Homeless in the tech economy

Can a for-profit crowd-funding start-up solve some of the social justice inequities the tech boom is making worse?

Published November 22, 2013 1:30PM (EST)

Members of San Francisco's crowd-funding start-up HandUp    (handup.us)
Members of San Francisco's crowd-funding start-up HandUp (handup.us)

Yesenia Ramirez's eyes light up when she recalls the morning in mid-November when her phone started buzzing each time a complete stranger made an online donation to help her family pay off its debts.

"It was amazing," she says, with the help of a translator. Yesenia, her husband, Christopher, and their two small children, Emily and Joshua, have been struggling to get out of San Francisco's homeless shelter system for four years. It's been an uphill battle. The income generated by Christopher's job as a dishwasher at the Four Seasons hotel and Yesenia's occasional work cleaning homes doesn't come close to making the grade in a city that currently boasts the highest median rent in the United States.

Miraculously, in October the Ramirez family won a lottery granting them a coveted affordable housing spot in a glitzy new San Francisco apartment building located just across the street from Twitter's headquarters in the formerly seedy, but now booming "Mid-Market" section of San Francisco. But there was a devastating catch. The building's developers required a minimum credit rating of 600 to be eligible for a lease. $2,000 in unpaid bills accumulated three years earlier -- at a time when the family was forced for two weeks to sleep on the streets -- had pushed Christopher Ramirez's credit rating down to 579. He was 21 points short. The application was denied.

In Mid-Market, where the influx of tech companies and rapid gentrification is a political flashpoint in a very political town, the plight of the Ramirez family attracted significant attention. Jane Kim, the city supervisor whose district includes Mid-Market, became involved. So did Bevan Dufty, the mayor's point person for homelessness.

Dufty saw a way out for the Ramirez family. In recent months, he'd become increasingly intrigued with a new, for-profit tech start-up called HandUp, a crowd-funding platform dedicated to collecting donations for homeless or otherwise needy people in San Francisco. He contacted the founder, Rose Broome, and within hours, the Ramirez family had their own HandUp profile page. On Nov. 13, the tweets started to fly.

And then Yesenia's phone started buzzing. Within a day, HandUp had collected $700 in donations. Not quite enough to get the Ramirez family all the way into the promised land, but Yesenia and Christopher, sitting in a conference room in a family shelter on a rainy San Francisco morning, with their two little children bouncing off the walls around them, are immensely grateful. The kindness of strangers, amplified by technology, means something very real to them.

Just what it means, in the long run, for solving the problem of homelessness in San Francisco, however, is still unclear. One crowd-funding start-up, no matter how noble its intentions, isn't going to wash away a blight that has resisted decades of hard work to eradicate. Rose Broome may be on solid ground when she argues that HandUp is proof that technology can be used "for good," but she's operating in a city where the astonishing growth of the tech economy is remaking neighborhoods from top to bottom, pushing up rents and raising prices for everything. It's hard to see how HandUp can make more than a tiny dent in the economic forces that the new tech boom has unleashed on San Francisco and the greater Bay Area. How can the tech economy solve problems that the tech economy is exacerbating?

It's the question of the day in San Francisco in the fall of 2013. It has no easy or simple answer. But there is one way in which HandUp does offer a meaningful path forward. Along with the necessity of rallying significant economic resources for the creation of affordable housing and comprehensive mental and medical health services, truly grappling with the problem of homelessness requires a sense of connection that binds together all members of a society -- from the newly minted Twitter millionaires to the veterans sleeping in doorways. And if there is one thing our new technologies are really, really good at, it is in making connections.

* * *

I meet Rose Broome for coffee at a Berkeley restaurant that has been open for less than a week. For the previous 25 years I've lived in this town, the space was occupied by a grimy Chinese buffet-style cafeteria that catered to the most price-conscious Berkeley residents. The new restaurant -- Eureka! -- couldn't be more different. It's a super-high end burger joint that boasts both 30 American craft beers on tap and 21 small-batch American whiskeys. As a symbol of the wealth currently flowing through the entire Bay Area, Eureka! is just about perfect. The cheapest possible shrimp fried rice has been replaced by some killer bourbon. But you kind of wonder where the people who formerly ate here are now getting their grub.

It has become commonplace in the Bay Area, and especially in San Francisco, to think of the tech economy as a kind of alien invading force overwhelming the indigenous culture, threatening to render what previously made the region cool or hip or edgy utterly extinct. But one of the first things that occurs to me as I get acquainted with Rose Broome is that  this us-against-them dichotomy conveniently ignores just how much new technology is central to our emerging culture, and has been for quite some time.

Rose Broome is no invader. She's a second-generation techie who grew up in the South Bay. Her father was a Unix systems administrator for AT&T. She remembers playing as a child in an AT&T server room. Her home had Internet access as early as 1986, when she was just 5 years old.

An idealist and progressive who played a significant role on the Obama 2008 campaign data team, like so many of her raised-in-the-Bay Area contemporaries, Broome has always wanted to do something socially meaningful with her life. For someone like her, applying crowd-funding technology to the problem of homelessness is a natural outgrowth of both her politics and her technological background. When you grow up with a smartphone in your hand, you want to figure out how to use it to change the world for the better.

And here's another point not to be underestimated. For someone who is progressive and technological and entrepreneurially minded, San Francisco, right now, is a magical place. As Broome describes it, the city is teeming with people who want to make a difference, and it has never been easier or cheaper to turn ideas into working businesses. HandUp received seed funding from a nonprofit start-up incubator, Tumml, that specializes in providing funding for companies working in the "urban impact" space. When she described her idea to her friend and eventual co-founder, Zac Witte, he told her he could code a prototype in four days. The relentless competitiveness of the tech industry has brought the cost of everything necessary to run an online start-up -- from credit card processing to text messaging services to Web server access -- down to rock bottom, and that's not even counting discounts available to companies with a social mission. Broome described to me a cultural milieu in which every evening boasts multiple events at which young and restless progressive technological go-getters gather together to brainstorm. It sounded exciting and full of possibility. This, too, is what makes the Bay Area cool.

HandUp, says Broome, lapsing into start-up jargon, solves a particular "pain point" that anyone who has encountered a panhandler is likely to be familiar with.

"You see somebody on the street and you want to help them, but you don't know how. Donors want to contribute to this person's basic needs, but they are concerned about transparency and they don't want to be contributing to drugs and alcohol. And not everybody feels safe pulling out their wallet. People have a lot of curiosity and compassion but there are also these barriers and people feel a lot of guilt."

HandUp doesn't hand out cash directly to people on the street. The service works in conjunction with Project Homeless Connect, a city program started during the administration of Mayor Gavin Newsom that connects the homeless with available services and donated items. Many of these services are free, subsidized by the government, local businesses and charitable organizations, but some do cost money. "Members" of HandUp who have cash in their accounts can go to Project Homeless Connect and get the cash redeemed for specific services. Broome says HandUp has already been able to pay for the provision of dentures -- which can easily cost $1,000 -- for some of its members.

Kara Zordel, the director of Project Homeless Connect, says that "when we met with HandUp we loved this idea because it's all about the community meeting the needs of the community. We also like the idea that it's not just about giving money, but it's connecting someone to services. The biggest problem with giving someone money [on the street] is that they then have no reason to walk into an office and get the services they need to make change.

"The whole concept of Project Homeless Connect is that the government on its own will never be able to meet the needs of every single person and so by using the community, by using the donations from businesses, by using the contributions from volunteers we're able to make quite a big change."

"What HandUp is doing," says Supervisor Jane Kim, "is bringing the community together and bringing a face and story to homelessness. It is an example of tech making an impact on a substantive issue, and I was really surprised by that, actually. Tech talks a lot about how they are changing the world -- and they are -- but they have been substantively changing the world for certain categories of our community, and there are vast parts of the community that are being completely left behind by the tech wave."

No one I talked to about HandUp, from Rose Broome to Kara Zordel to Supervisor Kim to San Francisco's director of Housing Opportunities, Partnership and Engagement (HOPE), Bevan Dufty, believes that HandUp can counteract, on its own, the larger economic forces transforming the city, or usher in a new wonderland where everyone of the city's 6,500 homeless residents has access to adequate housing and healthcare. HandUp "is just one component" in a multi-pronged effort to cope with homelessness, said the director of one shelter program.

But against a background in which government budget resources seem to be permanently constrained or shrinking, I got the strong sense that everyone was simply happy with any help they could get.

"HandUp has been very effective, dynamic and immediate," says Dufty, "so I am grateful for it."

I asked him if he had any concerns about the fact that HandUp is a for-profit start-up. Isn't there something just a little bit squicky about making a business out of helping the homeless?

"No," says Duffy. "With a tool like this, who knows where it can go? If she is successful I think it's great. There are not enough people working in the homeless environment, and if she's a role model and other people see that, I'm for it. I love entrepreneurship leveraging against homelessness; I think it is awesome. Who knows? It may help encourage other people to think of creative ways to help end homelessness for people. So I don't mind it."

"If she goes public," jokes Dufty, "she'll probably take me out for lunch at some point."

HandUp, it should be made clear, is not your typical for-profit start-up. It is registered legally as a public benefit corporation, which means it has "a social mission baked into the founding document." One hundred percent of donations go entirely to recipients, stresses Broome, who notes that HandUp also pays the credit card processing fees for processing transactions out of its own operating funds.

So where does potential for profit come in, I wonder? It's still very early in the game -- HandUp only got up and running in the summer of 2013 -- but Broome says that one way to generate revenue is through additional donations that patrons can designate specifically for HandUp operational expenses. It's the same model employed by other crowd-funding start-ups like Kiva and Watsi. Broome says that about 80 percent of the people who give donations on HandUp are already making such contributions.

But as with any other starry-eyed Silicon Valley entrepreneur, the sky is the limit for Broome, who has clearly spent time honing a pitch designed to pique investor interest. San Francisco is just the beginning. HandUp's model can and should be replicated nationwide. Each year, says Broome, "there are $26 billion in charitable giving directed toward human services like homeless shelters and food banks." If HandUp can find a place in that ecosystem, by making donating via your phone as simple and easy and direct as possible, well, that's a pretty big "market opportunity."

Broome also expresses a basic faith in the power of the for-profit business model as a way of getting things done.

"We believe the for-profit business model is a more powerful, effective, intelligent, efficient model. And we believe that we should, as a society, apply that powerful model to solving social problems when appropriate."

"We are not saying that there isn't a place for nonprofits, but that we see how the for-profit model can scale, how it can attract seed investment to help it grow. We think that we should use these tools to make a positive impact on society and not just reserve those business models for the Zyngas of the world."

* * *

A week later, while I am waiting in the hallway of a family shelter just a few blocks from City Hall, and not too far from Twitter's headquarters, Broome's words -- "a place for nonprofits" -- echo ironically. I am idly leafing through a neighborhood newspaper, the Central City Extra. The front page article is an account of a recent special hearing of the Board of Supervisors' Budget and Finance Committee in which "dozens of nonprofit executive directors lined up to describe how difficult, if not impossible, the tech boom's pressure on commercial real estate is making it for them to do their work."

The reality for nonprofits is that office space in the central city is dwindling with most building owners on Market Street refusing to lease to human services providers ...

In a city teeming with people who want to do good, there is literally "no place for nonprofits" in the Mid-Market neighborhood.

That same day, the front page of the San Francisco Chronicle published the latest in a string of stories about a rising wave of evictions forced through by landlords eager to cash in on rising rents. A few days earlier new census data confirmed that San Francisco's median rent was the highest of any metropolitan area in the country. Twitter's hugely successful IPO, which by one estimate will result in the creation of 1,600 "Twitter millionaires," has only turned up the volume.

A business boom is better than a crash, and there is little question that the surging tech economy has created thousands of jobs locally while reinvigorating the hotel and dining industries of the greater Bay Area. But it's also true that all those new dishwashing and waiter jobs don't pay enough for the people who are working at them to actually live in the city. In a progressively minded city, that's a big deal. As I started working on this story, San Francisco voters easily defeated a measure that would have allowed the development of a luxury condominium along the waterfront. Rising class tension is translating into a political backlash, and that's something that every politician in San Francisco needs to keep a close eye on, no matter how much they get in campaign contributions  from a tech community newly willing to exert itself in politics.

The overall contours of this story are intimately familiar to Jane Kim, the District 6 supervisor who represents Mid-Market and the Tenderloin, and who was instrumental in helping the Ramirez family raise the necessary cash to pay off their old debts. Jane Kim is responsible for initially introducing the infamous "Mid-Market-Tenderloin tax exclusion" -- a payroll tax break designed to encourage  tech companies to set up shop in Mid-Market -- aka "the Twitter tax break."

In return for the tax break, the tech companies were required to come up with Community Benefit Agreement plans that commit the companies to give back to their local neighborhoods. Point 10 of Twitter's Community Benefit Agreement pertains to homelessness. Here it is, in full:

KEY FEATURE #10: Preserve affordable housing & tackle homelessness

A major issue in the Central Market and Tenderloin communities is preserving affordable housing stock, expanding opportunities for low and moderate income people to secure affordable housing, and ending homelessness.

Twitter, in concert with other CBA companies, will work in partnership with the Office of the City Administrator as the City develops an online affordable housing database for Central Market and the Tenderloin that would provide information on vacancies, wait-list status updates, income qualifications and contact information for housing and shelter in the area.

Twitter will inform employees about Project Homeless Connect’s service days, which provide needed services to homeless individuals. These service days may be included in the two service days Twitter will provide to employees.

In addition to the promoted Tweets credits, Twitter will choose and provide social media training to at least two community based housing organizations in the community so their residents and employees may better access social media.

Readers can decide for themselves whether "promoted Tweets credits" and an "online affordable housing database" are adequate compensation for the impact that the 1,600 new Twitter millionaires will have on the city's housing stock, rents and general affordability. Mayor Ed Lee, who counts Supervisor Kim as one of his allies, was reelected with the strong financial support of the tech sector. So far, the the tech companies appear to be getting their money's worth.

I asked Supervisor Kim if the tech companies in her district were doing enough to address the formidable social problems faced by many of the preexisting residents of her district.

"I think it would be very interesting if tech got engaged politically to help us pass measures that would more adequately support and fund solutions to the problems that we are having, whether it is housing or homelessness," says Kim, displaying all the political adroitness one would expect from an ex-Green Party member who represents a district that is at the heart of San Francisco's gentrification battles.

"But I think they have a lot of catching up to do," said Kim. "I think what's interesting is the most significant beneficiaries of the Mid-Market Tenderloin tax exclusion are the property owners. Now all of a sudden these property owners are incredibly flush. Twitter is just another tenant. We should ask tech to give back, but we should also ask the property owners to give back."

* * *

But how should tech best give back? By funding start-ups like HandUp? Or by getting involved in old school politics? The answer depends a great deal on how one evaluates the basic role of government in tackling social problems, or whether one even believes, anymore, in government's capacity to solve (or significantly ameliorate) those problems.

I first found out about HandUp from a Twitter comment thread. At the end of October, the San Francisco Mercury News published a heart-rending account of homeless people who were using the No. 22 bus that travels back and forth from East Palo Alto to South San Jose as an overnight shelter. The story caught the attention of my Twitter feed -- profusely populated with people who take seriously the economic inequality increasingly visible in one of the most economically vibrant and wealthy regions of the United States.

A tweet from Jason Calacanis, a well-known Internet entrepreneur and angel investor who was instrumental in the rise of New York's "Silicon Alley" during the first dot-com boom, caught my eye.

[embedtweet id="396672528040460289"]

Homelessness in San Francisco has been a major political issue for decades. As Paul  Boden, co-founder of San Francisco's Coalition for the Homeless, joked to me, "We could have built a lot of affordable housing with all the trees cut down to make the paper for those studies." From Boden's perspective, we already have a reasonably good idea of what the root causes of homelessness are. Lack of affordable housing and insufficient mental health treatment facilities are two big drivers. Some people are simply incapable of taking care of themselves and need society's help, others simply can't afford to live where the jobs are. Ensuring that there is enough affordable housing in a desirable urban environment, and fully funding the necessary safety net of services to make sure that society's most vulnerable members don't fall through the cracks, is a big, expensive job.

How to appropriately shape the contours of housing policy is a highly contested domain, but there is no denying, as Boden pointed out to me, that government financial support for affordable housing plummeted in the early 1980s. You can draw a pretty clear line connecting Ronald Reagan's budget cuts and "government is not the solution" rhetoric to the rise of modern homelessness in the United States.

When you take a close look at San Francisco's infrastructure of homelessness support -- the networks of shelters, Project Homeless Connect, the affordable housing mandates built into all new developments, the array of nonprofits offering a vast array of support services -- it's really pretty impressive. While reporting this story I met a stream of dedicated, impressive people working tirelessly to help the at-risk population of San Francisco. There's just not enough infrastructure to go around As Dufty observed, of the city's 6,500 homeless, around 3,400 people are currently on the streets (the others are in shelters, treatment centers or  jail). "But our Section 8 [a federally funded housing voucher program] waiting list has been closed since 2001, and our public housing waiting lists for families and seniors has been closed since 2006." There is simply no place to put people, and that is a direct consequence of cutbacks in government funding.

If the tech community really wanted to make a difference, one obvious way would be to spend a ton of money building affordable housing with integrated mental health and medical care treatment facilities. There might not be an obvious way to make a profit off that kind of investment, but it's clearly a major piece of the overall puzzle.

When I first read Calacanis' tweet asking whether anyone had even studied this problem, I saw evidence of a disconnect between the tech community and a long-standing historical problem. I also detected what I thought was the unstated assumption that if the almighty tech community just got around to devoting its attention to the issue, then it could be fixed, lickety-split.

Calacanis and I later exchanged emails. He felt my initial assumptions were unfair -- he'd just been asking a simple question, he said. But then he proceeded to make clear that he did think the tech industry had a better chance to fix our broken social system than anyone else.

Why? Because the tech industry is really good at solving problems and they have done so well compared to the rest of society .... I think engaging the technology industry on a survey funded and endorsed by the technology industry would bring them into the tent. After a group of technologists, who solve problems for a living, have their input into the data collection, they could do divergent thinking and ideation around the issue. They could challenge the conventional thinking, and that's a great thing.

Technologists and entrepreneurs constantly come up with new ideas enabled by technology and techniques that are brand new to the market. If your position is that there is no chance of a new solution to an old problem, well, then you need to pay attention to what going on in every other industry in the world!

If health care, education and transportation are being radically transformed why would homelessness be immune to a new solution?

Sure enough, in a comment responding to Calacanis' original tweet, HandUp was cited as an example of a technologically mediated approach to the homeless problem. I decided I needed to learn more.

Is Calacanis right? Can the tech sector do a better job than big government on homelessness? Is homelessness just another social sector ripe for disruption, waiting for its AirBnB or Uber?

Rose Broome and I went back and forth on these questions. As the Ramirez saga played out around us, she crystallized her thoughts on the relationship between government, the tech sector and homelessness in a long email that's well worth quoting nearly in full:

I don't think the government is currently able to solve this problem alone. There are people, humans, my neighbors, digging through the trash cans outside my window every night. And that's the reality that I see, Andrew, that's what we have right now, not just the government, but all of the safety nets we have in place are not currently sufficient to provide basic needs for people in our community....

What I think is that we cannot rely on the government alone to solve these problems, to resolve homelessness. It's not productive to walk past people in the street and just think, "hey, that's the government's problem to deal with" and then just walk away. We all live in this community, and homelessness impacts all of us. There is room for a variety of tactics. I have a friend who gives out food in Civic Center once a week -- that's how she does her part. Other people feel more passionate about rallying for government resources, and I see that perspective too. Do I think it's possible with more government resources to solve this problem? Sure, it's possible. There are multiple solutions here. But how do we get there? The people who are knocking on that door, how far has it taken them? And I don't mean that in a snarky way at all. Do people think we should hold up on creating other solutions to wait for the government to resolve this? I actually don't hear anyone saying that, Andrew. I've been met with broad support. I'm doing what I can do about this right now, in a tangible way, and in a way that scales. I can build something that can help the community help the people around us who need help the most. If we can get more government or other resources into this, that's great too.

My grad research lab used to do work out of the SF General community mental health clinic before the program we were working with was shut down. This is just 5 or so years ago. I was shocked by that. Yes, I definitely agree that we need more mental health programs and affordable housing. There's much to be done, so let's get to work. We can do that by welcoming more people into this effort, not by shooting everyone down who has a different perspective or approach.

You know, this isn't an us-versus-them kind of thing, at least for me anyway, and I don't think that helps. I am no politician or historian but I don't see one silver bullet here, and I'm not claiming to be the one solution that will solve it all either. But I do think there's room for new innovation, for new technology to help alleviate the problem. I feel inspired to help connect more resources to homeless people through new technology, so that's the approach I'm taking. These are the skills that I have and I'm bringing what I've got to help the effort. HandUp is working with the government, the non-profits, with the tech community, and the homeless community themselves to bring new innovations to this problem. We should not let ourselves become paralyzed because this problem is deep and broad, we should not be afraid to act and do what we can to bring relief to those in our community who need help most. We should not wait for other people to solve this problem.

* * *

Although the Ramirez family did end up raising enough money -- through HandUp and other private charitable contributions -- to pay off their debts, it wasn't enough to change Christopher Ramirez's credit rating quickly enough to qualify for the apartment across the street from Twitter HQ. I learned that Bevan Dufty ended up co-signing the lease himself (an extraordinary action that, according to one shelter official, "absolutely never happens"). When I first heard about Dufty's rescue I thought, well, that's exactly the kind of approach to homelessness that will not scale in the long run. City officials can't go about personally co-signing leases for every homeless family, no matter how deserving they are. The Ramirez family is very, very lucky.

But the more I thought about it, the more I realized that something I value very dearly about social media and digital technology -- the ability to connect to people I care about over boundaries of time and space, despite the distractions and imperatives of a busy, busy world -- had been deployed by HandUp to meaningful effect in the case of the Ramirez family. In a way HandUp was doing, on a larger scale, exactly what I do when putting together a feature story.

For journalistic purposes, I wanted to meet with the Ramirez family to "put a face" on my story. Finding out their personal details -- learning that Christopher had been a forklift operator in Chicago before he lost his job in the recession, seeing the light in Yesenia's eyes as she looked at her phone and remembered the almost incomprehensible generosity of the general public -- would make my story better, I knew.

And that's one very important thing that HandUp does. It puts faces on stories, it creates narrative that we can cling to for understanding, it gives us a way to do something that feels a little bit more meaningful than handing someone a dollar. And it sparks cascading connections. That is in no way a bad thing. What better use for Twitter could there be than as medium for  a city supervisor who represents the Tenderloin to alert her followers not only to a family that needs help, but to a mechanism for giving that help.

"I don't know if it is happening anyplace else," says Bevan Dufty, " but I do think Rose is on to something. We're in a time where social media and the ability of technology to make connections is growing in importance and I don't  think that homeless people should be left out."

Kara Zordel, Project Homeless Connect's director, believes that anything that gets people started personally grappling with the issues homeless people face is a step in a positive political direction: "Every time we are able to engage with someone who wants to help and are able to educate someone on what's missing, to be able to educate them on the lack of medical-based housing -- the lack of any housing -- is a step towards them being able to advocate and vote differently and make the changes that are going to be needed in the future. If you educate people they'll make change. If someone actually gets to know a homeless participant [in HandUp], the next time they vote they're going to think things through because there is a face to the problem. And that's what will make the biggest change. It's not about money, it's about changing minds."

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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