Navigating the Fundamental Reorientation of Federal Homelessness Policy (FY25 HUD CoC NOFO)
- Rhonda Bohs, PhD
- Nov 17, 2025
- 4 min read
By Rhonda Bohs, PhD, HiQuity Solutions
The FY25 HUD Continuum of Care (CoC) Notice of Funding Opportunity (NOFO) represents a fundamental reorientation of federal homelessness policy. It is a structural rewriting of what the Department of Housing and Urban Development (HUD) believes homelessness programs should accomplish and how communities should be scored and funded. This is not an incremental shift, but a complete reversal of the foundational principles that have guided homelessness work for two decades.
Core Policy Shift: From Housing First to Treatment-First
For more than twenty years, communities operated under a Housing First framework that rewarded low-barrier access, voluntary services, and permanent housing stability. The new NOFO dismantles that foundation and replaces it with a treatment-first, compliance-driven model.
New Policy Priorities:
Mandatory Participation: The new model rewards programs that require people to participate in treatment, recovery services, and employment programming as a condition of assistance. It prioritizes mandatory service participation and employment outcomes.
Intensive Services: Projects must demonstrate structured, intensive service engagement. Some projects are required to document up to 40 hours per week of customized services for each participant.
Program Focus: The NOFO prioritizes transitional housing and service-heavy models.
Law Enforcement Alignment: The policy emphasizes formal cooperation with law-enforcement strategies intended to reduce encampments and public disorder. Outreach teams will face new expectations to align with encampment enforcement.
Coordinated Entry: Coordinated entry systems will be judged in part on their willingness to move people into programs with mandatory participation requirements.
Funding Threat and Program Viability
The immediate pain point for providers is the looming threat to permanent housing programs.
Funding De-Prioritization: CoCs previously spent the vast majority of their funds on permanent supportive housing (PSH) and rapid rehousing (RRH) because the federal scoring system required it. Under the new rules, these permanent housing types will be subject to funding caps and implicit pressure to reallocate dollars to transitional housing and service-heavy models.
Risk to Existing Portfolios: Providers who have built successful permanent housing portfolios face the possibility of losing renewal funding. This instability is happening while HUD is explicitly signaling future reductions in permanent housing dollars, creating a volatile and confusing landscape for planning and budgeting.
Impact on Vulnerable Populations: This shift is a direct threat to housing stability and program viability for organizations serving people with serious mental illness, addiction, chronic health conditions, or disabilities. Many individuals in these groups cannot meet the new short-term employment requirements or high-participation thresholds.
Operational and Philosophical Conflicts
The new funding framework creates philosophical tensions and logistical challenges:
Conflict of Values: Providers operating from a harm-reduction or trauma-informed perspective will find themselves at odds with the funding framework. HUD has introduced language that disfavors harm-reduction approaches and restricts the use of gender-inclusive policies.
Political Components: The NOFO contains politically charged components, utilizing rhetoric aligned with recent executive orders focused on “crime and disorder” and spotlighting faith-based organizations. Many providers will feel caught between their mission, values, legal obligations, and the new policy direction.
Timing Crisis: Providers will struggle with the timing, as HUD abandoned the previously announced two-year funding cycle and released the NOFO months late. This created the possibility of a funding gap in early 2026 that could leave rental assistance unfunded for months. This uncertainty is an operational crisis for organizations without reserves, risking unfunded costs, staff instability, and interruptions in tenant assistance.
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Litigation Risk: Several CoCs and national organizations are already preparing litigation. This means providers will be operating in an environment where rules may change again mid-cycle, creating significant anxiety and uncertainty for leadership
The Need for Strategic Support
This moment requires 1) policy translation, 2) strategic foresight, 3) program redesign, and 4) organizational crisis-response planning.
We are here to help providers understand, in plain language, what these changes mean and what adjustments are necessary to remain competitive and protect those they serve. Ultimately, it will all come down to infrastructure, unified front doors, fiscal accountability, and data-completeness.
Support needed includes:
Portfolio Analysis: Identifying which programs are vulnerable under the new scoring structure.
Program Redesign: Rewriting program models to credibly demonstrate the treatment, employment, and service-engagement elements HUD now expects.
Risk Mitigation: Preparing risk assessments that map out the potential financial and operational impacts of lost funding, and constructing contingency plans that anticipate funding gaps, rental-assistance interruptions, or forced program redesign.
Strategic Interpretation: Providing clear explanations of complex federal shifts without ideological spin, offering honest guidance, and helping providers navigate the tensions between federal expectations, local political dynamics, and their organizational missions.
This level of data-driven support will help organizations across the country adapt to the most consequential federal homelessness policy change in a generation.
An initial sustainability assessment is not just a diagnostic tool; it is a strategic intervention, a multi-use instrument that, when deployed with precision, captures real-time data across funding streams, service delivery models, workforce capacity, and program alignment.
This is no longer a “nice to have.” When programs are under threat and teams are overwhelmed, having a clear, data-informed picture of current capacity is not optional, it becomes a critical step toward stabilizing operations. In crisis conditions, clarity creates space and the ability to take a couple of necessary breaths before committing to necessary action. A sustainability assessment allows leadership to pause the panic or avoidance spiral, assess the ground the organization is standing on, and create just enough mental distance to begin envisioning what can still be preserved, strengthened, or rebuilt.
It provides a unified, actionable foundation for making high-stakes decisions with confidence. It breaks down silos, uncovers inefficiencies, and highlights where redesign efforts can produce meaningful returns in performance, financial stability, and outcomes for those served. In moments defined by policy disruption and shrinking timelines, this kind of integrated analysis becomes non-negotiable. It enables organizations to act with urgency, integrity, and strategic foresight. The redesign window is short for many, from six to nine months, and the cost of delay will be measured in programs lost and lives affected. The time to act is now.
U.S. Department of Housing and Urban Development. (2025). FY 2025 Continuum of Care (CoC) Program Competition NOFO. Grants.gov. https://www.grants.gov/search-results-detail/360861
Rose, S. (2025, November 14). Trump administration plans major shift away from long-term housing for homelessness. NPR. https://www.npr.org/2025/11/14/nx-s1-5553561/homelessness-housing-funding-trump-administration-hud
Reach out to schedule a Sustainability Consultation with our team today.
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