The Continuum of Care program’s eligibility and funding rules restrict grants to locally organized homeless-services coalitions that fund five specific project types for people meeting one of four federal definitions of homelessness, and every dollar is bound by strict documentation, match, conflict-of-interest, and post-award compliance requirements. The Department of Housing and Urban Development (HUD) runs the competition, but the coalition — the CoC itself — decides which local projects go forward, in what order, and at what funding level. Getting the rules right at the front end is the difference between a clean audit and a demand to repay federal money.
Who Can Receive CoC Funding
Money does not go to individuals. It flows to nonprofit organizations, state and local governments, public housing agencies, and instrumentalities of state or local government that operate as part of a designated Continuum of Care. Every CoC covers a specific geographic area and must be established by a broad cross-section of local organizations: homeless service providers, government agencies, public housing authorities, hospitals, law enforcement, veterans’ organizations, and people with lived experience of homelessness. The governing board must be representative of those groups and must include at least one person who is currently or formerly homeless.1eCFR. 24 CFR 578.5 – Establishing the Continuum of Care
Two designated roles anchor the structure. The Collaborative Applicant assembles and submits the consolidated funding application on behalf of the entire CoC. The HMIS Lead manages the local Homeless Management Information System, the database that tracks who is served, what services they receive, and how participants move through the system. Only the designated HMIS Lead can receive a dedicated HMIS grant.
The CoC must also operate a centralized or coordinated entry system so that anyone seeking help receives a standardized assessment regardless of which agency they approach first.2eCFR. 24 CFR 578.7 – Responsibilities of the Continuum of Care The assessment process must include specific policies for people fleeing domestic violence, dating violence, sexual assault, or stalking who seek help from providers that are not victim service agencies.
Individual project applicants inside the CoC still have to prove their own eligibility to receive federal funds. That means valid nonprofit status or governmental standing, and a completed HUD-2880 (Applicant/Recipient Disclosure/Update Report) detailing every expected source and use of funds — HUD and non-HUD — for the proposed project.3U.S. Department of Housing and Urban Development. HUD-2880 – Applicant/Recipient Disclosure/Update Report
Who Projects Can Serve
CoC-funded projects can only serve people who meet one of four federal definitions of homelessness. Serving anyone outside those categories with grant funds is the fastest route to disallowed costs in an audit.
- Literally homeless. People sleeping in places not meant for human habitation (cars, parks, abandoned buildings), living in emergency shelters or transitional housing, or exiting an institution where they stayed 90 days or less after being in a shelter or unsheltered situation.
- Imminent risk of homelessness. People who will lose their housing within 14 days, have no identified follow-up residence, and lack the resources or support networks to secure one.
- Homeless under other federal statutes. Unaccompanied youth under 25 or families with children who qualify as homeless under laws such as the Runaway and Homeless Youth Act or the Violence Against Women Act, have not had a lease or ownership interest in housing for at least 60 days, have moved twice or more in that period, and face barriers expected to keep them unstable.
- Fleeing domestic violence. People escaping violence, sexual assault, or stalking who have no other residence and lack the resources to obtain housing.
How Homeless Status Must Be Documented
HUD requires a specific priority order for documenting a person’s homeless status. Third-party documentation comes first. Intake worker observations come next. Self-certification by the person seeking help is the weakest form of evidence and should be used only when the other two are genuinely unavailable. HMIS records count as valid third-party documentation as long as the system maintains an auditable history showing who entered the data, when, and any changes made.5U.S. Department of Housing and Urban Development. Notice on Prioritizing Persons Experiencing Chronic Homelessness and Other Vulnerable Homeless Persons in Permanent Supportive Housing (Notice CPD-14-012)
The Disability Rule for Permanent Supportive Housing
Permanent Supportive Housing requires proof of disability at project entry, and it does not have to be re-verified afterward. Acceptable documentation includes a written statement from a state-licensed professional confirming the disability is long-term, substantially limits independent living, and could improve with better housing conditions. A letter from the Social Security Administration or proof of receiving disability benefits like SSDI also qualifies. For HIV/AIDS, the condition only needs to be verified; the provider does not need to confirm it limits independent living.6HUD Exchange. Eligible Participants At A Glance: Disability Definition
Intake staff can record their own observation of a disability to admit someone right away, but formal documentation must follow within 45 days. Miss that deadline and the costs of serving that participant become ineligible, which the grantee absorbs.
What the Money Can Pay For
CoC grants fund five project components, each aimed at a different stage of housing instability.7eCFR. 24 CFR 578.37 – Program Components and Uses of Assistance
- Permanent Supportive Housing (PSH). Long-term housing paired with supportive services for people with disabilities. No time limit on tenancy. Historically the largest share of CoC funding.
- Rapid Re-Housing (RRH). Short-term rental subsidies and case management to move people into private-market housing quickly. The subsidy is temporary and the goal is self-sufficiency.
- Transitional Housing (TH). Temporary housing with intensive services for up to 24 months, meant to prepare participants for permanent housing.
- Supportive Services Only (SSO). Funding for health, employment, legal, and other services for homeless individuals who are not living in CoC-funded housing.
- HMIS. Dedicated funding for operating and maintaining the local data system, available only to the designated HMIS Lead.
Homelessness prevention is available in limited circumstances under the same regulation. All project types can also use grant funds to contribute data to the local HMIS, and all are eligible for administrative cost reimbursement.
The Housing First Requirement
HUD has increasingly prioritized Housing First in its CoC competitions, and grant agreements now generally require it. The principle is simple: get people into permanent housing as quickly as possible without requiring them to complete treatment programs, demonstrate sobriety, or meet other preconditions first. Supportive services are offered but not conditional. Projects that screen people out for poor credit, criminal history, or active substance use run against this principle and score poorly in the competition.
What the Money Cannot Pay For
Knowing the ineligible activities matters as much as knowing the eligible ones, because spending federal dollars on a disallowed cost means paying HUD back out of the organization’s own funds.
- Leasing property owned by the recipient, a subrecipient, a parent organization, or a related entity, unless HUD grants an exception for good cause.
- Rehabilitation or new construction on leased property. Those funds can only be used on property the recipient owns or is purchasing.
- Combining rental assistance and operating cost funding in a single project.
- Inpatient detoxification and inpatient drug or alcohol treatment.
- Legal services for immigration, citizenship, mortgages, or homeownership matters. Retainer and contingency fee arrangements are also prohibited.
- Staff training costs and the cost of professional licensing needed to deliver supportive services.
- Operating costs for shelter-only or service-only facilities. CoC operating funds are reserved for housing projects.
Conflict of Interest Rules
A CoC board member cannot participate in or influence any decision about awarding a grant to the organization that member represents. Beyond the board, no employee, consultant, officer, or agent of a recipient or subrecipient may have a financial interest in any contract or activity funded by the grant, either during their tenure or for one year after leaving. The prohibition extends to immediate family members and business partners.9eCFR. 24 CFR 578.95 – Conflicts of Interest An organizational conflict also arises when an employee of a recipient inspects or determines rent reasonableness for property the recipient or a related entity owns.
Match, Cost, and Documentation Rules
The 25 Percent Match
Every CoC grant requires the recipient to match at least 25 percent of the total award. The leasing budget line item is excluded from the calculation.10HUD Exchange. Continuum of Care (CoC) Program Match Requirements Match can come from cash or in-kind resources, but the documentation has to hold up.
For in-kind service matches, the recipient must execute a formal Memorandum of Understanding with the agency providing the services, describing the terms and requiring a tracking system for the actual value delivered during the grant period. In-kind services from individuals must be valued at rates consistent with what the recipient’s organization ordinarily pays for similar work, or at prevailing local rates if no comparable internal role exists. A commitment letter from the partner agency can hold the place while awaiting HUD’s award notification, but the formal MOU must follow.11HUD Exchange. What Are the Documentation Requirements for In-Kind Services as Match?
Indirect Costs
Organizations that have never negotiated an indirect cost rate with a federal agency can claim a de minimis rate of 10 percent of modified total direct costs. Modified total direct costs include salaries, fringe benefits, materials, supplies, services, and travel, but exclude equipment, capital expenditures, and rental costs.12HUD Exchange. 10% De Minimis Rate The 10 percent de minimis rate is separate from the 10 percent administrative cost allowance under the CoC program. They cover different expense categories, and treating them as one is a common budgeting error.
Community Data and Environmental Review
Applications must integrate two community-level counts. The Point-in-Time count is a snapshot of the number of people experiencing homelessness on a single night. The Housing Inventory Count catalogs every bed and unit available for homeless populations in the CoC’s geographic area. Together, they show HUD whether proposed projects address real gaps or duplicate existing capacity.
Many CoC activities — tenant-based rental assistance, supportive services, operating costs — are categorically excluded from full environmental review under the National Environmental Policy Act, meaning no notice of intent or Request for Release of Funds is required.13eCFR. 24 CFR Part 58 – Environmental Review Procedures for Entities Assuming HUD Environmental Responsibilities Construction, acquisition, or rehabilitation triggers a more involved review. Even for exempt activities, the responsible entity must document in writing why each activity qualifies for exemption.
Application and Tiered Competition
The cycle begins when HUD publishes a Notice of Funding Opportunity (NOFO) setting priorities, scoring criteria, and deadlines.14U.S. Department of Housing and Urban Development. FY 2024 – FY 2025 Continuum of Care (CoC) Program Competition CoC Priority Listing Detailed Instructions Recent competitions have covered two fiscal years at once; the FY 2024–2025 NOFO authorized a single competition for both years. Whether that pattern continues depends on congressional appropriations.
Applications move through HUD’s e-snaps electronic portal. Inside each CoC, individual agencies submit their projects to the board, which reviews, scores, and ranks them based on performance data and community need. The Collaborative Applicant then packages everything into one consolidated submission.
HUD evaluates the results in two tiers. Tier 1 holds the higher-priority projects as ranked locally and is more likely to receive full funding. Tier 2 projects enter a national competition against Tier 2 projects from other CoCs. HUD weighs system performance measures like rates of return to homelessness, how quickly the CoC spent prior awards, data quality, and the strength of the local strategy. Where the CoC draws the line between Tier 1 and Tier 2 is one of the most consequential decisions the board makes each year.
Rules That Continue After the Award
Annual Performance Reports
Every grant recipient submits an Annual Performance Report through HUD’s Sage HMIS Reporting Repository. The APR pulls data straight from HMIS and measures outcomes like housing placement rates, income changes, and lengths of stay.15HUD Exchange. CoC APR Submission Guidance Poor APR results affect how the CoC board ranks the project in the next competition. A project with declining outcomes or slow spending is a prime candidate for reallocation, meaning its funding gets redirected to a new project the board expects to perform better.
Recordkeeping
All records related to CoC funds must be retained for at least five years. Program participant records — documentation of homeless status, disability verification, services provided — must be kept for five years after the last dollar from the relevant grant is spent. If the grant funded acquisition, new construction, or rehabilitation, retention extends to 15 years after program participants first occupy the site.16eCFR. 24 CFR 578.103 – Recordkeeping Requirements HUD, the Office of Inspector General, and the Comptroller General retain access rights for as long as the records exist.
The Single Audit Threshold
Any organization that spends $1,000,000 or more in federal awards during a fiscal year must undergo a Single Audit. Recipients holding multiple federal grants often cross that line without noticing. Organizations below the threshold are exempt from the federal audit requirement for that year but still have to maintain records sufficient to demonstrate compliance if HUD or an inspector asks.17eCFR. 2 CFR Part 200 Subpart F – Audit Requirements