Analysis of USA spending data indicates that over $100 million in Continuum of Care (CoC) grant funding will expire in January alone, with amounts increasing monthly. These expirations are imminent and unavoidable under current conditions.
Critically, HUD has not yet obligated replacement funding for these expiring grants.
What is driving the risk?
Several factors are converging to create immediate risk for communities:
- HUD has not obligated funds to replace expiring CoC grants, forcing communities to deplete their remaining balances with no assurance of future funding.
- While a new CoC NOFO has been released, it does not provide immediate funding. Even under the fastest timeline, funding will not arrive until after many grants have already expired.
- Ongoing litigation regarding federal funding delays does not prevent grant expiration or the exhaustion of community funds.
- Communities are operating in a context of historically high rents, limited housing supply, and increased demand for assistance. Low-income households are already under severe strain, and any disruption in services will compound harm.
What is at risk?
These expiring grants support the core homelessness response system, including:
- Housing for veterans, families, seniors, and children
- Transitional housing programs
- Street outreach and unsheltered homelessness response
- Domestic violence and survivor shelters
- Faith-based and community-based service providers
- Case management, stabilization, and housing placement services
January expirations alone affect several major states significantly, including Texas (approximately $5.6M), Florida (approximately $4.0M), Ohio (approximately $4.0M), North Carolina (approximately $3.3M), and Tennessee (approximately $1.4M). These examples illustrate the scale and geographic breadth of the crisis communities are facing.
Funding gaps are not manageable under current conditions
Suggestions that these funding gaps are manageable do not align with current realities. Some argue that because only a subset of grants expire early in the year, communities are accustomed to short gaps, and that routine, high-priority renewals (Tier 1) and standard planning can mitigate the risk. This assessment is contradicted by consistent reports from community leaders, providers, and people experiencing homelessness.
Reports from across the Built for Zero network — consisting of more than 160 communities ranging from large cities, mid-sized cities, rural regions, and statewide continuums in 38 states — indicate that the current risk environment is drastically different and more dangerous than in prior years.
Feedback from Built for Zero community leads, Continuum of Care leadership, and frontline providers, highlights several realities:
- HUD has not obligated replacement funding, leaving providers with uncertainty that funds will be available when current grants expire.
- CoC awards are neither guaranteed nor immediate, and do not prevent current grants from expiring or cash flow from running out.
- Many providers, particularly small, rural, and faith-based organizations, lack the cash reserves and credit lines necessary to bridge these funding delays.
- Inflation, staffing shortages, and rising costs have eliminated the financial flexibility that allowed service providers to absorb funding delays in the past.
- The ongoing affordability crisis magnifies the impact of this disruption, increasing the immediate risk of housing loss and prolonged homelessness when services are interrupted.
Small, faith-based, and rural programs usually operate on the thinnest margins and lack the financial reserves to survive these delays. If these programs fail, larger systems cannot easily step in to replace them, leaving a void that no other funding stream can fill.
Why urgency is warranted
Even brief funding gaps can destabilize entire local systems. Once disrupted, these programs are slow and expensive to rebuild. The risk is not hypothetical. It is measurable, immediate, time-bound, and already visible in January’s expiring grants. Lawmakers must be alerted immediately; every day of inaction results in the loss of essential funding.
Congressional action is required now to ensure funding continuity. Without timely action, communities will be forced to suspend essential services and risk the loss of housing for families, Veterans, older adults, and children. We urge Congress to direct HUD to renew all CoC grants expiring in calendar year 2026 for a full 12 months to preserve the homes, treatment programs, and other services for families, Veterans, older adults, and children.
Without timely action, low-income households and people experiencing homelessness will face immediate harm during this ongoing affordability crisis.
Bottom line
Over $100 million in CoC funding faces immediate expiration in January alone. Current safeguards have failed: HUD has not obligated replacement funds, the new NOFO cannot bridge the timing gap, and litigation offers no protections against these expirations. Without immediate Congressional action, preventable disruptions to housing services are inevitable.
