Homeless shelters are a type of homeless service agency that provides temporary residences for homeless individuals and families. These shelters exist to provide residents with safety and protection from the weather while simultaneously reducing the environmental impact on the community.
They are similar to, but distinguishable from, various types of emergency shelters, which are typically operated for specific circumstances and populations. Extreme weather conditions create problems similar to disaster management scenarios and are handled with warming centers, which typically operate for short durations during adverse weather.
The homeless shelter is thriving in the United States because, on a single night, more than half a million Americans go homeless, which represents 0.2 percent of the US population. Of those homeless persons, 65 percent are sheltered whereas 35 percent are living on the streets. Please note that there are 11,180 Community Housing & Homeless Shelters in the US as of 2022, an increase of 1.3 percent from 2020.
Steps on How to Start a Nonprofit Homeless Shelter With Government Funds
Table of Content
1. Conduct Market Research
The first step in the market research process for homeless shelters is to develop market-based research questions in line with your overall business goals and objectives. In this regard, you should source information that will help you maximize your business, information that will help you know what your potential market is looking for from a homeless shelter, and that will help you operate your homeless shelter with less stress and more efficiently.
a. Who is the Target Market of a Homeless Shelter?
- Families (Homes)
- Victims of natural disasters, war, and abuse (Asylum Seekers)
b. Is Homeless Shelter a Profitable Business?
Not really because homeless shelters are more of charity, and operators of homeless shelters make money from donations, grants and fundraising et al. But it is important to state that the market size for the community housing and homeless shelters industry is $17 billion.
c. Are There Existing Niches in the Industry?
No, there are no existing niche ideas when it comes to a homeless shelter, but a homeless shelter may also specialize in offering some or all of the following services;
- Short-term emergency shelter for victims of domestic violence, sexual assault, or child abuse
- Temporary residential shelter for homeless, runaway youths, and families caught in medical crises
- Transitional and assisted housing for low-income individuals and families
- Volunteer construction or repair of low-cost housing
- Repair of homes for elderly or disabled homeowners
d. Who are the Major Competitors?
- The Bridge Homeless Recovery Center
- Volunteers of America
- The Bowery Mission Tribeca Campus – formerly New York City Rescue Mission
- Covenant House Georgia
- Union Station Adult Center
- Atlanta Mission: The Shepherd’s Inn
- Bucks County Emergency Homeless Shelter
- Twin Oaks Shelter
- Coalition For the Homeless
- Good Samaritan House Homeless Shelter
- Arlington Life Shelter
- Upward Bound House – Family Shelter
- HRA Men’s Shelter
- Austin Street Center
- MSC Homeless Shelter
- Pine Street Inn
- SHELTER, Inc.
- Alexandria Community Shelter
- Harvard Square Homeless Shelter
- Bethesda Project’s My Brother’s House
e. Are There County or State Regulations or Zoning Laws for Homeless Shelter?
Yes, there are county or state regulations and zoning laws for a homeless shelter, and players in this industry are expected to work with existing regulations governing such business in the county or state where their business is domiciled.
f. Is There a Franchise for Homeless Shelter?
Yes, there are franchise opportunities for homeless shelters, and here are some of them;
- STREATS (Strive To Reach Educate And Transform Society)
- Who We Are
g. What Do You Need to Start a Homeless Shelter?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Furnished and Equipped Facility (Homeless Shelter)
- Computers, Laptops, and Software Apps
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Startup Capital
Memorable Business Name ideas for Homeless shelter
- Home for All
- Saint Barnabas™ Homeless Shelter
- Helping Hands® Homeless Shelter.
- Safe Abode® Homeless Shelter
- Jason Jeffrey Memorial House
- Eden’s Garden® Homeless Shelter
- Paul Labium Homeless Shelter
- Inner City® Homeless Shelter
- All Colors© Homeless Shelter
- Theo Mission© Homeless Shelter
- Zion House® Homeless Shelter.
- Street Children® Homeless Shelter
- Jonathan Paddington® Homeless Shelter.
- Covenant Ministry® Homeless Shelter
- Rock Ministry® Homeless Shelter
- Paula and Paul® Homeless Shelter
- St. Lucas® Homeless Shelter
- Mother Therasa® Homeless Shelter
- Sister Rosaline Park® Homeless Shelter
- Chicago Boys® Homeless Shelter.
Register Your Business
a. What Type of Business Structure is Best for Homeless Shelter?
Generally, when starting a homeless shelter, the best choice for legal structure is to form a nonprofit corporation at the state level and to apply for 501(c)(3) tax exemption at the federal level. Please note that on the state level, you can file a nonprofit LLC for your homeless shelter.
You can apply for an exemption with an LLC, but you would need to be an LLC taxed as a corporation; then, you ask the federal government to treat your homeless shelter as a nonprofit or tax-exempt organization. Interestingly, in the United States of America, several states allow a nonprofit LLC, including California, Ohio, Michigan, Minnesota, and Tennessee. Texas allows the formation of an LLC with a nonprofit purpose.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Homeless Shelter?
- 501(c)(3) tax exemption at the federal level
- Health and Safety Permit
- Zonal Permits (Applicable in some cities)
- Signage Permit
- Operational State Facility Inspections
d. What Type of Certification is Needed to Open a Homeless Shelter?
These are some of the certifications you can work towards achieving if you want to run a homeless shelter;
- Community and Social Worker Certifications
e. What Documents are Needed to Open a Homeless Shelter?
These are some of the basic legal documents you are expected to have if you want to legally run a homeless shelter in the United States of America;
- 501(c)(3) tax exemption at the federal level
- Business and liability insurance
- Federal Tax Payer’s ID
- State Permit and Building Approval
- Certificate of Incorporation
- Fire and Safety Permit
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a homeless shelter, you may not need to file for intellectual property protection, copyright, patent, or trademark. This is because the homeless shelter does not require one except on rare occasions.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Homeless Shelter?
When it comes to starting a homeless shelter, the startup costs vary and it could range from $500,000 to well over $2 million.
b. What are the Costs Involved in Starting a Homeless Shelter
- The total fee for filing 501(c)(3) in the United States of America – $350 – $675.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines, and other software) – $3,300.
- Publicity, and promotion – $3,580.
- Insurance (general liability, workers’ compensation, and property-casualty) coverage at a total premium – $2,400.
- The cost of securing and reconstruction of the facility – $1.5 million
- Other start-up expenses including phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
- The cost for furnishing and equipping the facility: $500,000
- The cost of launching a website: $600
- The cost for organizing fundraising event: $10,000
- Miscellaneous: $5,000
c. What Factors Determine the Cost of Opening a Homeless Shelter?
- The size of the homeless shelter
- The choice of location
- The required licenses and permits
- The cost of hiring and paying an attorney and fundraiser
- The cost for branding, promotion, and marketing the homeless shelter
- The cost for the purchase of furniture, gadgets, and equipment.
- The cost for insurance policy covers
- The cost for registering the organization as 501(c)(3)
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
It is not compulsory to build a new facility for your homeless shelter, but if you have the required finance, it will pay you to build your homeless shelter from scratch. The truth is that building or reconstructing a homeless shelter facility will help you come up with an edifice that will conform to what is expected of a standard homeless shelter in your city.
e. What are the Ongoing Expenses of a Homeless Shelter?
- Supplies such as food, toiletries, cleaning chemicals, blankets and pillows et al
- Fueling and maintenance of the facility
- Utility bills – (internet subscriptions, phone bills, signage and software renewal fees et al)
- Salaries of employees
f. What is the Average Salary of your Staff?
- Chief Executive Officer (Owner) – $67,000 Per Year
- Facility Manager – $43,000 Per Year
- Fundraiser – $40,000 Per Year
- Accountant – $32,000 Per Year
- Facility Assistants – $25,650 Per Year
- Front Desk Officer -$25,000 Per Year
- Security Guards – $24,000 Per Year
g. How Do You Get Funding to Start a Homeless Shelter?
- Raise money from personal savings and sale of personal stocks and properties
- Raise money from the community via fundraising and donations
- Apply for a loan from your bank/banks
- Apply for business grants and seed funding from the government, donor organizations, and angel investors
- Source for soft loans from your family members and your friends.
Write a Business Plan
a. Executive Summary
Sister Rosaline Park® Homeless Shelter is a nonprofit organization that will be based in Rio Rancho – New Mexico and will major in the operation of homeless shelters to provide a variety of community housing services, including short-term emergency shelter for victims of domestic violence, sexual assault or child abuse; temporary residential shelter for the homeless, runaway youths and parents and families caught in medical crises.
b. Products and Service
Providing temporary residence for homeless individuals and families.
c. Mission Statement
Our mission is to help victims of domestic violence, sexual assault or child abuse, the homeless, runaway youths, and parents and families caught in medical crisis, and average low-income earning families find safe shelter in and around Rio Rancho – New Mexico.
Our vision is to become the number one homeless shelter in the whole of New Mexico.
d. Goals and Objectives
The goals and objectives of the homeless shelter are to provide accommodation for people who have nowhere to sleep. Hence homeless shelters are used to quickly deal with emergencies such as adverse weather conditions or domestic abuse.
e. Organizational Structure
- Chief Executive Officer (Owner)
- Facility Manager
- Facility Assistants
- Front Desk Officer
- Security Guards
a. SWOT Analysis
We have highly qualified and experienced social workers and fundraisers in our organization, and we are strategically located.
We critically looked into our business model and we were able to identify two major weaknesses. One is the fact that we are a new nonprofit organization and the second is that we may not be able to initially attract the required financial resources to run the organization as required.
The opportunities available to homeless shelters not just in the United States but across the globe are massive because, on a single night, more than half a million Americans go homeless, which represents 0.2 percent of the US population. Of those homeless persons, 65 percent are sheltered whereas 35 percent are living on the streets.
The majority of industry revenue comes from the federal, state, and local government-funded homeless and housing assistance programs. Any changes in funding or government policy will drastically affect industry revenue. Federal funding for social services is expected to decrease going forward, posing a potential threat to the industry.
b. How Do Homeless Shelters Make Money?
Homeless shelters make money from fundraising, donations, and grants from the government.
c. Payment Options
- Donation via bank transfer
- Donation via credit cards
- Donation via online bank transfer
- Donation via check
- Donation via mobile money transfer
- Donation via bank draft
d. Sales & Advertising Strategies
- Advertise your homeless shelter facility on community-based newspapers, local TV and radio stations
- Promote your homeless shelter facility online via your official website and all available social media platforms
- Introduce your homeless shelter facility by sending introductory letters alongside your brochure to charity organizations, churches, and key stakeholders in your city
- Print out fliers and cards and strategically drop them in offices, libraries, public facilities, and train stations et al.
- Make use of attractive handbills to create awareness and also to give direction to your homeless shelter facility
- Position your signage/Flexi banners at strategic places in and around your city
a. How Much Should You Charge for your Product/Service?
A homeless shelter is free of charge to all homeless people.
b. How Much Profit Do Homeless Shelter Owners Make a Year?
Although, homeless shelters make money via fundraising, donation, and grants from the government, yet the average homeless shelter makes on average $37,482 per year or $868 (2 percent) more than the national average annual salary of $36,614.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the homeless shelter
- The location of the homeless shelter
- The management style of the homeless shelter
- The business approach of the homeless shelter
- The advertising and marketing strategies adopted by the homeless shelter.
- The number of years the homeless shelter is in business
d. What is the Profit Margin of a Homeless Shelter?
The fact that homeless shelters operate as nonprofits means that they are not designed to make profit.
e. What is the Sales Forecast?
Below is the sales forecast (fundraising forecast) for a Homeless shelter based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year (FY1): $750,000
- Second Fiscal Year (FY2): $1.5 million
- Third Fiscal Year (FY3): $2.5 million
Set Up your Office
a. How Do You Choose a Perfect Location for a Homeless Shelter?
- The demography of the location as it relates to the number of homeless people
- The demand for the services offered by homeless shelters in the location
- The purchasing power of businesses and residents of the location (the poorer they are, the more likely they are to run to homeless shelters)
- Accessibility of the location
- The number of homeless shelters in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Homeless Shelter?
- San Diego, California (151,278 Homeless people)
- Hempstead, New York (92,091 Homeless people)
- Tallahassee, Florida (28,328 Homeless people)
- Dallas, Texas (25,848 Homeless people)
- Spokane, Washington (21,577 Homeless people)
- Springfield, Massachusetts (18,471 Homeless people)
- Salem, Oregon (15,876 Homeless people)
- Allentown, Pennsylvania (13,199 Homeless people)
- Atlanta, Georgia (10,443 Homeless people)
- Cincinnati, Ohio (10,345 Homeless people)
c. What Equipment is Needed to Operate a Homeless Shelter?
You should be prepared to purchase a public address system, first aid kits, and other related equipment that will aid you in carrying out your job. You will also need computers and laptops, an internet facility, telephone, fax machine, and office furniture (chairs, tables, and shelves), and all these can be gotten as fairly used.
When it comes to hiring employees for a standard homeless shelter, you should make plans to hire a competent chief executive officer (owner), facility manager, fundraiser, accountant, facility assistants, front desk officer, and security guards.
Launch the Business Proper
When it comes to an organization like a homeless shelter, fundraising events and dinners are usually the best way to launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party.
The bottom line is that with a proper launching of the homeless shelter, you will be able to officially inform people in your city that your homeless shelter is open to shelter the homeless and of course to receive donations.
a. What Makes a Homeless Shelter Successful?
- Strong and focused leadership
- Financially stability
- Passionate volunteer base
- Having an innovative fund-raising idea
- Following a clear vision
- Finding the right talent and network
- Building a strong organizational culture
- Maintaining excellent customer service and outreach
- Being open to change
- Security consciousness
- Accepting and learning from feedback
b. What Happens During a Typical Day at a Homeless Shelter?
- The homeless shelter facility is open for the day’s work
- The to-do list is reviewed by employees
- Most homeless shelters provide meals and low-cost board.
- Residents are assigned a case manager who will assist them with the issues they are dealing with. They can help them get the things they need by connecting them with relevant services.
- The residents are instructed to follow the light out time
- The circle starts the following day because most homeless shelters have staff that are available 24 hours a day.
c. What Skills and Experience Do You Need to Build a Homeless Shelter?
- Good managerial and human development skills
- Compassionate and Empathetic.
- Excellent communication and negotiation skills.
- Organizational skills.
- A strong understanding of how nonprofits are managed
- The ability to connect with homeless people.
- Good supervisory skills
- Experience in networking and fundraising
- Experience in working as a social worker
- Experience in managing people
- Experience in charity and business administration