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Trump admin approves funds for NYC housing nonprofits, with conditions — then abruptly rescinds
By
David Brand
Published Mar 14, 2025
Modified Mar 15, 2025
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Photo by JIM WATSON/AFP via Getty Images
By
David Brand
Published Mar 14, 2025
Modified Mar 15, 2025
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After a nearly two-month delay, the Trump administration said this week it will release millions of dollars in federal grants to organizations that house formerly homeless New Yorkers with a string of added conditions.
But federal officials abruptly rescinded the agreements less than an hour after Gothamist first reported on the development Friday saying the language used in its agreements may violate court orders.
That initial agreement required funding recipients to pledge they wouldn’t promote what federal officials call "gender ideology,” diversity initiatives or sanctuary immigration policies. The federal Department of Housing and Urban Development issued the terms of the contract to housing groups in New York City on Thursday.
On Friday afternoon, though, within minutes of Gothamist publishing the news, staff from the federal agency’s local field office informed city officials that it had “rescinded” the agreement because the language around the new restrictions was “not consistent with” court orders, according to an email shared with Gothamist.
A federal Housing and Urban Development spokesperson confirmed that the agency would issue new grant agreements before releasing the funds, meaning the recipients may still receive the funding once the federal government fixes its language.
The directive issued Thursday by HUD also informed nonprofits they no longer have to adhere to the “housing first” model, which allows homeless individuals to secure permanent housing without first meeting other conditions like sobriety or employment.
The initial restrictions and the abrupt change to the contract agreement Friday are fueling uncertainty among groups addressing a dire homelessness crisis in New York City, where more than 140,000 people lacked stable housing during the most recent one-day count.
Advocates for homeless New Yorkers said the language could lead to future penalties and the loss of federal funds. Officials from some local organizations that receive the grants said they are reviewing what effects the new conditions could have on their programs.
Fred Shack, the CEO of the homeless services provider Urban Pathways, called the new language “disconcerting,” but said his organization’s “commitment to providing services that are in the best interests of the folks who are our clients is unchanging.”
Shack said Urban Pathways receives a $271,000 grant from the federal government to help run an apartment building with on-site social services for 55 formerly homeless adults in Midtown. He said the organization has received the funds for 18 years and he was glad to receive notice of its renewal on Thursday.
“If that money were to go away, it is going to have a significant impact on our ability to provide the same level of service,” he said.
HUD attached the conditions to contracts specifically awarded through its Continuum of Care program, which helps fund housing for homeless adults and families nationwide. New York City’s Continuum of Care organizations use the funding to house about 11,000 people in short-term apartments, buildings with on-site social services and units owned by private landlords who are paid through the programs. The federal agency provides more than $163 million to New York City nonprofits to supplement city and state funding.
The newly released funds will go to New York City programs with prior federal contracts that have expired since January, including the Urban Pathways program. There are 26 programs with contracts that have expired or are expiring this month, according to the city’s Continuum of Care coalition.
The Trump administration in January froze the funding that was previously awarded under President Joe Biden.
In a post on X on Thursday, Housing and Urban Development Secretary Scott Turner said the Continuum of Care program had been “used as a tool by the left to push a woke agenda at the expense of people in need.”
Turner also referenced how the federal government will issue the grants to faith-based organizations, which he said have faced discrimination.
The “funds will now be used for their intended purpose — they will not promote DEI, enforce ‘gender ideology,’ support abortion, subsidize illegal immigration, and discriminate against faith-based groups,” Turner added. “HUD will use all available resources to fight homelessness.”
Nicole Branca, the CEO of the New York City nonprofit New Destiny Housing, said her organization has always devoted its federal funding to housing and rental assistance. New Destiny builds homes, finds apartments and provides services for domestic violence survivors.
“100% of the federal funding goes toward keeping people housed, so I have no concerns about meeting the conditions,” Branca said.
She said New Destiny uses the funds to pay private landlords, who would also be affected by any cuts.
Officials from four organizations that receive federal funding declined to talk about the potential impact of the new directives without first speaking with their attorneys.
Other leaders in New York City homeless services say the new conditions could be used to justify future penalties of funding cuts to specific organizations.
“It’s difficult to even know how to interpret [the directive] because it’s so broad,” said Kate Barnhart, executive director of the organization New Alternatives for LGBTQ+ Youth. “If they want to come after an organization, they will find something they can jam in under that rubric.”
Barnhart said she could speak freely about the new directives because New Alternatives doesn’t receive federal funding. Her organization runs a drop-in center in Midtown for homeless young people, including teens and young adults she said have left other parts of the country as a result of measures like bans on gender-affirming care.
“The destabilizing influence of all this is causing our clients to suffer in terms of anxiety and mental health,” Barnhart said
In a joint statement, Department of Social Services spokesperson Neha Sharma and Department of Housing Preservation and Development spokesperson Ilana Maier said their agencies were reviewing the new rules.
“We will be closely monitoring any impact on access to care, housing or services for at-risk individuals and the broader safety net for housing-insecure New Yorkers,” they said. “We will always stand ready to support our most vulnerable communities in keeping with the city’s mandate to provide shelter to any New Yorker in need and our mission to tackle the homelessness and housing crisis.”
The Continuum of Care is one of several federal housing programs affected by the Trump administration’s efforts to root out what it considers wasteful spending or examples of diversity, equity and inclusion initiatives. The Department of Housing and Urban Development has canceled affordable housing contracts over DEI concerns, Bloomberg reported Tuesday. The agency has also weighed laying off 84% of the employees in the division that oversees homeless services grants, NPR reported. A spokesperson for the Department of Housing and Urban Development said the figure was not accurate.
The directive around diversity has raised some questions among New York City social service providers.
Shack, from Urban Pathways, said his organization hires people who have experienced homelessness and who play a key role in operations and social services. He said that won’t change.
“We hire people based on their ability to do the job and their ability to engage with the population they serve,” he said. “I could hire someone with a clinical degree, but if they don’t have the ability to connect with the individual who’s been living on the street for five years, it doesn’t do us any good.”
Many of the federally funded organizations have also faced chronic payment delays from the city, adding to the anxiety when it comes to covering costs.
Uncertainty surrounding the federal funding had led some organizations to stop working with new clients, officials from the city’s Continuum of Care coalition said earlier this week. At a public meeting Tuesday, Department of Social Services Associate Commissioner Kristen Mitchell advised those organizations to continue taking on new clients.
“I know it's difficult in this climate. Not-for-profits have very thin margins, and so it's difficult,” Mitchell said. “But all of our Continuum of Care providers and projects should be continuing operations.”
Editor’s note: The headline and body of this story have been updated to reflect that the Trump administration rescinded the housing grants after publication, citing potential court violations in its contractual language. The grants may be re-issued once the language is resolved, officials said.
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David Brand
David is a reporter covering housing for Gothamist and WNYC. Got a tip? Email [email protected] or Signal 908-310-3960.
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