Tried & True: Using an Endowment to End Homelessness

John Rook, PhD

There is lots of discussion about how to end homelessness and to provide adequate/appropriate housing for vulnerable citizens in Alberta and beyond. One of the issues that service providers face is that when government money is given to them to build low-income properties, as soon as the money is spent, there is no guarantee of further government funding for capital projects. What follows is a proposal, with historic precedents, for a model that would ensure a never-ending funding supply for housing.

We know (from Wikipedia) that the Alberta Heritage Savings Trust Fund (AHSTF) was established in 1976 by former Alberta Premier Lougheed. One of the main objectives of the fund was “…to improve the quality of life of Albertans."  The main uses of the Heritage Savings Trust Fund used is to invest for the long term in such areas as health care, education and research. We know that many homeless researchers believe that lack of housing is a health issue. The Canadian Observatory on Homelessness has been addressing this for years as inadequate housing causes rapid decreasing health and mental health, especially in the street homeless and shelter homeless populations.

Wikipedia also tells us that “… during the mid-1990s, public opinion turned against allowing governments to dip into the Heritage fund to fund special projects, and instead all income earned each year began to be withdrawn from the fund and added to general revenues.” Despite that, the government has used funds from the Trust to establish several savings funds.

 Dr. Ron Kneebone, an economist who works for the University of Calgary’s School of Public Policy, pulled some of these from the current provincial budget (the value of each as of March 31, 2019):

·      Heritage Foundation for Medical Research Endowment Fund ($1,778 million)

·      Heritage Scholarship Trust ($1,281 million)

·      Heritage for Science and Engineering Research Endowment Fund ($1,076 million)

With this history of the government establishing endowment funds to permanently fund certain initiatives, I am proposing that a separate endowment be established exclusively for affordable housing in the province of Alberta.

A Heritage Affordable Housing Endowment Fund (HAHEF) would be consistent with how we have used the AHSTF in the past. This proposal is completely in line with these earlier efforts and would serve similar purposes. Since the value of the Heritage Foundation for Medical Research Endowment Fund is that it leads to better health outcomes then, a Heritage Affordable Housing Endowment Fund, given all we know about the returns to health from investments that ensure people maintain housing, would not only lead to increased health outcomes, and will do so by housing people.

So how would this work? Here is my idea for consideration and discussion:

·      Take $5 billion from the current AHSTF (which is around $18.5 billion currently) and place it into a HAHEF account

·      Only use the interest from the HAHEF account which leaves the principal untouched

o   2% interest would produce $100,000,000 annually

o   3% interest would produce $150,000,000 annually

o   4% interest would produce $200,000,000 annually

·      Using the latter 4% value, at $200,000 per unit, 1,000 units of affordable housing could be built annually

·      Since the principal would not be touched, the fund would provide funding forever

·      In years when the total interest wasn’t completely used, the surplus could be used to repair existing units

·      Building up to 1,000 units annually and repairing units as needed, numerous trades people would have employment

·      A partnership with schools like NAIT/SAIT could produce the skilled trades needed

·      People currently in shelters and prisons could be selected for the trades schools and then be employed in the project

·      Both homeless families and singles would benefit from the work and the housing

·      These new trades people, who were formerly homeless and a drain on the public purse, would now be paying employment taxes!