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How to Start a Homeless Shelter With Government Funds In 2021 – A Detailed Step By Step Guide

According to the National Alliance of End Homelessness, there were 580,366 people in January 2020 in the United States that didn’t have a shelter to rest their heads. Around 70% were individuals, and others were people with children.

Homelessness is something you don’t want to experience. Especially if you have your loved ones with you. Today, there are somewhere around 11,180 community housing and homeless shelters in the States. But still, more work needs to be done to end the problem.

And that’s where you can play your part. Today, we are going to show how to start a homeless shelter with government funds in 2021. We’ll walk you through from the literal basics to setting up & running a place where people in need can get a roof over their head with other basic life necessities.

So, if you are really into building a homeless shelter, be prepared to put in a lot of hard work. 

Part One – Learning About The Home Shelter Business

Building a Homeless Shelter

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Before learning how to start a homeless shelter with government funds, you’ll first need to learn about the industry. From understanding the shelter business to knowing your competitors and facing challenges, this section will cover all the pre-requisite knowledge of the industry you are stepping into. So let’s get right into it.

Step #1 – Understanding The Industry & Conducting Market Research

As mentioned above, the latest number of people who are experiencing homelessness is 580,366. Between 2019 and 2020, the phenomenon increased by two percent. And this change also marked the increment in population growth for the fourth straight year.

Note that the latest report about homelessness was generated for the year 2020. And since the outbreak of COVID-19, no new data has been collected in the States. Meaning, there’s a significant hole in available knowledge about the industry.

COVID-19 has greatly impacted homelessness in the US. But as we don’t have any factual data on the subject, we can also predict that the matter is only getting worse day by day. Long story short, the need for homeless shelters is rising, and we are far behind in the race to end homelessness.

Indeed, homelessness is decreased by 15 percent from 2007. But after the significant COVID-19 crisis, things aren’t looking great. However, here’s a piece of good news! HUD’s McKinney-Vento Homeless Assistance Grants program received $2.777 billion in FY 2020. And now, they are demanding $3.5 billion for the cause in FY 2022.

There’s a ton of support by the government of the United States to end the homelessness crisis. But people need to step forward and play their part by conducting market research and acting accordingly.

Once you have understood the industry and did your homework about the market, it’s time to learn about…         

Step #2 – Types Of Homeless Shelters & Picking Your Area Of Activity

There are different types of homeless shelters found in the United States and other parts of the world. Here are some of the common ones:

    • Youth Shelters
    • Domestic Violence Or Women Only Homeless Shelters
    • Homeless Shelters For Couples
    • Permanent Supportive Housing
    • Emergency Shelters
    • Prototypical Homeless Shelters
    • Family Shelters
    • Wet Shelters
    • Faith-Based Homeless Shelters
    • Homeless Shelters For Victims & Child Abuse
    • Shelters For Aged People
    • Substance Abuse And Mental Health Shelters

That’s not the complete list! There are also some other types of shelters in the biz. However, you can only concentrate on one niche at one moment. Before you choose a type of shelter to build, it’s essential to conduct in-depth market research.

As there would be many people who would have walked down your path in the past, analyzing their journey would be beneficial. Furthermore, you can use the State of Homelessness: 2021 Edition by the National Alliance to End Homelessness to get detailed insight and analysis about the niche you are looking forward to pursuing.

Picking your area of activity would depend on your mission and values. For instance, if you want to do something about the youth runaway problem, building a youth shelter would be the perfect option for you.  

Step #3 – Knowing The Competitors

But before you pick the type of homeless shelter you’ll build, it’s better to know your competitors. Why? Because there would be a handful of shelters that would already be pursuing your mission for years. And in order to get government funding for homeless shelters, you’ll be needing a solid business plan that would only come into existence by acknowledging your competitions.

Here are some of the popular shelter businesses in the US:

  • Rosewater
  • Back On My Feet
  • Saint Francis House
  • Salvation Army
  • Operation Sacred Trust
  • Carrfour Supportive Housing

Carry out a thorough breakdown of the popular places in the shelter business. You can use to access the complete list of shelters in the US. See how they are working, on which scale they are helping to eliminate homelessness, etc. Once you have made all the deductions, it’s time to make a decision. 

Step #4 – Starting From Scratch Or Buying A Franchise

Now you have two options, starting a homeless shelter from scratch or buying a franchise. Although both scenarios will require you to give your 100 percent, buying a franchise would be relatively an easy venture.

Buying a franchise of a renowned home shelter that’s looking to expanding in your area would make your journey simple. All the hard-lifting would be done by the shelter; you’ll just need to invest your time in learning the bits and pieces. And then, you’ll just have to act. But you’ll be restricted inside a boundary. Meaning, you’ll have to listen to the people who have been managing the business for years.

On the split side, building a homeless shelter would require you to do everything from scratch. From filing legal documents to hiring employees, managing business models, to dealing with urban development hud and department of housing, you’ll need to do everything on your own. But that would allow you to run things the way you want to. And if done the right way, that can lead you to be a role model for millions around you.

Both ways guarantee one thing, you’ll be helping society in eliminating homelessness. Now it’s your choice, how you want to pursue God’s work.       

Step #5 – Recognizing The Threats/Challenges You’ll Be Facing

Sometimes you are facing difficulties not because you are doing something wrong, but because you are doing something right – Joel Osteen.

Threats and challenges are inevitable in the homeless shelter industry. So, it’s important to learn about some of the common ones that you’ll surely be facing once you are in the field.

Firstly, you’ll be subjected to overcrowding. As there are many people who don’t have a roof on their head at night in the States, you can expect the needy people rushing your shelter like bees race towards their hives.

Next up, homeless shelter funding sources can also be a barrier. It’s not guaranteed that you’ll get government funding at the time you are expecting. And that can lead to a bunch of finance-dependent challenges.

Security can also may a major threat your business can face, especially if you are guarding victims of domestic violence, abuse, etc. People can raid your shelter as it’s becoming a blockage in their evil doings.

Another thing that can make you go sleepless when running a homeless shelter can be a lack of equipment. There are tons of basic things that you’ll be needing to accomodating homeless people like beds, clothes, grooming products, shampoo, etc. A slight shortage of basic necessities in shelters can cause devastating issues.

The list goes on and on, but you got the point. The bigger the responsibility, the greater the challenges.    

Part Two – Getting Started

Homeless Shelter Beds

We are finally done with the first part of how to start a homeless shelter with government funds. It’s time to learn how to create a homeless shelter, requirements for a homeless shelter, and everything in between. Enter part two of starting a shelter business.  

Step #6 – Preparing Mission Statement & Finding A Location For Your Shelter

Prepare a mission statement by clearly outlining your goals, intentions, and services. From the capacity of your shelter to what assistance you’ll be providing, pen down everything in the statement. Be formal when drafting the statement; include all the relevant information about the shelter you are looking forward to building. Note that your statement can be anywhere from a few sentences to several pages.

Once you have formed your homeless shelter mission statement, it’s time to find a location for it. Ideally, you can make use of the statement you have written for taking a building as a donation. Otherwise, you’ll need to rent a place to run your shelter. The place must have proper bathrooms, rooms, hall, etc., according to the capacity you have set for your shelter.

Speaking more about the place, it must be in a good neighborhood with nearby hospitals, stores, parking, security, etc. Inside the place, there must be enough room for a kitchen and an eating hall. Similarly, the site must have a good ventilation system along with a proper sewerage system.

However, if the place isn’t all-ready to host homeless people, you must renovate it beforehand. Furthermore, here are ten items a homeless shelter needs the most. Look for similar pieces to rehabilitate the place for warm welcoming the people in need.         

Step #7 – Choosing A Business Name & Suitable Legal Entity

Next up, it’s time to choose a name and a suitable legal entity for your homeless shelter business.

First things first, pick a name for your business. There are no rules whatsoever for a shelter business name; it can be anything. But you just need to make sure the name isn’t taken by any other company. Choose a name that shows your sincerity with the work and something that uplifts the people in need. Avoid picking a name that you think can be controversial; choose one that backs your mission and values in the simplest way possible.

Then, once you have the perfect name in your head, it’s time to pick a suitable legal entity for it. To get your business on a legal pathway, you’ll need to incorporate it. This way, your business will have separate accounts and properties. In addition, it will help the people after you to keep your mission alive—more on the topic in the next step.   

Step #8 – Getting Legal Help For Incorporation, Drafting Bylaws, Business License, Obtaining Tax ID & Applying For Tax Exemption

To incorporate your business, you’ll need to file paperwork with your jurisdiction to become a non-profit corporation. In the US, you can access the documentation and help on the IRS official website. The list contains info about the matter organized in accordance with different states and territories of the US. However, if you are outside of the US, doing a simple google search about incorporating your non-profit business will help you find the right direction.

Next up, you’ll need to draft bylaws. Basically, bylaws are your non-profit incorporation’s manual that contains basic information about your business, its purpose, number of directors, etc. It’s a kind of cheat sheet of your shelter that must remain at your principal place of business anytime.

Then, it’s time to apply for your business license. Contact your city’s local government to get the applicable business license. You’ll require to provide your name, business name, contact information, number of employees, bylaws, etc., with some fee. But note that the information required by the government varies from state to state and country to country.

Once you get your business license, it’s time to obtain a Tax ID. Even though you are a non-profit organization, you’ll still need a tax ID. Ask the body who has issued you the license about obtaining the tax identification number; they’ll help you with the matter.

Then, it’s time to apply for a tax exemption. Note that different states, countries, and regions have different rules. But with determination and a bit of digging, you’ll find the right resource for learning how to apply for a tax exemption in the place you live. Regardless of the place, you’ll need to show the info about your business, business license, tax ID, and other legal documents to get a tax exemption.

We recommend hiring a legal agent that has previously worked with a non-profit homeless shelter. The person will help you with all the legal matters and make your work easy.      

Step #9 – Discuss Insurance Policies With An Agent & Protect Your Business

Sure, you are doing something good. But that doesn’t mean things can’t go sideways. And that’s where an insurance policy can help you in miraculous ways.

Hire an honest and reliable insurance agent to help you pick the best insurances for your homeless shelter business. We recommend someone who has previously worked or is currently with a shelter. Regardless, cross-question the agent about the insurance he or she is telling you to buy. Moreover, explain your business model and then seek advice from the individual.

Here are some of the common insurances you shoulder consider setting up a homeless shelter:

  • Unemployment insurance
  • General liability insurance
  • Sexual abuse liability
  • Umbrella insurance
  • Business’s owner policy
  • Social work liability

After that, think about protecting your business. File for intellectual property protection to safeguard the documents of your biz, its logo, name, and everything in between. To find out more about IPP (Intellectual Property Protection) around where you live, a quick google search will unveil tons of helpful information.  

Step #10 – Applying For Professional Certificates & Double-Checking Legal Documents To Operate

To run a homeless shelter, you’ll need to apply for some professional certificates in the homelessness industry. Without the relevant documents, you won’t be able to operate the shelter. Here are some docs that you must have in order to start a homeless shelter:

  • Case Manager Certification
  • Certified Independent Practise Social Worker
  • Commission for Case Manager Certification

Once you have got your hands on the relevant homeless shelter business certificates in your region, it’s time to double-check the legal documents before moving forward with the operation. So, here’s a run-down list of legal papers you must be possessing before proceeding towards the third part of the piece.

  • Incorporation Certificate
  • Business License
  • Insurance Policies
  • Business Model
  • Tax Exemption
  • Tax ID
  • Seller Permit
  • Relevant Professional Certificates

And that’s a wrap for the second part! But wait, there’s more to come. So let’s put all the efforts together we have made so far and moving one step forward to finish the mighty cause.   

Part Three – Putting All The Pieces Together

Living at Homeless Shelters

We have learned about the industry and made some baby steps for opening a homeless shelter. In part three of how to start a homeless shelter with government funds, we’ll dive in deeper and put the missing pieces together. So, here’s how it breaks down:

Step #11 – Draft A Business Plan, Appoint Directors To The Board & Set-up A Meeting

Although you are setting up a non-profit business, you need a business plan to make things work officially and legally. Your business model will include critical information about your homeless shelter. From your objectives to mission values and future goals, the plan will all the nitty-gritty details. Don’t think you can create a biz model on your own, or you aren’t qualified for the job? Then, you can contact an expert in a nearby shelter facility and ask them for model ideas.

Your business plan would take into account factors like your vision, how you are going to allocate the resources, from where you are going to get the equipment, how you are going to deal with potential challenges, etc. Similarly, it’s also going to include the number of board directors and their information. Those directors will be in charge of making financial and policy decisions for your shelter.

To hire board members for your homeless shelter business, look for people that have some sort of experience in the field. For instance, a shelter manager would be an ideal candidate for a board director. Similarly, prominent business icons near you would also be a great addition to your business’s board. Long story short, look for genuine and humanly souls that have some sort of experience in the homeless shelter business.

Once you have cherry-picked the board of directors, call a meeting. In the meeting, assign them the authority of managing the financial and policy sector of your shelter. Similarly, ask them to get acquainted with each other as they’ll be working as a team. Once everything is set and done, here are some tasks that will now be solely managed by your board:

  • Adopting bylaws and making changes/updates as per your requirements.
  • Appoint officers like President, Vice President, Secretary, Treasury, etc.
  • Open a bank account for your homeless shelter
  • Handling all financial and policy-related chores    

Step #12 – Sketch Detailed Cost Analysis

Launching your homeless shelter business would require money. And as you might not get government funding at the time you are expecting, sketching up a detailed cost analysis beforehand can save you from a lot of trouble.

Properly study all the expenses related to opening and running your homeless shelter. Then, one by one, start jotting them down to figure out how you are going to arrange them. Call your board of directors to assist you with the matter.

Sketching a detailed cost analysis before opening your shelter would help you see things clearly. You’ll know what’s required, how much is required, how you can manage it, how long will it last, etc. Similarly, you would know up to what extent the donations are covering up your expenses and how much you have to arrange on your own.

Just to give you a rough idea of the costs attached with building a homeless shelter, here are some pointers:

  • Money to pay for permits, insurances, licenses, and certificates
  • The amount required to rent or buy a shelter facility
  • Cost of owning a shelter website
  • Expenditures of renovating the place with the basic life demands.
  • Business cards, promotions, marketing schemes
  • Misc 

Step #13 – Hire & Train Volunteers & Employees

To run a homeless shelter, you’ll need a workforce. Firstly, you’ll need to look for like-minded people that are looking forward to investing their day and night to help end homelessness. To do that, contact your friends and family and spread the word. Or better yet, post an advertisement in your local newspaper or use social media to attract such people. Then, once you have an army of volunteers, you’ll need to train them.

From basic ethics of dealing with all sorts of people to cleaning shelter the right way, you’ll need to teach them a lot of lessons. As your volunteers would be the front-line soldiers, they’ll need to be at the top of their game for making things good for your shelter. If you aren’t qualified for the job, you can take help from a nearby shelter to train your volunteers with all the necessary drills.

Next up, you’ll be in need of professional employees like accountants, security guards, janitors, cooks, etc., to run the system of your shelter. Without hiring the essential employees in your shelter, you can’t open it to the people in need. To look for employees near you, use social media or your local media streams. We recommend hiring employees that previously have been working in the same cause as they’ll be able to share the same emotions as yours. And lastly, you’ll need to feed your employees with some basic drills of working in a homeless shelter.

Step #14 – Writing Grant Proposal & Finding Government Grants 

Finally, now you can apply for government funding for homeless shelters. But first, you’ll need to write a grant proposal. To do that, start by making a list of the needs of your shelter and the amount required to fulfill them. Next, use your detailed cost analysis to jot down all the money you’ll need to open and run your shelter. Finally, to make your proposal more potent, add the market research you have done to prove the demands you have attached to the grant.

Similarly, add how urgently you require the funds and how your organization is the ideal place for releasing homeless-shelter related grants. Furthermore, convince how you are making a different wave in the industry and how the government funding would benefit the cause. Finally, once you are done writing the grant proposal for your shelter, discuss it with your board members and make the required amendments.

Check out this amazing piece by PocketSense on how to write a grant for a homeless shelter.

After that, it’s time to find the organizations in your state, city, or country that grant funds for shelters. For instance, in the US, the Department of Housing and Urban Development (HUD), Department of Human/Social Services (DHS), Department of Health and Human Resources (HHS), etc., are the bodies that provide grants for shelters. You can find relevant departments in your region by doing a quick google search like [your city/state/country name] homeless shelter government funding.

Study the search results carefully and pick the official resources for gaining further information about getting government funds for your home shelter.   

Step #15 – Ask & Request For Donations Around You

Donations are the primary source of everything you’ll need to set up and start your home shelter business. And for that, you’ll need to ask and request the people, stores, departments, news outlets, etc., around you to step forward and play their role. Initiate the process by informing bodies around you via a social media trend, news headlines, posters, pamphlets, flyers, advertisement boards, etc.

After that, visit churches, mosques, charity groups, non-profit organizations, etc., around you with your team to spread the word. They’ll definitely help you either by providing some equipment or financially. Not to mention, ask them to share the info about your shelter with their contacts.

Then, visit stores, shopping malls, town halls, markets, and other public spaces to share a word about your mission and plan. Not all, but many people would help you by providing different things. For instance, a grocery store owner might fund you with monthly groceries, or a car showroom owner might donate some vehicles for a limited time to provide basic transport services to the people in your shelter.

However, when you are patrolling for this cause, make sure to have all your legal documents with you. Business owners will surely ask you for the docs as proof of you being a proprietor of a registered non-profit shelter.     

Part Four – Surviving In The Industry

Homeless Men's Shelter

So, you have opened your homeless shelter, now what? Well, there’s something more important waiting for you. And that’s surviving in the industry by running your business in the best way possible. In this final section, we are going to explore the aftermath of the question, how to start a homeless shelter with government funds.  

Step #16 – Plan, Develop and Use Competitive Marketing Strategies To Win 

To survive in the industry, you must create competitive marketing strategies to win. Your company’s marketing profile must be convincing for everyone. Whether it’s funding parties or people looking forward to volunteering, your company should reach the masses to create a substantial impact.

Start with the initial when planning and developing your marketing strategies. Strongly focus on the building blocks of your homeless shelter like its values, goals, mission, staff, etc. Find ways to stay ahead of your competitors by analyzing their marketing plan of action. See where your plan is lacking and how you can go one step ahead of other similar shelters in the industry.

Here’s a market strategy you can use. People often have a bad image of homeless shelters. You can use this shortcoming to your advantage by marketing true and exceptional stories from the real people that are currently living in your shelter. You can create a short documentary and convey to people the message that why your non-profit organization is different. Similarly, you can also form partnerships with other organizations to increase your reputation in the industry.

Keep improving the services available in your shelter so that the people residing in your facility can be your genuine word of mouth source. Because at the end of the day, it’s all about satisfying the ones who are in need.  

Step #17 – Create A Master Plan For Boosting Brand Awareness & Build A Corporate Identity

Boosting your brand awareness and building a corporate identity is something you start working on right off the bat. Without it, your shelter would just be another unnoticed place going down the hill.

Start by advertising the worthy objective of your shelter and how you are planning to achieve it. Set up online seminars, ads, and other sources that people could easily access to see how your shelter is making a difference. Use email marketing, telemarketing, and other modes of marketing to boost the awareness of your shelter. You can take the help of professional marketing and business agencies to do the job for you.

You can also organize galas, events, and fundraising gatherings to meet with people from different walks of life. Similarly, you can create pages on social media websites like Facebook, Twitter, Snapchat, Instagram, etc., to reach more people. You can start your shelter’s merchandise to give your business a unique identity.

To build an image of your business in the corporate world, you can reach out to similar organizations and join hands with them. Moreover, you can encourage government officials to frequently visit your shelter and see how everything is going. This way, you’ll receive more attention both from the relevant government bodies and other non-profit organizations. Building a corporate identity also means staying up-to-date with the legal formalities of your shelter. You can hire a separate legal team that keeps everything smooth and advises you on taking things to the next level.      

Step #19 – Setup A Network

To strive in the business, you’ll need to create a network or join one. With networking, you’ll get help from other similar non-profit organizations. You can form partnerships with other shelter homes to help your town, city, state, or country get rid of homelessness together. Staying in a loop with other homeless shelters would hugely benefit you financially, economically, and socially.

And that’s the end of the detailed guide about how to start a homeless shelter with government funds. But before you close the page and get onto your venture, don’t forget to check out the FAQs section coming up next.


Here are some frequently asked questions about how to start a homeless shelter with government funds.

What are four types of homelessness?

Homelessness is commonly divided into four types, chronic, episodic, transitional, and hidden. Chronic homelessness refers to being homeless for longer than a year. This is experienced by people who are mentally or physically ill, mostly aged individuals. Next up, episodic refers to being homeless for more than three instances in a year. After the third episode, the individuals are classified as chronically ill. 

In transitional homelessness, a person is going through a major life event like losing a job or any other catastrophic event. They face homelessness pre or post the event that has shaken their life. Lastly, hidden homelessness refers to a person relying on friends, relatives, etc. for a place to live.      

What’s provided for the homeless people in the shelters?

Although it depends on the type of homeless shelter, regardless, all shelters provide the basic needs of a person. From clean washrooms to tidy sleeping beds, meals, and clothes, the necessary needs of a human being are available at a homeless shelter.

Moving a step forward, different types of homeless shelters provide different things. For instance, a sexual abuse shelter would provide high-grade security, therapy, good food, a positive environment, and everything in between. On the split side, a youth shelter would provide education supplies, career counseling, and things like that. 

How do homeless shelters get money?

Homeless shelters get money primarily from two sources, donations and government funding. Donations can come from religious institutions, other non-profit organizations, grocery stores, companies, friends, family, and the general public. In contrast, government funds are received from legal bodies that deal in supporting shelters and other similar organizations.

How much does it cost to start a homeless shelter?

Well, it totally depends on the size of the shelter. Roughly a mini/micro level shelter facility would cost around $2,000 to $5,000. A mid-level shelter would require funds around $50,000. And a full-fledged large-scale place would cost around $100,000.

What are the primary requirements of a homeless shelter?

Here’s a quick checklist of starting a homeless shelter no matter where you live:

  • A place
  • Legal documents like business license, tax ID, etc.
  • Professional certifications
  • Insurance policies
  • Board of directors
  • Employees and volunteers
  • Donations

To learn about the complete requirements of a homeless shelter, you can dive into our detailed guide above. We have explained everything in good detail so you can help society in ending homelessness.

What’s the current situation of homelessness in The United States?

As reported by the State of Homelessness: 2021 Edition, as of Jan 2020, 580,466 people were experiencing homelessness. Out of the total count, 408,891 were individuals, 171,575 were people in families, chronically homeless people were at 110,528, 37,252 were veterans, and 34,210 were youth. According to the same report, it’s noted that males are far more likely to experience homelessness than females. Out of every 10,000 males, 22 don’t have a roof over their head. For females, the name is 13.

Final Words

Starting a homeless shelter isn’t for everyone; it takes courage, will, determination, hard work, and most importantly, empathy. For those of you who are thinking about starting a shelter, we would urge you not to let go of the plan for any reason, as the world needs more individuals who think about the ones who don’t have a place to rest their heads.

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