Block 7 addresses efforts to fund and finance homelessness policies and programmes, in a context of increasing pressure on public social spending and fiscal constraints. It discusses the need for more efficient, targeted allocation of resources to prevent and combat homelessness. This block examines the dual role of governments – both as funders of homelessness programmes and initiatives, as well as fundraisers that seek resources from other sources – and provides recommendations to secure adequate and sustained funding to support policy objectives to end homelessness.
OECD Toolkit to Combat Homelessness
Abstract
Homelessness entails high costs. First and foremost, there are high human costs, in terms of lower life expectancy, higher risk of disease, mental health conditions and substance use disorders, and poorer health outcomes associated with people experiencing homelessness, relative to the general population (OECD, 2020[1]). At the same time, the costs associated with homelessness weigh heavily on public budgets, given the range of housing and support services and other public systems that are mobilised for people at risk of, or experiencing, homelessness. This may include, among other things, housing/shelter, health and mental health services (including emergency care), social welfare services, and the criminal justice system. There is no standard approach to assess the financial costs associated with homelessness across countries, and such calculations present considerable methodological challenges (Box 7.1).
Public spending on social services, including housing and homelessness services, is under increasing pressure, as governments face growing fiscal constraints that limit the resources available for social protection. In OECD countries, social spending averages 21% of GDP, with substantial variation across countries (from 31.6% in France to 7.4% in Mexico) (Block 4).
Despite the lack of precise data on public spending aimed at addressing homelessness, certain challenges are widespread. Most funding is directed towards emergency responses and managing homelessness rather than preventive measures or long-term solutions. Evidence has shown, however, that long-term housing solutions, such as Housing First programmes, are effective and resources efficient (see further discussion in Block 5). The fragmented nature of funding, which often comes from multiple sources and sectors, makes it difficult to co‑ordinate resources effectively. This complexity in managing timelines, objectives, reporting processes and varying modalities applicable to different funds hinders the development of sustainable, long-term funding strategies, further complicating efforts to combat homelessness effectively.
There is no standard approach to assess the financial costs associated with homelessness, and such calculations present considerable methodological challenges, given that different levels of government and a broad range of sectoral agencies, service providers, and budgetary resources are often mobilised. Further, direct costs relating to housing and service provision vary considerably from one individual (or family) to another, depending on the breadth and intensity of needs, the type of housing/shelter and support services provided (and by whom they are provided), as well as the length of time services are accessed.
Accordingly, national estimates are based on different methods and cannot be compared. For instance:
Between April 2023 and March 2024, local councils spent GBP 2.3 billion (USD 2.9 billion) on temporary accommodation for households experiencing homelessness in England (the United Kingdom), reflecting a 29% increase from the previous year, and nearly doubling over the past five years (Shelter, 2024[2]).
Research from New South Wales, Australia, found that the average cost to the government for people accessing homelessness services over a six‑year period is nearly 4 times higher than with respect to the general population (NSW government, 2021[3]) Reflecting the broad range of supports accessed by people experiencing homelessness, just 9% of those costs related directly to homelessness and housing, with the health and justice sectors representing the costliest areas of intervention among individuals with high support needs.
In January 2024, the United States Government announced over USD 3 billion in federal funding for homelessness, to be directed towards permanent and short-term housing assistance, supportive services, planning, data, and other costs (HUD, 2024[4]).
As of 2022, the National Institute of Statistics (INE) in Spain estimates that on average, homeless care centres offering housing, catering services and/or street assistance spend EUR 348 804 per year at the national level (INE, 2022[5]).
In early 2023, the NGO Focus Ireland (Ireland) estimated Irish local authorities would spend EUR 345 million on services for households experiencing homelessness that year (Focus Ireland, 2023[6]). As of 2022, spending on emergency accommodation accounted for over 80% of all expenditure in homelessness by local authorities.
Access to affordable and social housing is central to solving homelessness. First, homelessness is, in part, a housing problem. Recent research from the United States suggests that housing markets play a significant role in shaping the size of the population experiencing homelessness. Researchers found that while personal vulnerabilities may help explain why some individuals become homeless in specific communities, they do not fully account for regional variations in homelessness (Colburn and Page Aldern, 2022[7]). These findings highlight the critical need for investments aimed at increasing the housing supply to prevent homelessness (see also Block 4). Further research linking housing markets to homelessness would enhance our understanding of this relationship and help uncover how these dynamics unfold in other OECD and EU countries. Further, housing is also a key part of the solution to homelessness: helping people transition into long-term housing (through housing-led and Housing First schemes, discussed in Block 5) depends on the availability of and individual’s access to affordable and social housing.
Public investment in housing declined significantly between 2005 and 2019, on average, in OECD countries, before rebounding somewhat in recent years (OECD, 2024[8]; OECD, 2023[9]). In particular, public investment in housing development alone dropped by more than half between 2005 and 2016. Public investment in housing and community amenities (a more comprehensive category, which also includes, for instance, community development, water supply, street lighting and R&D) also declined, albeit to a lesser degree (Figure 7.1). Recent increases in construction costs arising from more expensive raw materials, machinery and labour, and more demanding energy-efficiency standards, along with interest rates, have driven up development costs. For example, in France, construction costs for social housing are projected to increase between 5‑8% between 2024 and 2030, and around 15% after 2030, in response to the new environmental regulation (RE2020) (GREMILLET, 2023[10]). As a result, many housing developments have been put on hold, especially in social and affordable housing, where developers are limited in their ability to raise rents to pass on higher costs to tenants (OECD, 2023[9]).
Total public investment in Housing and community amenities and in Housing development alone, OECD‑30 average, as percentage GDP, 2000 to 2022
Note: 1) Total public investment in Housing and community amenities refers to the unweighted average across 31 OECD countries, and includes both direct investment (COFOG series P5_K2CG – Government gross capital formation) and Public capital transfers (COFOG series D9CG – Indirect capital expenditure made through transfers to organisations outside of government). Housing and community amenities includes, among other things, housing development; community development; water supply; street lighting; R&D housing and community amenities; and housing and community amenities not elsewhere classified (N.E.C.). 2) Public investment in housing development alone refers to the unweighted average across 30 OECD countries, and includes both direct investment (COFOG series P5_K2CG – Government gross capital formation) and Public capital transfers (COFOG series D9CG – Indirect capital expenditure made through transfers to organisations outside of government). Housing development includes, among other things, the acquisition of land needed for the construction of dwellings, the construction or purchase and remodelling of dwelling units for the general public or for people with special needs, and grants or loans to support the expansion, improvement or maintenance of the housing stock. 3) See the Eurostat Manual on sources and methods for the compilation of COFOG Statistics (https://ec.europa.eu/eurostat/documents/3859598/5917333/KS-RA-11-013-EN.PDF) for more detail. 4) Data exclude Canada, Chile, Colombia, Costa Rica, Mexico, New Zealand and Türkiye. Data for housing development alone also exclude the United States. Data for 2022 are provisional, and exclude Australia, Czechia (capital transfers), Korea, and the United Kingdom.
Source: (OECD, 2024[8]), OECD Affordable Housing Database (2024), indicator PH1.1 Policy instruments and level of governance, https://webfs.oecd.org/els-com/Affordable_Housing_Database/PH1-1-Policy-instruments-and-level-of-governance.pdf.
Nevertheless, while public investment in housing can in some cases contribute to expanding the supply of affordable and social housing, this is not always the case, and such housing investments are not systematically mobilised to house people experiencing homelessness. Data on government spending on affordable and social housing are not widely available across OECD countries. For countries with available data, public social expenditure on social affordable housing is highest in New Zealand at 0.35% of the GDP, followed by Australia at 0.26%, and Austria at 0.21%, respectively (OECD, 2024[11]). Further, social housing allocation systems fulfil multiple objectives and prioritisation of people experiencing homelessness remains rare (Pleace, Teller and Quilgars, 2011[12]). Throughout the OECD and EU, there remains a need to strengthen investment in affordable and social housing in OECD and EU countries (OECD, 2021[13]; OECD, 2023[9]).
In homelessness policy making, public authorities – including both national governments and subnational authorities – often have dual roles:
As funders to other public, semi-public or private entities, to support the development and implementation of strategies, policies and programmes to combat homelessness.
As fundraisers from other entities (supranational, national, non-public / private) to be allocated to homelessness strategies, policies and programmes.
For instance, in practice, national governments may be responsible for:
Setting the policy frameworks, funding arrangements, reporting requirements, and financial incentive structure(s) relating to homelessness policy.
Providing direct funding to sub-national authorities, NGOs and/or other non-public actors to support homelessness interventions/programmes (such as pilot projects, bridge funding, or cross-sectoral funding).
Raising funds (through the fiscal system; in response to supra-national funding opportunities; or in setting up long-term funding mechanisms).
Subnational entities, including local governments, may also play a similar dual role, as both provider and recipient of funds.
The following set of operational questions is intended to guide policy makers and practitioners on both sides of the funding issue: for funders of homelessness programmes and initiatives (which may consist of supra-national entities, national authorities, as well as the philanthropic and private sector); and for fundraisers (which may be national and sub-national governments, service providers and a range of other entities).
Funders:
How to balance immediate needs with long-term objectives?
How to co‑ordinate multiple funding sources for homelessness programmes?
How to diversify funding sources, drawing on rents, lottery money, revolving funds, savings programmes, social impact bonds, and social impact investment?
How can Monitoring and Evaluation (M&E) be generalised as a requirement to access funding?
Fundraisers:
How to design a homelessness programme or intervention that is attractive to funders?
How to identify funding opportunities that will help deliver on homelessness policy objectives?
How to strengthen funding and financing expertise within the homelessness services sector?
For funders: How to balance immediate needs with long-term objectives?
In most OECD countries, the bulk of public spending on homelessness is directed towards emergency accommodation rather than prevention measures or long-term housing-led solutions, despite increased recognition of their effectiveness. This is the case, even in countries that are investing significantly in the expansion of Housing First and Housing-led programmes (Block 5).
Policy makers must not only seek ways to expand the financial resources available for homelessness policies and programmes; they must also critically rethink how resources are allocated and the extent to which they can be best leveraged to support the shift from crisis response to advancing the government’s policy priority to end homelessness. Despite the documented successes of programmes such as Housing First, only a few countries and regions have been able to achieve scale, in part due to funding and resource constraints.
For example, in France, around 45% of the roughly EUR 3 billion budget of the Accommodation, pathways to housing and integration of vulnerable people programme (Hébergement, parcours vers le logement et insertion des personnes vulnérables) is allocated to support emergency accommodation, compared to around 20% to Housing First programmes (Cohésion des territoires, 2024[14]). In Ireland, local authorities’ average annual expenditure on services for people experiencing homelessness increased from EUR 73 million between 2009 and 2014 to an expected EUR 345 million in 2023. As of 2022, emergency accommodation accounted for over 80% of local authorities’ expenditure on homelessness services (Focus Ireland, 2023[6]).
Increase public investment towards prevention and long-term housing solutions
Boosting investments in prevention policies can help avert family homelessness and frequently results in cost-savings in the medium term (Evans, Sullivan and Wallskog, 2016[15]; Mackie, Thomas and Bibbings, 2017[16]). As of 2023, the provincial Government of Ontario, Canada, increased its annual investment in homelessness prevention by CAD 202 million (about USD 143 million), bringing the total budget for supportive housing programmes and homelessness prevention services to an all-time high of CAD 700 million (Northumberland County, 2023[17]). Still, this increase in investment in prevention is small compared to the provincial government’s investment of over CAD 4 billion in supportive housing and related services over the previous three years.
In 2024, the Government of Scotland (the United Kingdom) announced an GBP 80 million (USD 101 million) investment over two years in affordable housing in 2024, aimed at reducing the duration of temporary accommodation and securing long-term housing solutions (Scottish Government, 2024[18]). This funding aims to allow the government to acquire empty properties and transform them into affordable social housing.
In New Zealand, Housing First was introduced through the “Peoples Project” in 2014 and began receiving government funding in 2017. Housing First is for people who have been experiencing chronic homelessness (at least 12 months), and tailored support is provided for as long as needed. For individuals who are recently homeless or at risk of experiencing homelessness, the Rapid Rehousing Programme is available to provide support for up to 12 months. Transitional housing is for individuals and whānau with an immediate housing need and no appropriate alternative. The Ministry of Housing and Urban Development has increased its investment in transitional housing to 6 413 places available as of September 2024, or 398 more places than in July 2023 (Te Tuapapa Kura Kainga - Ministry of Housing and Urban Development, 2024[19]). Transitional housing is intended to provide housing and services for up to 12 weeks, and support for a further 12 weeks. People living in transitional housing pay up to 25% of their total income as a contribution to accommodation costs.
Aligning financing incentive structures for municipalities to accelerate the shift from emergency accommodation towards Housing First solutions
Existing funding regimes may explicitly or implicitly encourage local governments to rely on temporary accommodation, or on specific types of housing solutions. Governments can use funding rules to incentivise transitions from temporary to long-term housing, while ensuring responsibilities are not delegated to municipalities without the necessary funding structure and competences in place. Denmark has taken an innovative approach by adjusting the incentive structures to accelerate a shift from the provision of temporary and emergency accommodation towards Housing First solutions. The change is part of a new political strategy, launched in 2021, to end long-term homelessness and channel financial resources into Housing First solutions (FEANTSA, 2022[20]). By contrast, governments can also create negative incentives, including those that encourage local authorities to rely on temporary or poor-quality housing solutions, rather than longer-term, higher quality alternatives.
Legislation came into force in October 2023, which aims to: i) provide more affordable housing; ii) restructure the economic incentives for municipalities, to transition from financial support of shelter stays to the full implementation of Housing First in Denmark; iii) establish a national partnership of key stakeholders and invest in the role of civil society to strengthen the implementation of Housing First. A central element of the legislation was to adjust the financial incentives for municipalities investing in non-emergency housing support. Previously, the central government reimbursed 50% of municipal expenses on temporary accommodation for people experiencing homelessness for the duration of their stay. Under the new legislation, municipalities will be reimbursed 50% of their expenses on temporary accommodation for a much shorter duration (up to four months in an initial phase; then up to three months). After this period, the state reimbursement will reimburse 50% of municipal expenses for two years only in the case that an individual has transitioned to a long-term housing solution. In parallel, a temporary rent reduction was introduced for around 1 800 public housing units, along with a permanent rental reduction of an additional 2 250 units (FEANTSA, 2022[20]), and investment in the construction of new affordable housing.
For funders: How to co‑ordinate multiple funding sources for homelessness programmes?
Funding for homelessness often comes from different sources and spans different sectors, reflecting the cross-sectoral dimension of the issue. The development of Housing First projects, for instance, may be funded by national governments or NGOs, while funding for the creation and operation of overdose prevention centres (OPC’s) might come from a blend of multi-level public authorities or private funders. For example, the Insite safe injection site in Vancouver, Canada, receives both federal and provincial funding (PHS, 2024[21]); in Sydney, Australia, the Uniting Medically Supervised Injecting Centre is funded through state financing (Parliament of NSW, 2023[22]), and in New York City, the United States, OPC’s are privately funded (Giglio et al., 2023[23]; NYC Health, 2022[24]).
A multiplicity of funders in practical terms often imply different application processes, eligible expenses, reporting requirements, and spending horizons, which makes it hard to attract and manage different funds and ensure sustainable, long-term funding.
Further, the integrated nature of effective homelessness solutions – such as Housing First and Housing-led programmes – can also pose funding challenges because they often require both capital investment in infrastructure (e.g. housing development, renovation or acquisition), in addition to ongoing or longer-term costs, including the provision of social services and/or rental support for tenants if needed. The Housing First initiative in Trieste (Italy) is illustrative in this regard. Created in 2016, the initial phase of the project was funded by the NGO Caritas Italiana, with a range of funders supporting the subsequent operational phase: the municipality of Trieste provided funding for the housing units through the European Social Fund (ESF); the social co‑operative Lybra supported social inclusion measures for residents; the Emporio della Solidarietà provided food support; the Italian Federation of Organisations for Homeless People (FIO.PSD) provided training for the staff and designed tools to evaluate the project; and the Fund for European Aid to the Most Deprived (FEAD) provided additional resources (the European Social Fund (ESF) and the Fund for European Aid to the Most Deprived (FEAD) have since been combined in the present-day ESF+ scheme).
EU funds – such as the European Regional Development Fund (ERDF) and the European Social Fund Plus (ESF+) – can be used to finance the development of housing and social services. ERDF funds generally aim to correct imbalances between regions, including through the construction or improvement of infrastructure (European Commission, 2023[25]), whereas ESF+ funds focus on responding to social challenges, including through strengthening social protection and promoting employment (European Commission, 2023[26]). Although each fund has been used individually to improve housing solutions or the provision of social services, different programme criteria and timelines can in practice make it challenging to combine the funding streams to support integrated projects (Box 7.2). Other international organisations also financially support housing programmes (Box 7.3).
Projects in the homelessness sector seeking to attract multiple funders must ensure that the funding sources are complementary. To achieve this, it is essential to harmonise rules and guidelines, align timelines, and allocate funds in a clear and transparent manner, among other considerations (ECoPP Sub-Group 1, 2023[27]). In Sweden, informal meetings between key actors involved in the implementation of EU funds, including the ESF, ERDF and EAFRD, are organised by county administrations across different regions. These meetings facilitate geographical co‑ordination and alignment in multi-fund implementation.
EU Member States may consider a range of funding instruments to support Housing-led solutions. The following list provides an overview of key EU funding instruments.
ESF+
The European Social Fund Plus (ESF+) is the EU’s main instrument to address social challenges, focusing on COVID‑19 recovery, high employment, social protection, and a skilled workforce for a green and digital economy. It integrates various European funds and supports individuals, regions, and Member States in tackling social, employment, education, and climate‑related challenges. Member States must allocate a minimum of 25% of ESF+ resources for social inclusion, including support for the most deprived individuals, and funding actions related to the Youth Guarantee and Child Guarantee. A minimum of 3% of the ESF+ shared management strand is earmarked to programmes targeting the most deprived individuals, including people experiencing homelessness. New regulations which include a focus on housing make it possible to use ESF+ funds for Housing First (European Commission, 2023[28]; Housing First Europe Hub; FEANTSA, 2022[29]).
ERDF
The European Regional Development Fund (ERDF) aims to reduce disparities between different regions within the EU, enhancing development, and fostering overall cohesion. It funds infrastructure projects, including housing, making it applicable to Housing First initiatives. Notably, EDF’s objectives include promoting socio‑economic inclusion for marginalised communities, low-income households, and disadvantaged groups through integrated actions involving housing and social services. Importantly, ERDF funds focus on infrastructure investments, where ESF+ funds focus on helping individuals (European Commission, 2023[25]).
NextGenerationEU
NextGenerationEU, an EUR 800 billion (around USD 845 billion) temporary stimulus package, was launched by the European Union to aid Member States in repairing the immediate economic and social impact of the pandemic. It consists of two funding categories: the Recovery and Resilience Facility (RRF) and the Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU). RRF, at EUR 723.8 billion, serves as the core component, offering loans and grants to support reforms and investments in EU countries. FEANTSA (2021[31]) shows that among the 27 EU Member States, 7 explicitly address homelessness in their Recovery and Resilience Plans, with 5 proposing housing-led solutions. In addition, 20 EU Member States plan to invest in housing initiatives, while 12 are focused on combating energy poverty.
InvestEU
InvestEU mobilises investment, through an EU budget guarantee of EUR 26.2 billion (USD 27.7 billion), in various priority areas, including infrastructure projects in energy and transport, economic diversification, and social infrastructure projects (e.g. social and affordable housing, healthcare, social services, and educational infrastructure). It also supports other social investments (e.g. microfinance, the social economy, education, skills, and training) and projects in just transition territories (regions with a transition plan approved in accordance with the rules of the Just Transition Fund). The investment support may be complemented by technical assistance for the identification, preparation, and development of investment projects, as well as capacity building (referred to as “the InvestEU Advisory Hub”). The InvestEU Portal connects project promoters and investors in an online EU marketplace.
European Investment Bank
The European Investment Bank (EIB) finances affordable and sustainable housing initiatives. Within its EUR 150 billion urban lending portfolio, the EIB supports projects focused on reconstructing existing housing and developing new social and affordable accommodation. These initiatives address a range of needs, from demographic challenges in small towns and rural areas to severe housing shortages in major cities.
Just Transition Fund
The Just Transition Fund will support the economic diversification and restructuring of the territories. This involves mobilizing funding for productive investments in various areas such as research and innovation, environmental restoration, clean energy, workforce training, active inclusion programmes, as well as the transformation of current high carbon facilities. This fund will be directly connected to the programmed operations under the ESF+ and ERDF 2021‑27.
Social Climate Fund
The Social Climate Fund (SCF) aims to provide tailored financial support to EU member states to support the green transition, with a particular focus on vulnerable groups, such as low-income households affected by energy poverty. The funds can be used for building renovations, improving energy efficiency, promoting renewable energy, and implementing low-emission solutions, among others.
Inter-American Development Bank
The Inter-American Development Bank (IDB) Urban Development and Housing division works to improve infrastructure, services, and support informal settlements. For example, in February 2023, the IDB group IDB Invest structured and subscribed the totality of the first social housing bond in Peru issued by the leading company in housing and construction in the country (Los Portales) and an amount equivalent to USD 35M in Peruvian soles over a 10‑year period. This fund will finance the development of urban rehabilitation and social housing projects, aiming to benefit 6 800 families a year and build 15 000 new social housing units (IDB Invest, 2023[32]; Inter-American Development Bank Group, 2024[33]).
Asian Development Bank
The Asian Development Bank (ADB) offers grants and near-market term loans to middle‑income countries, including in urban development, health, and social protection along with technical expertise to establish the legal, regulatory, and policy frameworks to Asian member countries. The ADB has supported successful housing and urban sector projects since the 1980s including in housing supply, construction, and the expansion of housing finance. They are particularly emphasising this issue in the context of the COVID‑19 pandemic, and the disaster and climate change related impacts exacerbating housing problems, especially for the urban and rural poor (Lee, 2022[34]).
World Bank
The World Bank assists client countries in developing and deepening resilient affordable housing markets to low and middle‑income households by providing financial instruments, including supply side support such as construction finance and supply subsidies (World Bank, 2020[35]).
United Nations Refugee Agency (UNHCR)
In 2024, the UN Refugee Agency (UNHCR) plans to invest in sustainable housing and settlements in 38 countries by providing emergency shelter assistance to newly arrived refugees and asylum-seekers, including in host countries in the Americas, Asia, and Europe (UNHCR, 2024[36]). For example, in partnership with Habitat for Humanity, they implemented long-term housing options for Ukrainian refugees in Warsaw and Gliwice urban areas (Spyridon, 2023[37]). UN Habitat helps provide technical and housing policy advice and eviction defences support in partnership with the UN Office of the High Commissioner of Human Rights (UN Habitat, 2024[38]).
Overview of Bilateral and Multilateral Funding Sources for Housing (UN-Habitat).
UN-Habitat (the United Nations Human Settlements Programme) has compiled a comprehensive list of existing bilateral and multilateral funding sources to support the development and implementation of effective housing policies, programmes, and projects. This resource highlights a diverse range of institutions and housing interventions, including market-rate housing, affordable housing, and social housing, offering valuable insights into funding opportunities for varied housing needs (UN-Habitat, 2024[39]).
For funders: How to diversify funding sources, drawing on rents, lottery money, revolving funds, savings programmes, and social impact bonds?
Funding for long-term housing solutions can be drawn from a range of sources. The list below provides a range of options, and is not exhaustive.
Resources from different public agencies, lottery money and rents from tenants
Chile’s Housing First pilot serves individuals who are above 50 years old with a minimum of five years of street homelessness experience. The programme has served 916 individuals from 2019 to 2023, placing them in shared apartments and providing three support professionals for every 20 participants. The programme is funded by a public contribution of the Social Development Ministry and the Housing Ministry (approximately comparable to cost of shelters or EUR 21 per day per capita) and all participants, who must contribute 30% of their income as rent.
In 2008, Finland partnered with the NGO Y-Foundation to acquire 18 000 new apartments for its Housing First initiative. The foundation received discounted loans from the state to buy properties or renovate shelters. The apartments bought on the private market are funded through the Finnish lottery. The state support, which has amounted to approximately EUR 270 million (about USD 285 million), is shared between the national government and municipalities. Individuals experiencing homelessness who move into the apartments, are required to contribute to the rent.
Dedicated revolving funds
In 2022, Latvia established the Housing Affordability Fund to channel investment into affordable rental housing. The Fund will help finance the construction of new rental housing at below-market rates outside of the capital region. The initial funding of around EUR 42.9 million was primarily through the Latvian Recovery and Resilience Plan (RRP). The fund aims to be revolving through loan repayments from housing developers and the share of tenant’s rents that will be allocated to the Fund. To incentivise developer participation, the fund allocates up to 30% capital rebate of total project costs upon the lease of units (OECD, 2023[40]).
Special savings mechanisms
A common approach for raising debt among social housing providers is to pool financing through centralised funding institutions, which aggregate and manage public funds as is the case for the Housing Bank in Norway and the Caisse de Depots et Consignations in France. In France, individuals can open a tax-free state‑backed savings account (le livret A, le livret de Développement Durable et Solidaire, or the Livret d’Epargne Populaire) at a higher interest rate than private banks through the Caisse des depots. These accounts are a huge success; over 50 million French people have several livrets. The state then lends the money to social housing developers to fund social housing construction and maintenance. Over a quarter of the social housing costs are funded through this channel. In 2023, 84 500 social housing units were built and 107 021 rehabilitated through this funding pool. Thus, this programme provides reliable and sustainable long-term funding for social housing expansion (Caisse des Depots Groupe, 2024[41]).
Raising private revenue through social impact bonds
A new social policy innovation aimed at encouraging investment to end homelessness is known as Social Impact Bonds (SIBs). These are “pay-for-success” contracts in which third-party investors provide the up-front financing for a programme or intervention designed to improve the prospects of a target group, such as individuals experiencing homelessness. At the conclusion of the programme, the SIB partners assess the extent to which the programme has achieved its desired outcomes through an audit or independent evaluation (Painter, 2021[42]). If the preset target outcomes are achieved, investors are repaid with a financial return (de la Peña, 2015[43]). In the United Kingdom, a London-based SIB programme identified 830 people experiencing homelessness and five types of indicators (e.g. reduction in the number of street homelessness, reconnection to employment). The programme reached its desired results and allowed the investors to be paid back with interest. Payments to investors are made based on the agreed-upon returns. A 2022 study reviewed 32 SIBs for homelessness implemented in Australia, Belgium, the United Kingdom and the United States, and found that at least 14 met their target outcomes, but that improvements to outcome metrics and evaluation methods were needed to attract a higher scale of investors (Wang and Xu, 2022[44]).
Additionally, social impact investment property funds offer an alternative approach to raising capital for housing solutions. These funds leverage investment from local authorities, pension funds, and charitable foundations to acquire and refurbish properties, which are then leased to housing partners to provide safe, high-quality, and affordable housing for households in temporary accommodation. In the United Kingdom, the Resonance Homelessness Property Funds managed by the social impact investment company Resonance have housed over 3 300 people since 2013 (Resonance, 2024[45]).
For funders: How can Monitoring and Evaluation (M&E) be generalised as a requirement to access funding?
In light of the shortage of systematic M&E in the area of homelessness (Block 3), there is scope to leverage funding opportunities to strengthen the evidence base in terms of what works, ensuring that best practices are identified and applied elsewhere. Funding providers can play a key role in generalising M&E as a requirement to access funding.
Lessons can be drawn from the climate finance sector. The Green Climate Fund (the world’s largest funder in the sector) requires continuous monitoring of all funded programmes to assess the impact and adjust outputs as needed (Green Climate Fund, 2024[46]). Making M&E a prerequisite for accessing funding could help ensure policy implementation yields the results sought by the funder.
The Council of Europe Development Bank (CEB) has issued over EUR 10 billion in Social Inclusion Bonds since 2017, supporting vulnerable communities and fostering social cohesion across Europe (CEB, 2024[47]). These bonds focus on areas such as education, social housing, MSME lending, and health. The CEB requires all funded projects to comply with its environmental and social safeguards policy. Accordingly, the CEB enforces strict monitoring and evaluation of adherence to these standards throughout the project implementation cycle for all projects receiving financial support from the bank.
Improving transparency on how homelessness funding is allocated and the outcomes
Research shows that higher levels of budget transparency positively affect the quality of governance. This can include making the budget publicly available in a timely and comprehensive way, developing opportunities for civil society and the general public to engage in the budget process, and creating formal institutions (e.g. independent fiscal institutions, legislatures, and audit institutions) to understand, monitor, and influence how resources are spent (OECD, 2017[48]). While the following examples are not specific to the homelessness sector, they can provide inspiration to homelessness policy makers and practitioners.
For example, Ireland’s Department of Finance publishes monthly profiles of expenditures and revenues at the start of each year and these profiles form an important point of reference for monthly reporting to the public on budgeting execution. In 2015, Ireland introduced the new National Economic Dialogue (NED), which is a prebudget consultative forum, convened by the government, bringing together the various civil society interests, social partners and parliamentary stakeholders to discuss priorities for the October budget. The forum is held in June, after the government has determined (from its spring budget semester) the level of “fiscal space” available in the coming year, and before line ministries have submitted budget proposals.
There are several public budgeting initiatives at the city-level as well. For example, in 2016 in Paris (France), the city debated the allocation of EUR 30 million at a city-wide, arrondissement (city district), and school level. They also held dedicated forums for residents in low-income neighbourhoods designated by the city and held complementary citizen education initiatives on public financing. Since then, a public budgeting team meets regularly with a steering committee of high-level representatives to review proposed projects by theme. In tandem, the Paris City Council’s public housing company (la Régie Immobilière de la Ville de Paris) launched a participatory budgeting portal for the social housing they manage. Ten chosen projects were implemented with RIVP’s financial support (Cabannes, 2017[49]). The Madrid City Council in Spain launched an online platform for public participation in budgeting in 2015 to help foster trust, transparency, and direct citizen consultation (OECD, 2015[50]).
For fundraisers: How to design a homelessness programme or intervention that is attractive to funders?
Blending different funding instruments, including repayable (e.g. loans) and non-repayable (e.g. grants) instruments, can be effective in increasing the potential attractiveness of a programme or project from the perspective of funders. In addition, other strategies can help raise the profile of a funding application.
Aligning proposed projects with priorities of funding bodies and relevant stakeholders
A fundamental dimension of increasing an intervention’s “attractiveness” in the eyes of large funders is to ensure that the programme or project aligns with the broader priorities of the funder and any relevant stakeholders. In the context of the EU, for instance, subnational governments, NGOs and other entities that seek EU funding (see Box 7.2) should ensure that proposed projects align with the priorities of the Member States/national managing authority, and is compatible with the selection of projects by the managing authority during the negotiation and adoption of the programmes. In practice, this may mean adjusting a project’s scope and the proposal language to fit within the national frameworks.
In Spain, two NGOs, Hogar Sí and Provivienda, secured funding through the EU Next Generation Funds to finance two pilot Housing First projects. One of the projects, Derechos a la Vivienda, focuses on promoting housing solutions for people leaving care institutions (HOGAR SÍ, 2022[51]). One of the objectives of the EU Next Generation Funds in Spain is to promote a new economy of care and employment policies, as well as transforming, modernising, and enhancing social services, including housing (Fresno Consulting, 2021[52]). In this vein, within a public-private partnership, the government and social entities successfully aligned the project targets with the specific objectives of the EU Next Generation Funds to secure access to such funds.
Testing innovative solutions through pilot projects before scaling up
In Košice, the Slovak Republic, the DEDO foundation has supported households experiencing homelessness through a range of services, including access to healthcare and housing, primarily through a Housing First programme co-funded by the ESF (European Social Fund Plus, 2022[53]). The project’s positive outcomes helped design the Slovak Republic’s national strategy for preventing and ending homelessness.
In Czechia, the city of Brno launched a Housing First pilot project, offering housing solutions and support services to families experiencing homelessness. This initiative was funded by the ESF and was implemented in collaboration with civil society organisations and academia. The evaluation of the initiative showed that 96% of beneficiaries had maintained housing one year into the programme (Housing First Europe Hub; FEANTSA, 2022[29]). Building on the positive results, the Ministry of Labour and Social affairs issued a national call for funding Housing First programmes and provided guidance to applicants on how to prepare their applications.
The municipal Government of Rotterdam in the Netherlands manages Project 010, an initiative aimed at supporting young people aged 18 to 23 who are at risk of homelessness. Based on the principles of Housing First, the programme provides independent housing, financial assistance, and counselling services. Launched in 2019, evaluations have shown positive financial and social impacts. For every euro invested, the city government saves two euros due to reduced reliance on public services such as shelters. Additionally, each euro invested is projected to generate a net saving of EUR 1.5 in societal costs, including debt assistance and reducing school dropouts. The success of the programme has sparked interest in expanding it to other at-risk groups and scaling it up across the city (CEBEON, 2023[54]).
For fundraisers: How to identify funding opportunities that will help deliver on homelessness policy objectives?
Developing a pipeline of projects that are ready to finance, including scalable projects
In Catalonia (Spain), the Catalan Institute of Finance (ICF) is a beneficiary of a EUR 100 million loan from the Council of Europe Development Bank to support the expansion of social housing for vulnerable population groups across the region. The loan will co-finance a pipeline of operations managed by the ICF, including financial support for social organisations and municipalities to acquire housing units for social rent, as well as funding for social housing developers to build new units. Additionally, the loan benefits from an InvestEU guarantee, which aims to raise the total funding to EUR 200 million (CEB, 2023[55]).
For fundraisers: How to strengthen funding and financing expertise within the homelessness services sector?
Funding opportunities are also constrained by the limited capacity within the homelessness sector to manage this complex funding and financing landscape. NGO and service providers may not know that these funding sources are available, lack the training or time to put together a successful application, and find reporting requirements burdensome. This may make funding streams inaccessible, particularly for regions with the greatest resource constraints or those most siloed for national and subnational entities.
Efforts are currently underway to develop this capacity within the EU, through an EPOCH working group, co-chaired with the Council of Europe Development Bank. The aim of the working group is to map funding options and assist in developing projects aimed at tackling homelessness. In this context, the InvestEU Advisory Hub also supports the identification, preparation, and development of investment projects across the European Union. In addition, FEANTSA is convening mutual learning events aimed at building capacity, including in areas related to funding and financing for national and regional governments as well as service providers in the field of homelessness (more information available from FEANTSA).
Adapting lessons and approaches from the climate and energy sectors to build capacity for funding and financing for homelessness
The homelessness sector can also look to climate finance for funding directly, as housing solutions need to be upgraded in line with “green legislation”. Many low-income households live in older buildings that require energy-intensive processes to heat them (Taylor, 2021[56]). For example, the inhabitants of social housing estates in Warsaw, Poland, often live in homes that are heated with either coal stoves or electric heaters (Frankowski, 2022[57]). Renovation of the existing stock can mitigate energy poverty, and the climate finance sector can help funding towards this aim (Barnett; Ganzerla; Couti; Molard, 2024[58]).
Homelessness imposes high human and financial costs, with public spending often directed towards emergency responses rather than long-term solutions. The fragmentation of funding across different sectors and varying modalities across funding bodies hinder, among other factors, the efficient co‑ordination of resources.
This block presents innovative funding models such as revolving funds, social impact bonds, and partnerships between public and private sectors as potential ways to diversify and increase the financial support needed to address homelessness effectively. Monitoring and evaluation (M&E) should be expanded to ensure resources are used efficiently. To tackle homelessness effectively in the long term, it is crucial to expand the availability of affordable housing and increase investment in prevention programmes and Housing First initiatives. A growing body of research demonstrates that Housing First can be cost-effective for public budgets, as the savings generated often surpass the initial costs. This block provides recommendations for both funders and fundraisers, drawing on existing evidence and international experiences.
Building on these operational issues, the following recommendations can help policy makers and practitioners mobilising funding and financing and aligning incentive structures, for both funders and funding recipients:
For funders:
Identify and communicate policy objectives to be achieved and align funding and incentive structures accordingly.
Remove bottlenecks to funding integrated, long-term projects that combine both housing and service elements.
Mandate quality monitoring and evaluation (M&E) frameworks as part of funding obligations.
Ensure transparency in funding decisions and budget allocations related to homelessness.
Lay the foundation for long-term funding and financing for affordable and social housing, including through (revolving) fund systems, as well as systemic solutions to scale up Housing-led and Housing First solutions.
For fundraisers:
Map potential (supra-national, national, sub-national and non-public) funding sources, along with technical assistance needs.
Develop a pipeline of projects that are ready to finance, including scalable projects.
Address technical assistance needs in the homelessness services sector to develop skills to attract and manage funding.
More generally:
Adapt lessons from climate and energy funding and financing schemes to the homelessness and social policy sector.
Effectively communicate the rationale, the importance, and the social and economic benefits of funding Housing First programmes to the broader population.
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