Millions of dollars for homeless services in Hawaiʻi are at risk as the Trump administration pulls back from funding targeted housing programs that have been the mainstay of efforts to get people off the streets for nearly two decades.
That has led nonprofit leaders to estimate that on Oʻahu alone 400 to 450 people could be pushed back into homelessness, assuming the roughly $12 million in annual federal funding now in limbo is slashed.
“This sent a shockwave across the islands,” said Heather Lusk, executive director of Hawaiʻi Health & Harm Reduction Center, a nonprofit that runs public health, outreach and homeless housing programs on Oʻahu.
Family Promise of Hawaiʻi Executive Director Ryan Catalani, left, chats with case worker Fita Nisa at the nonprofit’s ʻOhana Navigation Center in Honolulu. Catalani thinks the funding crisis could be an opportunity to develop more innovative programs and responses to homelessness in Hawaiʻi. (Kevin Fujii/Civil Beat/2025)
The principal change announced by the U.S. Department of Housing and Urban Development in November would drastically curtail funding of what’s known as permanent supportive housing. Often aimed at the chronically homeless, that model provides services such as counseling and treatment for addictions in addition to a place to live.
HUD called it a “self-sustaining slush fund” and said a majority of the department’s funding would instead go to transitional housing and services intended to increase self sufficiency. Under the new funding rules, only 30% of homeless housing funds could be used for permanent supportive housing projects, down from 90%.
HUD last week withdrew those changes, just before its attorneys were to appear in federal court to defend them against legal challenges. On Friday, a judge ruled the department could not rescind the earlier funding policies or put the new ones into effect. HUD, which could appeal U.S. District Judge Mary McElroy’s preliminary injunction, said it would issue new funding rules. As of Friday afternoon it had not.
“There’s an incredible amount of anxiety just not knowing how to move forward,” said Laura Thielen, executive director of Partners In Care. The nonprofit is a coalition of nonprofits, government officials and community members that coordinates federal funding for homeless services. Such so-called “continuums of care” are mandated in all jurisdictions that receive HUD funds related to homelessness.
Family Promise of Hawaiʻi, which is a continuum member, provides emergency shelter, housing and services to homeless families. It could lose much of the $3 million in HUD funding it received last year if the new rules take effect.
“The biggest thing for us as an organization is that there is more uncertainty next year,” said Ryan Catalani, Family Promise’s executive director. “And of course, next year is already a few weeks away.”
“This sent a shockwave across the islands.”
Heather Lusk, executive director of Hawaiʻi Health & Harm Reduction Center
Service providers apply to the continuum for funds from HUD, which last year distributed $16.2 million to organizations on Oʻahu. A separate continuum of care, Bridging The Gap, covers Hawaiʻi, Kauaʻi and Maui, which together received $4.2 million last year.
Bridging The Gap chairperson Brandee Menino said if HUD moves funding away from permanent housing, that would wipe out three-quarters of permanent housing projects on the neighbor islands.
Menino said the greatest impact would be on Hawaiʻi island because most of the permanent supportive housing stock is in Hilo, where 166 people are living in 56 different locations.
“We are telling service providers to prepare for these possible changes.” she said in an email.
Rejecting Once-Favored Approaches
The changes to funding rules were a solid rejection of longstanding approaches known as housing first and harm reduction. Those prioritize housing people without requiring that they be drug free or in treatment, among other things. The idea is that once housed, people can better address other debilitating challenges.
Currently, Thielen said, permanent supportive housing programs receive about 70% of the HUD funding on Oʻahu that comes through the continuum.
The funding rules now on hold changed what could qualify in other ways, too.
Programs known as rapid rehousing that provide short-term rental assistance to people facing homelessness are slated for major cutbacks. Programs with diversity, equity and inclusion goals would be excluded from funding. Nonprofit applicants could also be turned down if they previously followed now-prohibited DEI practices.
Partners In Care Director Laura Thielen speaking to state representatives about the annual Point in Time homeless count. (Christina Jedra/Civil Beat/2020)
Lusk, at Hawaiʻi Health & Harm Reduction Center, predicts that her organization would lose about $200,000 in HUD funding for its outreach to homeless LGBTQ youth.
“The expectation is that we would not be continued or prioritized for funding, given who we’re focusing on,” Lusk said.
She said anti-transgender actions by the Trump administration — which on Thursday proposed yanking federal funding from hospitals that offer gender-related medical services to minors — coupled with news trickling out about HUD’s shifting priorities, have left people the organization works with feeling set upon.
“Given particularly that we’re serving a community that’s already disenfranchised and feeling stigmatized,” Lusk said, “what I’m hearing from my outreach workers is that the community (is) very scared.”
Another worry for nonprofits is that under its rules, HUD will not pay for people to go “backward” in services, Thielen said. That means that if someone were to lose their permanent supportive housing spot, HUD would not pay for them to go to a transitional housing program — even though transitional housing is an area where HUD now is focusing its funding.
“So they would have to go back into homelessness again and then come up in the transitional housing category and then possibly get into transitional housing,” Thielen said.
An economic forecast for 2026 from the University of Hawaiʻi Economic Research Organization said if the new rules stick, “Households that would previously have left shelter or the street for permanent housing will be more likely to cycle through emergency shelter and transitional beds instead.”
A Chance To Innovate
Honolulu-based Family Promise of Hawaiʻi is in its fourth year of receiving HUD funds through the competitive continuum of care process.
The prospect of deep cuts comes in a year when the nonprofit has received an increase in requests for help, with 10 first-time callers to its help line daily. It has served 962 households in 2025, a record number, Catalani said, about 80% of whom have since been moved into permanent housing.
As the Oʻahu continuum pursues conversations with elected officials and foundations about how to bridge the likely large gaps in funding, Catalani said he is trying to see the changes as an opening.
“There is an opportunity for us to work more at the local level in terms of funding and resources,” he said, “and perhaps allow for more creativity, innovation and agility within the homelessness system to try and find strategies together that will be more effective for families.”
For example, he said, Family Promise has 13 case managers on Maui working with 525 families who survived the 2023 wildfires, helping to get them into housing and make sure they are getting their other needs met.
Each family has had the same case manager over the two years since the fires despite shifts in Family Promise funding, and transitions in the resources, programs and nonprofits with which they have been connected.
“Throughout all of these changes, their core support has been the same,” Catalani said, “so they’ve been able to build rapport and trust and really have someone who they know will be there for them and help them navigate any of their challenges until they reach that point of stability.”
That likely would have been harder to achieve had the effort relied on HUD funding, which is typically less flexible, Catalani said. The current crisis could lead to new relationships with local funders with less rigid guidelines, he said. That could make it easier to scale collaborative, client-centered programs like the Maui case managers model.
“Maybe there is a different way of looking at this challenge,” he said. “That it gives us the flexibility to respond faster, more effectively on a more person-to-person basis, something really tailored to what Hawaiʻi truly needs.”
UPDATE: This story has been updated to include the court action on Friday.
Civil Beat’s reporting on economic inequality is supported by the Hawaiʻi Community Foundation as part of its work to build equity for all through the CHANGE Framework; and by the Cooke Foundation.
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