Everything You Need to Know About the Continuum of Care and Youth Homelessness Demonstration Program Notice of Funding Opportunity

On Monday, December 8, the Fiscal Year 2025 Continuum of Care and Youth Homelessness Demonstration Program Notice of Funding Opportunity (NOFO) was deleted​​ from the federal government’s grants page (grants.gov). The U.S. Department of Housing and Urban Development has pulled the NOFO amidst the two lawsuits challenging it.

• HUD temporarily pauses homelessness funding overhaul just ahead of court hearing | POLITICO (12/8/25)
• Intentional Chaos’: Judge Chastises HUD in Dispute Over Homelessness Programs | NOTUS (12/8/25)

At this time, we don’t know if and when the NOFO will be re-released. We will keep you posted as we learn more information.

On November 13, the U.S. Department of Housing and Urban Development (HUD) released the Fiscal Year 2025 Continuum of Care and Youth Homelessness Demonstration Program Grants Notice of Funding Opportunity (NOFO). This NOFO is one-year funding for Continuums of Care (CoC) and for renewals, replacements, or reallocations of current Youth Homelessness Demonstration Program (YHDP) grants.

The NOFO makes available $3.9 billion for CoCs, which includes $228 million specifically for renewals, replacements, or reallocations of current YHDP projects. Applications are due January 14, awards are expected May 1. This timeline means that many CoCs will experience a gap in funding.

HUD’s messaging emphasizes that this NOFO is the most funding that has ever been available for homelessness programs. While this is technically true, it’s only because this NOFO includes funding from previous Fiscal Years (FY) that was not allocated because Congress has not engaged in a regular appropriations process (how they fund the federal government) since FY 2024—not because HUD is committed to increasing investments in homelessness programs.

Below is a breakdown of previous FYs’ funding for the CoC program, and how they appear in this NOFO:

$3.544 billion for Continuum of Care (CoC), of which:​

• $107 million shall be for new YHDP in up to 25 communities, of which
  • Not less than $25 million shall be for new YHSI grants.

$290 million for Emergency Solutions Grants (ESG) (awarded as a formula grant).

$3.544 billion for CoC program, which includes:​​

• $107 million for new YHDP/YHSI.
• Allows $100 million in FY 2024 Builds money to be repurposed.

$290 million for ESG​ (awarded as a formula grant).

$3.918 billion in available funds, which come from:​

• $3.544 billion from FY 2025 CoC.
• $100 million which is repurposed from FY 2024 Builds money (which was eligible for repurpose under FY 2025 Appropriations).
• $294 million in reclaimed CoC funds.

• $52 million for domestic violence, dating violence, sexual assault, or stalking projects.
• $129 million for renewal projects under the Unsheltered and Rural Homelessness Supplemental NOFO.
• $228 million for competitive renewal, replacement, or reallocation of current YHDP grants.

This list is not exhaustive, but it includes the most concerning changes that will impact youth as well as adult programs: Cap on Permanent Housing, Changes to Competition, Project-Level Review Changes, CoC-Level Review Changes, and Encouraging Solo Applicants.

Nationally, about 90% of CoC funding is spent on permanent housing (PH), which includes permanent supportive housing (PSH), rapid rehousing (RRH), and joint projects (TH-RRH). Under the new NOFO, a CoC’s spending on PH is capped at 30%. The remaining CoC funding must go to transitional housing (TH), supportive services only (SSO), and HMIS.

The NOFO awards an additional point for PSH projects that prioritize the elderly and/or individuals with a physical or developmental disability, not including substance use disorder.

Nationally, there are 16,369 PH beds dedicated for youth under age 24 and 392,014 beds and units for families with children. It is very likely that these set asides will decrease dramatically as CoCs prioritize their limited PH funding for the elderly, those with disabilities, and those experiencing chronic homelessness.

It is expected that PH projects exceeding the 30% cap may transition to another project type, such as TH. However, providers cannot simply transfer clients between PH and TH projects. In other words, you can’t change project type and automatically keep the same clients. Clients must be exited from the original project and meet the eligibility requirements to re-enroll in the new one. This is very concerning, since HUD’s narrow definition of homelessness will likely prevent many individuals who are currently in PH from re-enrolling in a program forced to change project type.

The entire CoC portfolio is now competitive. This means that projects that previously received noncompetitive renewals, like YHDP or domestic violence bonuses, must now compete alongside all other projects within the CoC.

In addition to this, the competition for funding between projects and between CoCs will be much more difficult. This is because HUD has changed the percentage that can be used for Tier 1 funding (protected funding for renewals) from 90% to 30% of a CoC’s Annual Renewal Demand. Since PH is also capped at 30%, it is likely that most CoCs will fill their Tier 1 funding with PH projects. This means that all other projects must be ranked in Tier 2. Tier 2 awards will be based on:

• The project-level criteria (quality, threshold, risk).
• The project’s ranking within the CoC (all projects must now be ranked).
• How many of the CoC’s projects require supportive services.
• The CoC’s merit score.

These changes not only increase the competition for Tier 2 funding between projects within a Coc, but they also increase competition between CoCs. If a CoC scores poorly on the supportive service requirements and/or the merit score, then it will lose Tier 2 funding to a higher-scoring CoC​.

Most individual projects are required to meet the new project-level criteria included in the NOFO. HUD awards points for how well projects align with the NOFO’s requirements. The changes include:

• Incentivizing Service Requirements for TH Projects​​ For 2 points, TH must provide 40 hours per week of customized services to every participant.
  • The 40 hours can be adjusted based on employment schedule, but the NOFO doesn’t explicitly state if they can be adjusted based on education schedule.
• Evaluating a Project’s Previous Activities​ Applicants can be rejected if they have previously or currently “subsidize[d] or facilitate[d] racial preferences” or “conduct[ed] activities that rely on or otherwise use[d] a definition of sex other than as binary in humans.” In other words, applications can be rejected if they ever engaged in DEI and/or gender-affirming activities—both of which were requirements under previous NOFOs.
  • This highly problematic provision is being challenged in the lawsuits. Basically, they are seeking to penalize providers for following previous NOFO requirements.
• Requiring Street Outreach Programs to Offer Supportive Services Applicants under SSO-Street Outreach must have a strategy for providing supportive services to those they engage with, “including those with histories of unsheltered homelessness and those who do not traditionally engage with supportive services.” If projects cannot show this sufficiently, their application will be rejected.

CoCs must also undergo a review, part of which includes how well their projects adhere to the requirements in the NOFO. Changes include:

• Heavily Incentivizing “Public Safety” Initiatives​​ 13 points are awarded if the CoC can show:
  • Their state and/or local government that covers the entire geographic area has laws and/or “protocols” to ban encampments and public drug use.
  • Utilizes policies such as involuntary commitment.
  • States comply with requirements under the Sex Offender Registration and Notification Act.
  • “Assists” law enforcement in activities like breaking up encampments.
• Incentivizing Verifying Immigration Status​ 4 points are awarded if all of a CoC’s projects verify immigration status before enrolling someone in services.
• Incentivizing Supportive Service Requirements for all Projects CoCs must identify how many of its projects require supportive services:
  • 10 points if 100% of the CoC’s projects have participation requirements.
  • 5 points if 50% have participation requirements.

Solo applicants may submit an application apart from their CoC if they have “attempted to participate in the continuum of care process but [were] not permitted to participate in a reasonable manner.” Solo applicants aren’t new, but HUD has been heavily emphasizing this pathway since the NOFO was released.

Funding solo applicants allows HUD to fund applicants directly without them having to be part of the CoC ranking/merit review process. HUD could be encouraging this pathway so it can fund projects that more closely align with the Administration’s priorities over the community’s priorities.

The NOFO provides $228 million in funding for YHDP renewal, replacement, and reallocation. There is no funding for new YHDP communities or Youth Homelessness System Improvement (YHSI) grants under this NOFO.​​​​

Looking at the funding table above, there is $214 million in unspent funding for new YHDP/YHSI awards ($107 million from FY 2024 and $107 million from FY 2025). This $214 million is different from the $228 million included in this NOFO for renewals, replacements, and reallocations. As such, we believe that standalone NOFOs to solicit new YHDP and YHSI awards are forthcoming.​​​ We do not know when, but considering the current CoC NOFO lawsuit, it is unlikely to be anytime soon.

Additional YHDP information from the NOFO:

• All YHDP renewals and replacements must now compete as part of the process outlined above. Previously, most YHDP projects were renewed noncompetitively.
• Youth Action Board (YAB) approval is now needed to renew or replace a project under YHDP’s Innovative Activities. This could impact communities that disbanded their YABs due to lack of funding (YHDP only funds YABs for two years—from there, CoCs can choose whether or not to continue funding YABs. Unfortunately, few CoCs choose to continue supporting their YAB).
• YHDP reallocations can now only​​ go to youth-serving projects. This is good—the previous NOFO allowed the very limited funding set aside for youth projects to be reallocated to non-youth projects. However, the NOFO does not state that YHDP reallocations have to go to other YHDPs—just to youth-serving projects.
• Some YHDP communities that were awarded in FY 2023 are still awaiting their grant agreements. While there is no set timeline for those agreements, this NOFO does not​ impact your FY 2023 grant agreement.

Some of the NOFO’s changes are legal, some toe the line, and some are likely not legal.

So far, an injunction has not been issued. This means that a judge has not yet temporarily stopped HUD from proceeding with this NOFO as written. As such, providers and CoCs should continue to work on their applications in line with the NOFO’s current requirements, just in case the lawsuit is not successful.

First, we recommend providers and CoCs continue to work on their applications in line with the NOFO’s current requirements, just in case the lawsuits are not successful, or does not require provisions in the NOFO to change completely.

Additionally, some localities have been leaning on their city, community, and state governments to fill in the gaps left by the federal government. For example, the Seattle/King County government is planning to pay to maintain the area’s current PH beds and the CoC will use federal funding for TH and SSO projects. In Hawaii, the state legislature set aside $5 million in the state’s budget to award one-time grants to any nonprofits that lost federal funding. The Hawaii Youth Services Network was awarded $600,000 to maintain their street outreach program after the federal Runaway and Homeless Youth Act Street Outreach Program grant was not released this year.

Date​ Tuesday, December 16, 2025Time 1:00 – 2:00 PM Eastern (12:00 PM Central, 11:00 AM Mountain, 10:00 AM Pacific)

Join NN4Y for a year-end federal policy roundup for members! We will recap the major advocacy efforts taken by youth providers and young leaders this year and the wins those efforts secured. We will also look to our federal policy priorities for next year, the challenges that lie ahead, and how we will work together to keep transforming systems and policy to prevent and end youth, young adult, and young parent family homelessness.

This session is open to NN4Y members. To join, please complete this registration form. Once your membership is confirmed, you’ll get the join link by email.

For any questions, email member@nn4youth.org.

NN4Y will continue monitoring the situation and sharing updates on how this reopening process affects youth homelessness programs and grantees.

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