention because somebody thinks, oh, this is a bright, shiny new thing that you should try,” she says. “Once we discover that something can work, then we can make the case for funding it.”

New solutions are now part of the city’s approach, but now, says Bill Pickel, CEO of Brilliant Corners, “the question is how can you accelerate and scale it to something like the level of need?”

Building Quicker and at Lower Cost

Costs to build affordable housing with services for residents average about $600,000 per unit and take six years or more to plan and build.

Tipping Point’s largest grant supported an effort to build such housing cheaply and quickly using innovative financing and construction. The building was completed in three years and a month, about 41 percent faster than the typical timeline. It also cost 41 percent less than comparable buildings in San Francisco, according to an evaluation from the Urban Institute and the California Housing Partnership.

Here’s how it happened.

Financial executive Charles Schwab and his wife, Helen, gave Tipping Point $65 million.

Tipping Point worked with the Housing Accelerator Fund, a nonprofit that raises government and private dollars to build new affordable housing and protect existing units. The fund used $50 million of the Schwabs’s gift to acquire a privately owned parking lot, fund design and approvals, and start construction.

Modular units were constructed at a factory, then trucked to the site and assembled, which reduced building time. The developer, Mercy Housing, financed the rest of the project with low-income housing tax credits and tax-exempt bonds.

Melina Mara, The Washington Post, Getty Images

The city will provide additional funding for on-site services for residents and pay about $2 million a year to lease the building.

That lease agreement allowed the nonprofit housing fund to reinvest part of the Schwab gift, along with state funds, to convert two hotels into permanent supportive housing. Altogether, the Schwabs’s philanthropic dollars helped create more than 500 new housing units.

And now, Cobbs says, Tipping Point had discovered a way to build housing faster and cheaper from now on.

He hopes more housing can be paid for and built the new way in San Francisco. In fact, Tipping Point is already working with Mercy Housing and the Housing Accelerator Fund to build another 145-unit building using conventional construction while achieving the same cost savings.

Next Steps

As the Chronic Homelessness Initiative wound down, some partners, particularly in government, felt Tipping Point’s absence, says the Urban Institute’s Batko. The grant maker had been able to rally different players together, helping to troubleshoot and manage processes, and connect the dots between organizations.

“Tipping Point might have been filling a particular role of support for the public sector,” Batko says. “No one has stepped in and filled that space yet.”

As its efforts are being evaluated, Tipping Point aims to build on lessons learned over the past five years and is currently raising money for its next stage of work to reduce homelessness. It plans to broaden its focus to the wider region beyond the city.

Already, Tipping Point has provided funding for All Home, a group that works to advance regional solutions to poverty, inequity, and homelessness.

The grant maker also plans to boost funding for nonprofits that work to prevent homelessness and organizations that aid Black and Latino people, who are disproportionately affected by homelessness.

And the push for increased data transparency continues. Tipping Point is creating a dashboard of homelessness data on its website to help the public track key results and will work with government to collect relevant data.

It’s important to take an expansive view of the work accomplished in San Francisco over the last five years, says Amanda Misiko Andere, CEO of Funders Together to End Homeless, a coalition of grant makers.

People may judge this initiative’s success by whether fewer people are unhoused, Andere says, but she hopes they’ll also understand how that requires “totally transforming how we do things.”

“Sometimes,” she says, “we have to see these initiatives as planting the seeds to not do business as normal.”

Reporting for this article was underwritten by a Lilly Endowment grant to enhance public understanding of philanthropy. The Chronicle is solely responsible for the content. See more about the Chronicle, the grant, how our foundation-supported journalism works, and our gift-acceptance policy.