How Much Does It Cost to Start a Homeless Shelter? (Revenue Forecast and Breakeven Analysis Included)

It will cost you about $200,000 to start a small-scale homeless shelter and $1,000,000 or more to open a standard homeless shelter.

However, it is important you know that your exact startup cost will vary due to the influence of certain factors, which we will discuss in this article.

According to reliable reports, at least 2.5 to 3.5 million Americans per year are sleeping in shelters, transitional housing, and public places not meant for human habitation. About 7.4 million more individuals are displaced from their homes due to economic reasons.

A homeless shelter more or less starts with a group of individuals who want to develop a plan to help people in the community who need shelter.

This idea eventually graduates into a plan to put up a homeless shelter. Most homeless shelters are being funded by sponsors such as hospitals, companies, professionals, and individuals.

Also note that organisations that manage homeless shelters (or sponsor them) create events that can benefit homeless individuals.

Such charity events are very common, such as lavish gala dinners and small bake-off festivals. For adequately funded homeless shelters, they are able to provide programs for homeless people so that they will feel that they belong to the community.

In these shelters, homeless individuals usually check in between 5:00 PM and 7:00 PM. Most shelter allows individuals to stay in for the night or a couple of days. Exceeding the allowable number of days will mean having to pay for each night after.

Estimated Cost Breakdown for Opening a Homeless Shelter

1. Property Acquisition or Lease:

• Purchase: $300,000 – $600,000 (depending on location and size)
• Lease: $50,000 – $100,000 (first year’s rent, possibly including security deposit)

2. Renovations, Repairs and Modifications to meet zoning, safety, and operational requirements: $50,000 – $200,000

3. Furnishings and Equipment: $50,000 – $150,000

Annual Operating Expenses

1. Utilities (Electricity, water, gas, internet, and waste removal): $20,000 – $40,000
2. Insurance: $10,000 – $30,000
3. Staff Salaries for administrative staff, care workers, and security personnel: $200,000 – $400,000
4. Food and Supplies: $100,000 – $200,000
5. Professional Services (Legal, accounting, and consulting services): $20,000 – $50,000
6. Programs and Services (Educational programs, job training, counseling services, and recreational activities): $50,000 – $100,000
7. Marketing and Fundraising: $10,000 – $30,000 (initial budget)
8. Emergency Fund/Contingency: $100,000 – $150,000

Total Estimated Cost of Opening a Homeless Shelter: $960,000 – $1,850,000

Revenue Sources

1. Government Contracts and Grants: $300,000 annually
2. Private Donations: $100,000 annually
3. Fundraising and Other Income: $50,000 annually

Yearly Financial Forecast

Year 1 – 3 Revenue:

• Total Annual Revenue: $450,000 (Government Grants + Private Donations + Fundraising)

Year 1 – 3 Costs:

• Total Annual Operational Costs: $600,000 (Sum of all operational costs)

Net Profit (Loss):

• Annual Net Profit (Loss) = Total Annual Revenue – Total Annual Operational Costs
• Year 1 – 3: $450,000 – $600,000 = (-$150,000) annually

Breakeven Analysis

To reach the breakeven point, your homeless shelter needs to either increase its revenue streams or decrease its costs to make up for the $150,000 annual shortfall.

This might involve securing more government contracts, increasing private donations and fundraising efforts, or finding ways to reduce operational expenses.

Breakeven Solution:

• Increase Revenue: You can aim to increase the total annual revenue of your homeless shelter to at least $600,000 to match operational costs.
• Reduce Costs: Alternatively, you can choose to explore opportunities to lower expenses in your homeless shelter without compromising the quality of care and services.

6 Factors That Determine the Cost of Opening a Homeless Shelter

By starting a homeless shelter you can aid your fellow man and also offer great services to your community. Aside a kind and compassionate spirit, homeless shelters require resourceful and level-minded staff to create a sustainable environment that will provide for the poor and the needy.

Note that starting or working in a homeless shelter will not only provide those in need with food and a roof, it will enable you to find a fulfilling position.

On the average, a homeless shelter in the United States will cost about $82 per square foot. If you have decided on the size of your shelter, all you have to do is multiply the number of square feet by $82. Although this is just an average, it is advisable to consider the factors analyzed below.

1. Location

One of the first steps in starting a homeless shelter is to find a large and viable location to hold those staying there. Also have it in mind that where your shelter will be located has an enormous effect on the cost of construction.

If you decide to build a homeless shelter in high end cities like New York, you should expect to pay a lot more than average; it may cost you almost $120 per square foot.

For a homeless shelter in Dallas, expect to be at the lower end of the scale – around $80 – $98 per square foot. The cost per square foot varies for a number of reasons. For instance, the costs of land varies from city to city. Buildings in Vegas tend to be more expensive than buildings in Rhodes.

Also note that location will also determine how much you’ll be spending on labour. For instance, construction workers in New York make an average of $43,311 per year but those in Alabama make just $28,580. The cost of materials also depends in part upon where you build.

2. Building Size

To clearly estimate the cost of building a homeless shelter, you also have to take size into consideration. Constructing a 2-story homeless shelter is a lot more complicated than building a bungalow structure. Have it in mind that the bigger a building is, the higher the cost per square foot will be.

3. Type of Materials Used

Another very important factor to consider when calculating the cost of a homeless shelter construction is the type of materials you plan to use.

Are you planning to build a high-end homeless shelter with a brick exterior and hardwood floors? Or would you prefer to lower your building costs by using vinyl siding and laminate flooring?

4. Equipment

Coupled with your space and other factors mentioned above, you will have to budget for the supplies and equipment you need to fit your Homeless Shelter with. Indeed there is a significant need to provide for the homeless population in the United States.

In fact, as a large majority of the shelters are specific for women and children, there is an even greater challenge to identify shelters that men can access. Irrespective of gender, the items that many shelters need are:

Bottled water, new underwear and socks, gift cards from chain stores for shoes, personal grooming products such as deodorant, toothbrushes, toothpaste, combs, brushes, tissues,

Toilet paper, feminine hygiene products, travel size soap and shampoo, baby wipes, sleeping bags and reading glasses. At the top of the needs list for shelters are: toiletries, portable privacy screens, twin bed sheets, towels, and new socks.

5. Feeding and Health Program

The homeless shelter organization usually sets up a feeding program on a regular basis, wherein they support a certain community particularly the elderly and abandoned children. They also encourage children from well-to-do families to take part in such programs to imbibe positive attitude and to nurture compassion for others.

The homeless are also often sick, most notably because of poor hygiene. With the help of homeless shelters, homeless individuals are provided basic necessities and taught on how to take care of themselves.

Those with medical conditions are given proper care and medication with the help of hospital sponsors and health professionals.

6. Paperwork

Even though starting a homeless shelter can be done with the very purest of intentions, it’s still a business and it must hold a business license and other necessary paperwork in order to operate legally.

You will be expected to contact your local courthouse or other shelters to find out what paperwork you will need in order to operate a shelter that can legally receive donations and government grants.

Frequently Asked Questions

1. Can You Obtain An Abandoned Building From The City For A Homeless Shelter?

It can be quite difficult, but yes it is possible. You just need to know how to go about it. Under the Title V program, the federal government requires that any empty or “underused” properties that it owns, can be made available to homelessness advocacy organizations.

Every week, a list of the available properties are printed up in the Federal Register. Non-profits (along with state and local agencies) can submit a proposal for how they want to use the space. The only rule in the game is that it must benefit the homeless.

If the Department of Health and Human Services approves the application (and they have 25 days to do so), the property is transferred to the nonprofit.

2. What Degree Would Be Beneficial To Run A Camp And Homeless Shelter?

If you want to run a camp or homeless shelter, consider getting a bachelor’s, master’s (MSW), or doctorate (DSW) degree in social work. Alternatively, you can start volunteering with your local homeless shelters or organizations.

3. What Is Provided For The Homeless In The Shelters?

The homeless go to homeless shelters for a reason, and some of the things homeless shelters provide to their roaming population include; feeding, shelter, basic necessities, education, employment, and rehabilitation.

4. How Do You Talk To A Town About Putting In A Homeless Shelter?

If you want to put up a homeless shelter, the first thing you need to do is to contact the council of your community. The council is in the best position to provide you information. He or she will make the necessary recommendations and set up the necessary meetings. If you are still at a loss of how to go about this, you can go to your City Hall. Ask the receptionist who should be able to help you proceed from there.

5. How Do Homeless Shelters Get Funding?

As the owner of a homeless shelter, if you can’t get another nonprofit to fund you, the you’ll need to find the funds on your own. To do this, you can apply for government grants, which you can find online. In the U.S., check grants.gov and usa.gov. You can equally consider other sources of funding such as Friends and family, and Donors

6. Do Homeless Shelters Make Money?

50% of homeless shelters are Government-funds based, and the rest of the 50% are non-profit shelter systems. However, some systems require a fee, which is sometimes received out of generosity from the rich or well-organized people. To get these donations, the center needs to raise funds. You might have seen a lot of signs and brochures that emphasize “Raise money for the poor” and other charity-related sayings.

7. How Much Money Does It Take To Start A Homeless Shelter?

The cost of opening a homeless shelter will depend on the size and number of members you want to accommodate. However, based on the feedback of existing home shelter owners, the cost can be roughly estimated as follows:

• A mini or micro-level homeless shelter will cost in the range of from $500- $2000.
• A mid level homeless shelter will cost around $50,000
• A home shelter on a large scale will cost more than $1,00,000.

8. How Much Do Homeless Shelter Owners Make?

As of Mar 11, 2022, the average annual pay for a Homeless Shelter Director in the United States is $49,081 a year. This is the equivalent of $944/week or $4,090/month. In some areas, you can see annual salaries as high as $101,500 and as low as $19,000, the majority of Homeless Shelter Director salaries currently range between $27,000 (25th percentile) to $60,000 (75th percentile) with top earners (90th percentile) making $76,000 annually across the United States

9. What Do Homeless Shelters Need The Most?

Homeless shelters take all sorts of donations, but they aren’t all equal. Some items are of more importance than others. These include;

• Simple toiletries such as dental hygiene products, shampoo and conditioner, and deodorant
• Niche clothing items such as winter coats, jackets and sweatshirts, socks, shoes, and underwear
• Bedding supplies like pillows, blankets, and mattress liners
• Feminine Hygiene Items like pads, tampons, liners and other items they could need while they’re staying with a shelter
• Consider the kids and donate diapers, baby wipes, pull-ups, Baby formula, Infant- and child-sized clothing
• School Supplies such as pens, pencils, crayon and paper
• First aid kits
• Money

10. What are the Biggest Challenges to Opening Or Operating a Homeless Shelter?

One of the major issues that have been raised is funding. This is because homeless shelters have to rely on donations or outside funding because it isn’t really logical to charge money for social services of that nature. Yet another huge challenge when opening a homeless shelter is finding a good location and then a building. This is because people usually don’t want a homeless shelter in their streets and there is a lot of prolonged negotiation before a settlement can be reached.

11. What Can You Do And Where Can I Start?

Before you can talk about starting or opening a homeless shelter, you have to get the right information first. Yes, you need to know what is obtainable in your locality. Like it was said before, you need to contact your city council and have a talk with them. On the alternative, you can go down to your city hall and ask questions. That should be your starting point. After that, you can now start worrying about registration, location and funding.

12. What US State Has the Best Homeless Shelters?

While a lot of grime stories circulate about the sorry state of homeless shelters in the United States, but there are still some good ones around. Usually, and from diverse opinion, the better run shelters usually are those by the Salvation Army. But aside from that, some of the best homeless shelters you can find in the United States include;

• WARM Shelter in Westerly, Rhode Island
• Southampton Men’s Shelter. 112 Southampton Street 02118. Boston, MA. They have Hundreds of bunk beds, mailing address, showers, laundry, lockers with locks, day room, Breakfast Lunch and Dinner
• Pine Street Inn For Men. 444 Harrison Avenue 02118. Boston, MA. They also have bunk beds, mailing address, mandatory showers, lockers with locks, breakfast lunch, and sometimes dinner.
• Weinberg Housing & Resource Center. 620 Fallsway 21202. Baltimore, MD. They have day room, meals, bunk beds, clean showers (most of the time), locker with lock, case management, housing, financial assistance, food stamps, etc.

13. What is the Number 1 Cause Of Homelessness?

While there may not be a number 1 cause of homelessness, but definitely some issues come tops as the major causes. These issues include Unemployment, Poverty and Lack of Affordable Housing

14. How Much Money Does a Shelter Need to House a Homeless Person for One Night?

It is a fact that it costs about $10,000 per person, per year, to give homeless persons homes of their own. $10,000 per year works out to around $27.40 per day. Add in food costs (there have been cases of estimates of around $1.50/meal/person being reasonably achievable), and that’s another $4.50 per day = $31.90 per person/day.

Maybe double that to cover miscellaneous costs for toiletries, bedding, water and electricity, and wages for non-volunteer shelter employees, and it can come around to $60/day/person. Note that this cost can be way lower too. Some claim around $25 and even $5.

15. How Much Money Does The Government Give To Homeless Shelters?

At the federal level, as per Budget 2017, the Government of Canada is currently planning to spend about $4 billion over the next 11 years on homelessness initiatives. The biggest slice of which is the Homelessness Partnering Strategy, at $2.1 billion. This certainly goes for most of the states.

16. How Much Food Stamps Does a Homeless Person Get?

The Supplemental Nutrition Assistance Program is the program formerly known as food stamps. It is a federal nutrition program that helps you stretch your food budget and buy healthy food. SNAP benefits can be used to purchase food at grocery stores, convenience stores, and some farmers’ markets.

For 2018, a single person meeting the SNAP income eligibility requirements may receive a maximum monthly amount of $192. For a homeless household of two people, the maximum amount is $353. The SNAP benefits are credited to a card each month that the person can use to buy food.

17. What City In USA Has Most Homeless?

According to the US Department of Housing and Urban Development, nearly a quarter of all people experiencing homelessness live in either New York or Los Angeles. Seattle, San Jose and San Diego.

18. What If You are a Kid But Still Want To Create a Charity?

You can go right ahead. You can start with raising money for a charity so you don’t need to go through a lot of paperwork and having to register the business. But you can also form a non-profit corporate entity, but not file with the IRS for tax exempt status. This will cost you some money, between $100 and $300, but you get to have your own charity. If you are a kid, you may also need the backing of an adult.

19. What Are The 4 Types Of Homelessness?

• Transitional Homelessness

This is one of the more common types of homelessness. This affects a person that is going through a major life change or catastrophic event. Many times when people lose their jobs suddenly and unexpectedly they can face transitional homelessness while they look for a new job.

• Chronic Homelessness

This is the most well-known type of homelessness. This type of homeless lasts for longer than a year. Many times, people struggling with chronic homeless have something that is preventing them from fighting their way out of it whether that be mental illness, a physical disability or addiction. Even older people fall into this category.

• Episodic Homelessness

Episodic homelessness can turn in to chronic homelessness. It’s defined as a person that has experienced three episodes of homelessness within a given year. After four episodes within a year they are classified as chronically homeless. Episodic homelessness usually afflicts younger people that are fighting health issues or addiction.

• Hidden Homelessness

Hidden homelessness often goes unreported. These are individuals that are couch-surfing without immediate prospects for permanent housing. They will often rely on relatives or friends for a place to live. Since they never access homeless support resources, they are never included in national statistics.

20. What is the Average Age of Homelessness in America?

The average age of homelessness in the United States is 11 years.