America’s Approach to Homelessness: Solution or Subsidy?

Americans are spending billions on homelessness with little to show for it, according to a new analysis that questions whether the nation’s approach to the crisis is fundamentally flawed.

Despite record funding levels flowing to homelessness programs nationwide, the number of people living on the streets continues to climb. The U.S. Department of Housing and Urban Development recently reported 771,480 people experiencing homelessness on a single night in 2024—the highest figure ever recorded and an alarming 18% increase in just one year.

The Capital Research Center (CRC), a conservative policy group, argues in a new study that mismanagement rather than insufficient funding lies at the heart of America’s persistent homelessness problem. Their analysis examined 759 nonprofits that filed briefs in a 2024 Supreme Court case regarding public camping regulations and found these organizations collectively received $9.1 billion in funding, including $2.9 billion directly from government grants.

“What we’re seeing isn’t a shortage of money or compassion,” said a spokesperson for the CRC. “It’s a failure in how those resources are being deployed and tracked.”

The report contends many organizations originally founded to provide direct services to homeless individuals have morphed into advocacy operations that now dedicate substantial resources to lobbying, public relations campaigns, and legal battles rather than direct housing assistance or rehabilitation programs.

This transformation has created what the CRC describes as a “Homeless Industrial Complex”—a network of nonprofits and advocacy groups that, in the group’s assessment, have developed financial incentives to manage rather than solve the homelessness crisis.

The geographic distribution of homelessness remains highly concentrated. California and New York continue to report the largest homeless populations and the highest per capita rates in the country. While the national average stands at approximately 23 homeless individuals per 10,000 residents, California’s rate has climbed to 48, and New York’s has reached 81.

The CRC report specifically criticizes California’s Housing First policy, which prioritizes placing individuals in permanent housing without requiring participation in substance abuse treatment or mental health services. According to their analysis, after California mandated that nearly all homelessness funding follow this model between 2015 and 2019, the state’s unsheltered homelessness rose by approximately 47 percent.

Defenders of Housing First policies challenge this interpretation, pointing to multiple factors contributing to rising homelessness, including soaring housing costs, the fentanyl epidemic, and significant gaps in the mental health care system.

“The Housing First approach is based on the recognition that people need stability before they can address other challenges,” said a spokesperson for a national housing advocacy organization. “Blaming the model oversimplifies a complex problem with multiple causes.”

Amid the discouraging national trends, there are some bright spots. Veteran homelessness dropped by approximately eight percent nationwide over the past year, suggesting that targeted programs with clear metrics and strong accountability measures can produce meaningful results.

The federal government has increased funding for homelessness programs substantially over the past decade, with HUD’s homeless assistance grants growing from approximately $1.9 billion in 2014 to over $3.2 billion in 2024. State and local governments have similarly expanded their investments, with California alone committing over $20 billion to address homelessness since 2018.

Critics suggest that the focus on spending totals rather than measurable outcomes has created a system where funding increases are seen as success regardless of whether fewer people are experiencing homelessness.

“We need to fundamentally rethink how we measure progress,” said one policy expert not affiliated with the CRC study. “The metric shouldn’t be dollars spent or programs created, but people permanently housed and lives rebuilt.”

As policymakers and advocates continue to debate the most effective approaches, the CRC report leaves readers with a provocative question that cuts to the heart of the national discussion: Is America truly solving homelessness, or merely financing it?