Federal Cuts Are Shrinking Homelessness Prevention, Rental Aid, and Fair-Housing Enforcement

Originally posted on Charity Bridge Fund | October 30, 2025

Since January 2025, The Emergency Food and Shelter Program (EFSP) has been in an indefinite pause,preventing the disbursement of an estimated $117 million in federal funds. EFSP is the flexible backbone that keeps shelters open, pays motel nights and utility arrears, and prevents evictions when other streams are delayed. EFSP supports 10,000 to 12,000 local public and nonprofit organizations, including shelters and food pantries, across more than 2,500 jurisdictions. The pause is forcing providers to ration beds, shorten stays, or shut intake days while they wait on federal drawdowns. Local United Way nonprofits report suspended payments to shelter, rental-aid and utility-aid partners. In short, this has forced organizations to scramble for alternative resources and caused concern for those relying on services related to shelter.

Roughly $400M in AmeriCorps grants (about 41%) were terminated in April. A federal judge later ordered restoration of some of these grants — but that restoration only took place in certain states. Programs in the remaining states and national networks remain exposed to gaps. Many housing nonprofits, like Habitat for Humanity, rely on AmeriCorps members to provide volunteers.

There are more funding cuts on the horizon. The federal government’s FY26 budget zeros out the HOME Investment Partnerships Program, a $1.25B formula stream that cities and states use with nonprofit partners to build and preserve affordable homes and support first-time buyers.

More than half of the Department of Housing and Urban Development’s homelessness program funding is planned to be cut in FY26, including cutting $2.2B in funding for Continuum of Care— a program that provides services to sheltered and unsheltered people with the goal of moving them into permanent housing. The funding cuts could put more than 170,000 people at risk of experiencing homelessness.

Where This Leads

Permanent supportive housing and strong case management are what reliably convert temporary shelter stays into permanent exits from homelessness. When funding for rental subsidies, supportive services, and case managers is cut, move-ins are slowed, returns to homelessness rise, and average lengths of stay in shelters climb.Permanent supportive housing consistently increases housing stability and reduces homelessness. Intensive case-management models improve housing and service engagement outcomes. When funding is cut, these benefits are lost to communities.

When emergency rental aid, utility assistance, and housing counseling stall, families fall into eviction or utility shutoff — even small, short-term arrears can trigger cascading costs. City-level analyses show evictions raise municipal spending across shelter, health, and justice systems; prevention and diversion are cheaper than reacting afterward. Federal and independent research underscores that eviction carries long-term harm, especially for children. This includes impacts to health and school, including more absences, more suspensions, and lower achievement.

Pulling funding from fair-housing nonprofits shrinks the country’s housing market testing and private enforcement capacity for civil rights breaches. This housing market testing detects violations that standard complaint channels miss; without it, bias persists unseen in the market. When funding is cut or delayed, fewer systemic tests occur and case timelines lengthen. These effects ultimately fall hardest on renters of color, immigrants, seniors, and people with disabilities.

Over time, the shelter systems quickly become overburdened, leading to visible encampment growth. This visible impact ripples across these neighborhoods. Many cities pay large sums to clear camps repeatedly, without having long-term solutions. The housing market is negatively impacted and municipalities face other escalating costs for crisis responses. When people remain unsheltered, interventions from police and EMS rise, as do jail bookings and ER visits. Reductions in supportive housing and services are associated with worse population health (infectious disease, disability, premature death) among people experiencing homelessness — costs that compound over time.

Drug use and overdose risk are rising in unhoused communities even as national overdose deaths have recently declined. CDC analyses show a national drop in overdose mortality in 2024 from the pandemic peak, but people experiencing homelessness remain at a disproportionately high risk of fatal overdose. As homelessness has grown 18% year over year, more people are exposed to the streetside drug supply, and cuts to housing, case management, and outreach threaten to reverse national gains by reducing access to treatment and stable housing — the strongest protective factor against overdose.

Without funding, the nation’s housing safety net will continue to unravel, one neighbor at a time.

We Must Act Now

We must act now to ensure communities don’t lose access to the very services they depend on most. Charity Bridge Fund is mobilizing support, so nonprofits facing federal funding cuts can continue to keep communities housed.

Restoring these housing lifelines isn’t just about budgets; it’s about protecting communities from the far-reaching impacts of homelessness and the belief that every person deserves the dignity and stability of a safe home.