Toward Understanding Homelessness: The 2007 National Symposium on Homelessness Research. Changing Homeless and Mainstream Service Systems: Essential Approaches to Ending Homelessness. Funding Mechanisms


Most programs that serve homeless people are funded by a complex array of sources, forcing service provider executive and development directors to spend far too much time pursuing each piece of the ever-changing funding puzzle. One of the most important signs of real system change is the easing of this patchwork funding burden. A few communities have simplified funding for all or most parts of their continuum of care, assembling all funding resources in one place and requiring providers to submit a single application that covers what they need by way of operating and services dollars (and capital dollars if relevant). Several other communities have accomplished a similar simplification for one component of their CoC  typically PSH  usually on an ongoing basis but sometimes as only a one-time effort. Exhibit 2 summarizes these arrangements in eight communities (based on research reported in Burt et al., 2004, and Burt & Anderson, 2006).

Exhibit 2
Funding Mechanisms Facilitating Development of Homeless Assistance Programs and Services to End Homelessness
Funders Communities with Ongoing Funnel Mechanisms One-time MOU Communities with Ongoing Mechanisms to Assure that Projects Get All the Types of Funding They Need
Columbus, OH Philadelphia Connecticut1 Seattle/
King County1
San Diego1 Portland, OR1 Maine1 Massachusetts DMH
Housing Finance Agency C     C     C C
Public Housing Authority O   C     O   O
Development/Redevelopment Authority C,O,S       C,O     C
Housing/Community Development Department C,O,S C,O,S C C,O O C   C,O
Homeless-Specific Office or Bureau C,O,S2 C,O,S2   C,O,S O,S      
Mental Health Agency S C,O,S O,S
through state budget line items
S S S   S
Substance Abuse Agency S C,O,S S S      
Medicaid Agency             S S
Human Services/TANF/Child Welfare Agency/Departments   C,O            
Law Enforcement or Corrections             S S
United Way C,O,S     S        
Other Private Philanthropy C,O,S     C,O,S        
Note: Codes for type of funding:  C = capital, O = operating, S = services.

1  For permanent supportive housing only.
2  Many different government departments transfer money to the lead homeless agency for coordinated distribution. Contributing agencies are noted in the table. In Columbus, United Way and private philanthropic funds also flow through the lead homeless agency, which is a nonprofit corporation.

Funnel Mechanisms That Combine All Needed Funding Types in One Application

In 1986, public and private agencies and organizations in Columbus, Ohio, that were routinely approached to fund local homeless services were looking for a coherent way to structure their funding activities. They came together and created the nonprofit Community Shelter Board (CSB) to serve as the central planning, funding, and monitoring entity for homeless assistance programs in Columbus/Franklin County, and funneled all of their homeless-related funding through CSB. For about 10 years CSB presided over a system that gave homeless service providers the luxury of preparing only one application for all or most of their funding, but that did not seriously challenge the array of services the system was providing. In the late 1990s, downtown development plans sparked a concern about what would happen to homeless people and provided the impetus for self-study and ultimately for a paradigm shift in goals, from managing to ending homelessness. After due deliberation, the community launched the Rebuilding Lives initiative in 1998 to develop up to 800 units of permanent supportive housing for chronically homeless people (Burt et al., 2004). To identify and secure the resources needed for Rebuilding Lives, a Funders Collaborative was established, whose membership includes all the major public and private funders and potential funders in the area. Through the Collaborative, individual agencies pool their resources, establish common expectations about what outcomes are to be achieved, and specify what reporting requirements are needed to document progress. Armed with these resources, CSB funds individual projects that meet the goals and standards of the Collaborative. Providers apply for capital, operating, and services funding using one application, receive one grant, and write one report. This centralized funding mechanism is a powerful tool for enacting system change, since programs that do not conform to the new standards and way of doing business are not funded.

In Philadelphia, the Office of Adult Services orchestrates all homeless-related activities, coordinating with other key agencies in the process. The budget for emergency shelter is part of Adult Services, and a variety of public agencies (e.g., housing and community development, child welfare, and some mental health and substance abuse services) transfer funds to Adult Services to improve the integration of funding mechanisms and ease the proposal burden on providers. Adult Services also coordinates with mental health and substance abuse agencies that operate an array of community-based supportive housing as well as provide supportive services for homeless people in Philadelphia. The city also used the resources under its control to shift the emphasis of its investments from shelter to permanent supportive housing and outreach, in essence changing the allocation of money to follow the change in ideas on how best to end homelessness.

Starting in 1992, the State of Connecticut and the Corporation for Supportive Housing joined forces to promote the Connecticut Supportive Housing Demonstration Program, which ultimately produced 281 units of PSH in nine projects located in six mid-sized Connecticut cities. From the start the funding package combined capital, operating, and service dollars contributed by several state agencies and distributed the funds through a consolidated request for proposals. Recognizing the low probability of getting any more money until they could demonstrate to the legislature and state agencies that the first investment had paid off, CSH also raised money for an evaluation (Andersen et al., 2000). The evaluation showed that homeless people and people at very high risk of homelessness accepted this housing and remained stably housed for significant periods of time. Results of a public cost avoidance component of the study showed that tenants used fewer expensive crisis health services (mostly emergency room and medical inpatient services) and used more routine and appropriate health care such as home health and outpatient substance abuse treatment services. This switch from crisis health services to more preventive and routine care in clinic and office settings is one of the common goals of permanent supportive housing. Case managers help clients to attend to health problems earlier, before they become emergencies, which means that clients are able to use the more appropriate and less expensive clinic settings for health care. Because they were getting more routine and preventive care, tenants were also better able to avoid hospitalization. These results, which show both improved health outcomes and lower outlays for health care, have been parlayed into two additional rounds of state funding for PSH, now approaching about 1,000 units. Funding for each wave is ongoing, not one-time, as the resources to support projects are line items in state agency budgets. The Department of Mental Health and Addiction Services issues the request for proposals and funds operations and services from its own budget, which includes Shelter Plus Care resources. State housing finance and housing and economic development agencies provide capital resources that providers access through the single application process.

In summer 2006, the Seattle/King County Funders Group issued its first request for proposals to create supportive housing that combined capital, operating, and services funding. As the RFP says, This is the first countywide public funding effort in King County to coordinate the application and allocation process for capital, operating and services funding for proposals that meet the goals of the 10 Year Plan to End Homelessness. The Funders Group was a structure deliberately created to promote system change under the Taking Health Care Home initiative (Burt & Anderson, 2006).

What these four communities do on an ongoing basis, San Diego did once, in 2003. Several agencies, including the redevelopment authority, which supplied funding for capital and operating expenses and administered the grant-making process, pooled their resources through memoranda of understanding and issued a joint request for proposals for new permanent supportive housing projects.

Funding Mechanisms Involving Facilitated Access to Resources from Several Agencies

Several communities involved in system change studies have not gone as far as those described above in integrating their funding streams for the purpose of simplifying provider applications and assuring adequate levels of operating and services resources. They have, however, gained a commitment to fund from the agencies controlling the resources that are most essential for supportive housing and have created mechanisms to help providers navigate their way through these agencies funding processes. Portland, Oregon staff supported by THCH funding helped housing developers and service providers form viable projects, obtain capital resources from the housing and community development department and state resources (e.g., Low Income Housing Credit), operating resources (housing subsidies) from the public housing authority, and services funding from the mental health and substance abuse agency. In Maine, THCH staff facilitate meetings of a funders/coordinating group that has as one of its primary tasks finding the service match money for tenants of supportive housing projects that receive capital and operating resources from the state housing finance agency. And in Massachusetts, the Department of Mental Health routinely brokers resources for housing projects to support its homeless and at-risk clients, offering its own service resources to leverage housing dollars from a wide variety of sources including HUD, the state housing finance agency, numerous local public housing authorities, and the Massachusetts Department of Housing and Community Development (Burt, Pearson, & Montgomery, 2005).

Mechanisms That Integrate Funding for Clients

Resource management innovations can do for clients what funnel mechanisms do for providers  enable them to get the care they need with someone else worrying about how to match dollars to services. In their simplest form, resource management systems are being used to match available resources with clients who need them. The systems are used to track resources at the client level to ensure that clients needs are being met holistically and to ensure that the resources are managed efficiently and appropriately. One concept widely used in the childrens mental health field, system of care, ( is being adopted as part of the Indianapolis Blueprint to End Homelessness. A system of care assembles the resources to do what it takes from whatever system has relevant resources to meet client needs. This model involves two important paradigm shifts. The first is a recognition that agency silos do not meet client needs, as clients frequently fall through the cracks as they try to negotiate the mental health system to get mental health services, housing providers to get housing assistance, and so on. Instead, resources from each of these systems are pooled and managed by a resource coordinator to achieve the clients goals. The second important change is that, in contrast to the funding practices of most mainstream systems, funds are available up front rather than having to be claimed and justified after service delivery through a cost-reimbursement process. The community or collaborative of funders identifies the approximate annual or one-time level of resources that different subpopulations are likely to need, and the resource coordinator uses this pool of funding in discretionary ways to purchase services, pay for housing, and support client-identified activities.

This resource coordination model is consistent with the literature cited earlier regarding the ability of certain interventions to help mainstream and homeless assistance systems avoid unnecessary costs. The key to its success is a communitys ability to convince funders of its merits and to secure their commitment to participate in a system of care funding approach. Implementing this model would be a significant indication of system change, as it involves a change in power (change in control of expending resources), money (the act of pooling resources), habits (new ways of delivering services), technology/skills (new skills in working with clients to achieve goals), and ideas (breaking down the silos to deliver client-centered services). Resource management systems can also support dual purposes  direct service coordination and resource use documentation. A community could see the level of resources being used per client, how those resources vary or need to vary based on client characteristics and service requirements, and how the intervention (or involvement in the resource coordination model) changes the use of services. These integrative service delivery and funding systems can help a community understand and set resource allocation levels and measure whether application of funds in this way results in cost savings to other parts of the system.

Reallocation of Funds

The descriptions of Chicago, Columbus, and Philadelphia discuss how communities are using their resources to influence and leverage system change. Beginning with the 2005 CoC application, HUD provided a new tool, the Hold Harmless strategy, within the annual CoC application, to assist in this process. Communities can use the Hold Harmless provision to reallocate funds from poorly performing or lower priority projects to new permanent housing projects that target people who are chronically homelessness. This approach to system change is likely to increase in practice as other CoCs gain greater understanding of how to use this new tool.

View full report


"report.pdf" (pdf, 455.28Kb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®