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What We Learned About Emergency Shelter

Emergency shelter is one part of a larger continuum of services meant to help people experiencing homelessness ultimately transition to permanent housing. Not intended to be a permanent solution on its own, the role of an emergency shelter is to offer a crucial service to those on the path out of homelessness — a night of safe shelter. The ImpactMatters team researched a large swath of emergency shelter nonprofits in order to give donors accurate estimates of their impact. We were able to find data on 390 nonprofits, who spend a total of $273,576,685 to provide 9,275,738 nights of emergency shelter, and learned some interesting things along the way.

First, a brief breakdown of our process. We determined impact by counting up the total nights of shelter (“shelter-nights”) a nonprofit provides in a year, using data it reports, and comparing shelter-nights to total program cost. There are, of course, more nuances involved, which you can read about here. We then determined cost effectiveness by comparing the cost per shelter-night to the market rate an individual would have to pay for a night of housing — a value known as Fair Market Rent, which comes from the Department of Housing and Urban Development (HUD). Why? Imagine two alternative uses of the same resources: A nonprofit could spend resources to shelter a beneficiary. Or, alternatively, the beneficiary could spend the same amount of resources on the housing market to obtain shelter herself. If scenario A stretches resources further than scenario B, then we would conclude the nonprofit is cost-effective. [You can read more here about when and why we use market rates as benchmarks.]

However, we did make some adjustment for the fact that shelters have to take on additional costs above market rates to address the particular challenges that come with housing populations of mostly chronically homeless people (more on that below). With that caveat in mind, if a nonprofit provides shelter for less than 400 percent of Fair Market Rent, we consider it cost-effective (4 stars); less than 200 percent and we consider it highly cost-effective (5 stars).

Based on data published by the nonprofits, nonprofits earned the following star ratings:

Rating

Criteria

Number of nonprofits

5 stars

Program provides a night of shelter for less than 200% of Fair Market Rent

167

4 stars

Program provides a night of shelter for between 400% and 200% of Fair Market Rent

140

3 stars

Program provides a night of shelter for more than 400% of Fair Market Rent

83

2 stars

Nonprofit does not publish impact information

0*

1 star

Nonprofit has potential governance or financial health issues

0

* We are temporarily withholding 2-star ratings to give nonprofits an opportunity to publish data

What we learned

1. There are specific challenges to housing chronically homeless populations that lead to shelters taking on high costs

In the real estate market, providing housing to a chronically homeless person is difficult because landlords reject their applications and chronically homeless people tend to have co-occurring conditions, like addiction or mental health issues, that can make permanent housing challenging. This means that the Fair Market Rent doesn’t really accurately reflect what homeless people face. Housing people experiencing homelessness involves taking on costs that private market landlords don’t have to, which is why we find shelters have to spend well above Fair Market Rent to provide housing.

2. This points to the fact that shelters operate in an unideal policy environment

We didn’t want to fault nonprofits for the fact that it’s costly to house a person experiencing homelessness. As long as there are such substantial structural barriers to escaping homelessness (e.g., landlord discrimination, high upfront costs to obtain housing and lack of treatment for ongoing health issues), nonprofits will have a difficult time providing shelter for less than market costs.

3. Emergency shelters are good at reporting data

We were able to evaluate more emergency shelters than any other type of nonprofit. This was thanks to many nonprofits who reported annual shelter nights on their own, and also to requirements from HUD that emergency shelters participate in what’s called the Point-in-Time count, which, with some minor adjustments, we can use to estimate annual shelter-nights provided. 

What we still need to learn

1. Do costs change depending on specific demographics served?

Certain emergency shelters may specialize in helping veterans, victims of domestic violence, homeless youth, people with H.I.V./AIDS and other specific groups experiencing temporary or chronic homelessness. It could be that there are unique costs or challenges to reaching and helping these folks. It could also be that these groups are in some ways easier to serve than a general homeless population. Right now, we don’t know either way; we just don’t have enough data.

2. How does quality differ across shelters?

Our analysis assumes that one shelter night = one shelter night, no matter where you are. We know however, that some shelters differ on key dimensions like safety, the percent of beneficiaries who exit to “positive destinations” as defined by HUD, and whether there are also other social services available. Unfortunately we just don’t have all the shelter-level data on these attributes we would need to fold them into our evaluations.