CARITAS OF AUSTIN
More than a third (36%) of Travis County residents are considered low-income, struggling to make ends meet in one of the 10 most expensive rental markets in the United States. As such, Austin is witnessing an unprecedented suburbanization of poverty with many families moving out of Central Austin and into surrounding cities. Caritas of Austin was looking for ground-breaking approaches and entrepreneurial investments to engage poverty where it exists.
ACCELERATOR GRADUATE IMPROVES HOMELESS SERVICES AND GENERATES SUSTAINABLE REVENUE
Caritas was founded in 1964 with a commitment to prevent homelessness and serve nearly 20,000 individuals and families per year out of their downtown Austin headquarters. Austin has become one of the 10 most expensive rental markets in the United States, forcing many poverty-stricken families to move out of into surrounding cities and counties. Due in part to this suburbanization of poverty, access to Caritas’ critical services was becoming more difficult for households. Caritas recognized an increasing need to be geographically located in high-poverty areas.
“Austin has grown and changed tremendously over the past 10 years, and we knew we must adapt our services to address homelessness and poverty where it is occurring,” said Caritas of Austin Executive Director Jo Kathryn Quinn.
Homelessness comes at an extremely high cost to our community, especially in health care, incarceration and education. Research shows it is 58% less expensive to keep people from falling into homelessness and that neighborhood-based service models have produced a 60% reduction in the likelihood of homelessness. Caritas of Austin was determined to bring these solutions to our community.
Neighborhood-Based Approach to Address High-Poverty Areas
Through their participation in the 2014 Mission Accelerator, Caritas created a plan to transform their service delivery into a neighborhood-based model with “hub-and-spoke” offices. While the main office downtown remains intact, each spoke location (or satellite office) will serve as a neighborhood resource to truly engage poverty where it exists. Over the course of the Accelerator program, Caritas worked with Mission Capital consultants and local business experts to create a comprehensive plan including strategy, cost structure, revenue streams, capital expenditures and growth projections for their new operations.
“By going through this process, we made time to look at every step of our business plan. Our chances of success on this project and future Caritas opportunities are stronger due to the Accelerator program. We are already seeing wonderful results,” says John Cyrier, Board President, Caritas of Austin.
Based on demographic analysis, Caritas determined their first satellite office should be in the Rundberg neighborhood in North Austin where there are more than 28,000 households living at or below income of $35,000 annually. Caritas’ new approach will employ Critical Time Intervention (CTI), a proven, cost-effective practice designed to support individuals as they transition from homelessness back into the community. In addition to its effective hub-and-spoke model, Caritas is applying nationally-recognized best practices such as CTI and the Housing First model, and adapting it to the unique needs of Austin-area neighborhoods.
In April 2015, Caritas successfully opened a satellite center in the Northgate Plaza in Rundberg. Executive Director Jo Kathryn Quinn credits the Accelerator for helping bring their vision to life.
Through its Caritas North location, the organization will generate measurable savings for the City of Austin. For example, their services cost approximately $5,500 per family per year whereas emergency shelter housing costs approximately $13,000 per family. Caritas North will save the City of Austin an estimated $1-$3 million per year.
Dual-Benefit Real Estate Investment Creates Revenue Source
In the process of developing the Caritas North office space, the organization saw an opportunity to think creatively about the broader community need. They noticed that some of the surrounding businesses clashed with their mission, for example a payday loan provider threatens long-term financial stability of some of the same people that Caritas serves. When the opportunity to buy the plaza arose, the organization jumped on it. In a matter of weeks, Caritas raised $800,000+ from 37 investors to purchase the entire plaza. Some of these investors were existing Caritas of Austin supporters, but many were drawn to the dual opportunity of a real estate investment with a philanthropic arm.
The partnership is designed so that Caritas receives rent-free space and a long-term positive cash flow for Caritas programs. Even more promising, however, is that with control over the plaza’s tenants, Caritas of Austin can transform the Northgate Plaza into a multi-service resource by bringing in complementary community services to better serve their Rundberg neighbors in need.
“Having a solid business plan in place and strong business connections in the community enabled us to move very quickly on this,” Quinn said. “Our ultimate vision is not just a real estate investment. It’s that this property could eventually become a hub of service providers and nonprofit organizations which serve this entire neighborhood.”
Caritas North will serve as a pilot for building future spoke locations and reaching more neighborhoods. By combining proven practices, strong business planning and entrepreneurial risk taking, Caritas of Austin brings innovative solutions to addressing homelessness in our community.
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