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Stewart B. McKinney Homeless Programs


Posted Date: December 12, 1995

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The Stewart B. McKinney Homeless Assistance Act of 1987 has been the primary Federal response targetted to assisting homeless individuals and families. Its range and reach is broad, and its many programs support outreach, emergency food and shelter, transitional and permanent housing, primary health care services, mental health, alcohol and drug abuse treatment, education, job training, and child care.

The McKinney Act programs were designed to encourage partnerships, coordination, and collaborative mechanisms within States, communities, and nonprofit organizations. The six McKinney Act programs reviewed in this report make available a bundle of shelter options and supportive services to homeless individuals and families. Each program embodies its own unique, distinguishable mission within the larger context of the broad intent of the McKinney Act. This section of the report is intended to identify common themes among the McKinney programs reviewed in this report in order to move toward a better understanding of Federal homeless assistance strategies.

Individuals and families become homeless for reasons over which they may have little or no control. While poverty is generally a common denominator, other unfortunate circumstances increase the likelihood of homelessness for many individuals and families. Circumstances or factors that contribute to the risk of homelessness include an increase in the depth of poverty in society at large, lack of affordable housing options, health crises, divorce and separation, domestic violence, single parenthood among women, leaving home or "aging out" of foster care for unattached youth, and the deinstitutionalization of the mentally ill without preparing them for adequate living arrangements. (Priority Home! The Federal Plan to Break the Cycle of Homelessness, U.S. Department of Housing and Urban Development, March 1994, p. 25.)

The McKinney Act programs administered by HUD seek to respond to the range of situations evident among the homeless. In doing so, a spectrum of shared characteristics emerge that typify grantee responses:

  • Diversity of flexible responses.
  • Flexible, community-based efforts as the focus for resolving homelessness.
  • Leadership by secular, nonprofit providers.
  • Shifts in emphasis from shelter capacity to shelter and service quality.
  • Linkage between shelter assistance and supportive services.
  • Excellent leveraging ratios.
  • Positive client outcomes.

Programs also share negative administrative characteristics in their approach to their missions. These include:

  • Large administrative burdens, and poor coordination among programs and different administrative entities.
  • Incremental as opposed to comprehensive decisionmaking.
  • Limited funding and high demand.
  • Inconsistent program requirements, eligible applicants, and matching fund requirements.

Characteristics that typify grantee uses of the McKinney programs are discussed at greater length below.


Diversity of flexible responses: Taken individually, each of the five evaluated McKinney Act programs and SFPDI approaches homelessness from a different perspective; has different target populations; and employs different methods of assistance that vary in nature and in the length of time it is offered. There are also marked variations among program award cycles and reporting requirements. Taken as a set, they reflect a range of responses to the special situations of homeless persons that establish an understanding, growing in sophistication and depth, that concedes that homeless individuals are not a homogenous group, but in fact that they may have little in common with each other. The five evaluated McKinney Act programs and the SFPDI program offer flexible responses that range from providing emergency shelter and assistance, to permanent housing for target populations such as families, the elderly, persons with chronic disabilities, and veterans.

Flexible, community-based efforts as the focus for resolving homelessness: Each of the five McKinney Act programs places great emphasis on flexible, community-based solutions. This is true whether the emphasis is directed from the Federal level in terms of a particular program's set of rules and funding criteria, or allowed to evolve from the local level.

Of the four programs awarding funds on a competitive basis, SAFAH and SHDP allowed grantees the most flexibility and free choice in how they could apply funding within the parameters of eligible activities. The flexibility was creatively and responsibly used.

Examples of more restrictive competitive programs are the Section 8 SRO program and S+C. The Section 8 SRO program is a federally directed initiative that emphasizes community-based solutions to homelessness through creation of permanent housing alternatives by providing payments to property owners who create SRO units by rehabilitating existing community structures. The S+C program provides just rental assistance and requires local matches in supportive services of an equal or greater value.

The Emergency Shelter Grant Program is an example of a block grant program with flexibility. The block grant provides assured funding, though amounts will vary with appropriations that allow communities immense flexibility within an established framework of eligible activities to respond to requirements presented by the local homeless population.

Leadership by nonprofit providers: There is considerable consistency among project sponsors. A common characteristic of each program is that a preponderance of homeless providers are nonprofit organizations with upwards of 5 years of experience in providing service and shelter options to the homeless. In most cases, project sponsors provide shelter and services at several geographic locations. Most also had experience operating other types of facilities, such as day shelters, senior drop-in centers, child care centers, emergency shelters, youth centers, or counseling and health service centers.

This local capacity and leadership has given rise to policy and programmatic innovations that directly respond to specific homeless needs. This local response suggests there is a reservoir of local flexibility, dedication, innovation, and opportunity for coordination in meeting the needs of homeless persons. The demonstration of commitment and competence also suggests that the capacity exists to consolidate and simplify the McKinney programs.

Shifts in emphasis from shelter capacity to shelter and service quality: Recipients of SAFAH and ESG funds shifted their focus over time from adding shelter capacity to improving shelter and service quality, designing programs to promote recovery, and expanding shelters' repertoires of skill training, counseling, and other critical supports such as child care. The shift is particularly evident within the ESG program where the proportion of ESG funding used for capital projects dropped from a high of 53 percent in 1987 to a low of 20 percent in 1991. The dramatic shift included allowing a change in the amount of funding that could be applied to essential services and homelessness prevention.

Local grantees also suggested that ESG funds are initially needed to ensure that there were sufficient emergency shelter spaces available for various types of homeless individuals in a community. Once the facilities were in place and sufficient funds were available to ensure their operation, then the provision of services to meet the current and future needs of the homeless became paramount.

Funding priorities also showed a shift within the SAFAH program, with capital to noncapital expenses declining as grant periods lengthened. In projects awarded a 1-year grant, rehabilitation and acquisition costs amounted to as much as 78 percent of all costs. By contrast, where projects were funded for 5 years or more, similar capital costs accounted for no more than 25 percent of the total.

Linkage between shelter assistance and supportive services: All of the programs encouraged, if they did not require, provision of and access to supportive services. In addition, factors evaluated for competitive awards included the applicants' ability and commitment to service delivery.

The SHDP program, for instance, stressed integrating comprehensive services with transitional housing as a means to surmount problems facing many homeless individuals and families. Toward that end, sponsors of transitional and permanent housing provided flexible specific packages of services to meet individual needs of various homeless populations.

SAFAH, which did not earmark funds for particular homeless assistance, e.g., shelter acquisition or services, was used by grantees to provide a shelter/service continuum. For example, in addition to shelter, 87 percent of all SAFAH projects provided case management services. Well over half offered individual and family support that included housing location assistance, child care, job placement, and health services such as primary care, prenatal care, and substance abuse counseling.

Evaluations of the five McKinney Act programs indicate that local sponsors have achieved considerable success in creating partnerships to support shelter and service linkages and to enhance program flexibility.

Excellent leveraging ratios: Among shared characteristics to emerge from the evaluated McKinney Act programs has been the ability of local sponsors to effectively leverage community resources with available Federal assistance. This has meant that while the Federal Government's contribution to a project sponsor's budget may be as little as 5 percent, as is the case with the ESG program, the value and power of that contribution is realized many times over in the ability of a project sponsor to secure sizeable funding commitments from corporations, foundations, or other State, city, and county sources.

For example, each SHDP Transitional Housing dollar received for acquisition and rehabilitation was expanded by an additional $5.50 from other sources; each SHDP permanent housing dollar received for services and other operating costs leveraged $4.50. Although grantees were not required to match funding received from SAFAH, they raised approximately $2 for every SAFAH dollar received. Shelter Plus Care also achieved high leveraging outcomes, with resource pledges ranging from 1 to 6.5 times the HUD rental assistance. This Federal financial partnership has been essential to the success of homeless assistance organizations. The Federal contribution to a homeless shelter and service provider's budget often fills the critical gap in funding that allows a program's various components to mesh effectively.

Positive client outcomes: For each program, positive client outcomes have been documented. To varying degrees, depending on the characteristics of both the program and population(s) served, persons once counted as homeless are making a transition to independent living in permanent housing. The following findings illustrate positive client outcomes being registered by the five McKinney Act programs and SFPDI:

  • ESG grantees who funded homelessness prevention activities in FY 1991 reported helping 17,330 families to secure permanent housing.
  • Seventy percent of residents who graduated from SHDP TH projects at the conclusion of their assisted treatment program entered into stable housing arrangements.
  • Of residents of SHDP permanent housing programs, 69 percent retained stable housing arrangements for at least 1 year by remaining in a PH project. Approximately half of the PH residents who left the project entered alternative permanent housing situations.
  • SAFAH was successful in helping transitional housing clients obtain their own permanent housing in 63 percent of all cases.
  • Of the SROs created by the Federal program, more than half were 95-percent occupied within 1 year of completion. These units provide a form of affordable, permanent housing for homeless individuals.

These client outcomes suggest that the homeless programs are achieving their objectives. In addition, these outcomes help define how a continuum of care can encompass the three components of outreach and emergency shelter; transitional housing; and supportive, permanent housing within a community.


Individual McKinney Act programs have greatly enhanced State and local governments and nonprofit responses to homelessness. However, grantees feel that the variations in purposes, methods of award, types of Federal assistance, timeframes, and reporting requirements have posed major obstacles to effective use of Federal assistance.

The shared negative administrative characteristics associated with award decisionmaking that emerged from evaluation of the McKinney Act programs created barriers to a more comprehensive and effective effort to end homelessness. Grantees were frustrated with what they perceived as categorical, discrete funding sources that appeared to require maximum effort for minimum funding. In addition, grantees expressed concern about time-consuming application procedures, confusion among multiple programs with differing purposes, and different award criteria. These negative issues center on how program and funding decisions are made at the Federal rather than local level.

Lack of information: Lack of information as a barrier was most clearly expressed in GAO's review of the Single Family Property Disposition Initiative. In spite of their interest in and recognizing the need for obtaining federally held properties, the Nation's nonprofit organizations involved in assisting the homeless have participated minimally in any of the programs that would provide them such property. This situation is attributed to a lack of the necessary information that would allow them to make informed decisions about participation: knowledge about existence of programs, how the programs operate, and availability of specific local properties.

The ESG grantees expressed a need for greater coordination between HUD and other Federal agencies; HUD and the States; the different State agencies involved in administering homeless programs; and the States, counties, and cities with overlapping ESG jurisdictions. SHDP Transitional Housing grantees complained of cumbersome application procedures and complex, redundant reporting requirements. (Since these observations the HUD administrative office has simplified applications and reporting requirements.)

Decisionmaking: Grantees expressed concerns that the multiple McKinney programs made it difficult to develop comprehensive local homeless programs. Decisionmaking was difficult due to the uncertainty of competitive awards and categorical redundancies. Grantees stated a need for a broader block grant as a vehicle to streamline the process of obtaining Federal funds or reducing reporting requirements seen as excessive, as well as reducing administrative fragmentation and operations overhead.

ESG homeless providers often expressed frustration with problems associated with assisting their clients in accessing permanent housing or housing subsidies. They viewed broadening the block grant as a way for the agencies to advance in the direction of transitional and permanent housing for homeless clients.

Limited funding and high demand: Across all programs, lack of sufficient funding was cited as an overarching issue.

The Shelter Plus Care evaluation found that the high administrative costs of implementing the program were not reimbursable by the S+C grant or authorized support services. The evaluation also noted the amount of time incurred in developing and negotiating agreements and operational procedures with sponsors and supportive service providers.

For the homelessness assistance organizations participating in the Single Family Property Disposition program, the issue was expressed as follows: once homelessness assistance organizations learn how HUD's disposition program works, they have found a major constraint to be that of finding the financial resources necessary to acquire more property in the program; participating organizations have been relatively unsuccessful in using Federal funding assistance to help defray foreclosed property costs; and the organizations reliance on Federal assistance will most likely require additional Federal financial help in reducing those financial barriers.

Matching fund requirements: Although most project sponsors were able to achieve significant leveraging ratios of Federal to local funds, the requirement of a match in most programs was met only with some difficulty. ESG providers found that "they are able to raise funds from private sources for special services and programs but find it difficult to 'sell' these supporters on paying the rent or the utilities." In practice this meant that private sponsors were not always actively willing to support the same set of activities that were eligible for Federal funding under one of the McKinney Act programs.


The McKinney Act programs administered by HUD have assisted significant numbers of homeless persons to regain independence and permanent housing and at reasonable costs. Even with the successes, homeless is not yet conquered. Widespread poverty or disabilities continue to lead to new homelessness.

The partnership of governments with nonprofits to simultaneously focus on the full array of human needs is relatively unique in an era of institutionally separated housing and service delivery systems. These comprehensive homeless assistance strategies may hold important lessons for the pressing need to reform welfare, assisted housing, job training, and mental health and substance recovery programs.

Even given the early positive effects of the McKinney homeless programs, there is a pressing need for program improvement. It is time to seek a consolidation of and simplification of the McKinney Act's programs in order to better support local efforts to design effective continuums of care for their homeless populations.

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