Housing nonprofits often start with the same question: How do we apply to HUD? For the two best-known programs, the short answer is that most organizations never apply to HUD directly. CDBG dollars go to cities, counties, and states, and homeless assistance dollars move through a local planning body called a Continuum of Care. A nonprofit’s first application usually goes to a local government or a local coalition, well before anything reaches Washington.
 
Understanding that routing shapes everything that follows: who to talk to, which deadlines matter, and what the proposal needs to show.
 
How does CDBG funding reach local housing and community programs?
 
Quick answer: The Community Development Block Grant (CDBG) program gives annual formula grants to states, cities, and counties. HUD does not award CDBG funds directly to nonprofits or other nongovernmental entities. The local government administers the program and decides which projects it funds, so a nonprofit’s path starts with that government’s office.
 
Cities and counties fall into two groups. Entitlement communities receive funds directly from HUD and include principal cities of metropolitan areas, other metropolitan cities with at least 50,000 residents, and qualified urban counties with at least 200,000 residents. Smaller communities fall under state programs. Forty-nine states and Puerto Rico run their own programs, and state programs make awards only to non-entitlement local governments. A nonprofit in a small town therefore usually works through its municipality or county, which applies to the state and carries the project forward.
 
Eligible uses include property acquisition, rehabilitation, public facilities and infrastructure, and limited public services. New housing construction is generally ineligible, with some exceptions. Every activity must meet one of three national objectives: benefit to low- and moderate-income persons, prevention or elimination of slums or blight, or an urgent community need. Over the period each grantee chooses, at least 70 percent of funds must benefit low- and moderate-income people.
 
What does a CDBG application look like for a nonprofit?
 
Cities that fund nonprofits typically open an application cycle tied to their annual planning process, and organizations apply as subrecipients. HUD notes that requirements vary by grantee, so the local application is the controlling document. A call to the city’s community development office comes before any drafting.
 
Local reviewers tend to look for the following:

• Alignment with the priorities in the community’s consolidated plan
• Documentation that the people served are low- or moderate-income
• Evidence that the project is ready, such as site control and other funding in place
• Financial systems that can handle federal pass-through money
• A budget with a reasonable cost per person served

 
Pass-through funds carry federal rules. Under the Uniform Guidance, an organization that spends $1 million or more in federal awards in a year needs a single audit, and any subrecipient should confirm its own status before applying. A grant readiness checklist helps surface those gaps early. For a wider view of this funding tier, see state and local government grants.
 
How does the Continuum of Care Program work?
 
The Continuum of Care (CoC) Program funds projects that move people out of homelessness. Nonprofits, states, local governments, and their instrumentalities may apply, while HUD’s CoC eligibility rules state that for-profit entities cannot. Applications run through a local CoC, a planning body that designates one organization as its collaborative applicant. Project applicants submit to the collaborative applicant through an annual competition, and the collaborative applicant submits the full package, including the CoC application, the project applications, and their rankings.
 
Eligible project types include permanent supportive housing, rapid re-housing, and transitional housing of up to 24 months. Supportive-services-only projects are limited to the entity the CoC designates to lead coordinated entry, and HMIS funding goes to the designated HMIS lead agency.
 
Because rankings happen locally, participation matters. Organizations that attend CoC meetings, share data, and understand how the local committee scores projects are in a stronger position than those that appear only at application time.
 
The rules also change between cycles. HUD’s FY2026 competition notice drew a court challenge over its funding structure and selection criteria, and the timeline shifted as the case moved forward. Applicants should read the current notice and confirm details with their CoC lead.
 
What do housing and homelessness proposals need to show?
 
Whichever channel a program uses, a few elements appear in nearly every strong application.
 
A needs statement built on local figures. The Point-in-Time count, HMIS data, and local rent-to-income comparisons give reviewers numbers they can verify. A grant needs statement works best when each figure comes from a named local source.
 
Housing outcomes with clear definitions. Typical measures include exits to permanent housing and housing retention at six and twelve months. Stating how each is counted prevents confusion at reporting time.
 
Named partners. Housing projects depend on service providers, landlords, and public agencies. A signed federal grant MOU shows who does what.
 
Leveraged funding. Reviewers like to see other money committed to the project, whether from the city, a foundation, or program income.
 
A staffing plan that matches the caseload. Services budgets are scrutinized, so case manager ratios and supervision should be spelled out.
 
When does outside grant support make sense for housing programs?
 
Housing programs often juggle a CDBG subaward, a CoC project, and state or foundation funds at the same time, each with its own calendar and reporting format. Organizations in that position often bring in government grant writing help to keep applications consistent and deadlines covered.
 
Frequently asked questions
 
Can a nonprofit apply directly to HUD for CDBG funds?

No. HUD awards CDBG funds to states, cities, and counties. Nonprofits typically apply to their local government, or to the state through the municipality, as a subrecipient.
 
What is a subrecipient?

A subrecipient is an organization that receives funds from a grantee, such as a city, to carry out an eligible activity. The grantee remains responsible for compliance, so it passes federal requirements down to the subrecipient.
 
What is a Continuum of Care?

A Continuum of Care is a local planning body that coordinates homeless services and applies to HUD for funding on behalf of projects in its area. Each CoC designates a collaborative applicant to submit the application.
 
Can a for-profit developer receive Continuum of Care funds?

No. HUD states that for-profit entities are not eligible to apply for CoC grants or to be subrecipients of the funds.
 
Does CDBG pay for new housing construction?

Generally no, though HUD lists some exceptions. Rehabilitation, acquisition, and public facilities are among the more common eligible uses.