Social factors can affect the course and outcome of mental illness. Programmes that attempt to ameliorate the effect of such social problems as unemployment, poverty, homelessness, incarceration and isolation have proven effective in improving outcome, quality of life and social inclusion for people with serious mental illness. Transitional employment programmes (TEPs), developed in the 1970s, were the precursors of supported employment. A refinement of the supported employment model has been named individual placement and support (IPS). Norwegians with mental illness report that poverty, unemployment and substandard living conditions are among their greatest obstacles to recovery. Housing cooperatives could become a viable response to the homelessness of people with mental illness and, simultaneously, improve their economic situation and quality of life. The psychosocial clubhouse seeks to address both the problems of social isolation and powerlessness of people with mental illness.