Court Blocks Latest Unlawful Homelessness Funding Announcement
August 8, 2026 - Providence, R.I. – A broad coalition of local governments and nonprofit organizations has triumphed in its 
challenge to the Trump-Vance administration’s most recent attempt to disrupt federal funding for people trying to exit homelessness. Although a court had already halted unlawful restrictions on federal homelessness funding, the administration once again attempted to make changes that will kick people out of permanent housing and back onto the streets. The court on Friday ordered the U.S. Department of Housing and Urban Development’s (HUD) to vacate the issuance of its 2026 Notice of Funding Opportunity (NOFO), effectively blocking the unlawful weaponization of government funding.
In a filing, in National Alliance to End Homelessness et al v. HUD et al, the National Alliance to End Homelessness (NAEH), the National Low Income Housing Coalition (NLIHC), Crossroads Rhode Island, Youth Pride, Inc., as well as the County of Santa Clara, Calif., King County, Wash., Boston, Mass., Cambridge, Mass., Nashville, Tenn., and Tucson, Ariz. asked the court to stop the implementation of the HUD NOFO for FY 2026 Continuum of Care (CoC) grants – the nation’s more than $4 billion program to support efforts to end homelessness.
The court granted the request today, writing, “The Court’s review of the record and the parties’ arguments reveal that HUD’s issuance of the 2026 NOFO violates the [Administrative Procedure Act] based on HUD’s failure to engage in the notice-and-comment process required by the [law].”
Today’s decision continues a saga that has seen nonprofit organizations triumph repeatedly as they have challenged Trump-Vance administration efforts to unlawfully weaponize federal funding. For years and through multiple presidential administrations, the CoC Program has helped provide the necessary resources for local governments and organizations to fund permanent housing projects for veterans, seniors, people with disabilities, and individuals and families with children experiencing homelessness. It has always been HUD’s obligation to release these resources in a timely manner through a lawful CoC Program competition NOFO. However, HUD attempted to radically upend this critical program with a FY 2025 NOFO that threatened to push nearly 200,000 Americans into homelessness.
The coalition behind today’s successful judicial intervention took legal action to stop the NOFO issued in 2025, and in December 2025, a federal judge granted preliminary relief, which temporarily blocked the administration’s attempts to implement the unlawful and unreasonable restrictions that sought to shift funding away from proven solutions to homelessness. Eventually, Congress stepped in and required HUD to renew all existing grants for FY 2025. HUD still has not finalized all of those FY 2025 awards that by now are long overdue, leaving projects without funding and further disrupting the nation’s flagship homelessness response program. The court ultimately issued a final decision concluding that last year’s NOFOs were invalid.
The 2026 NOFO bears many similarities to the versions the court already determined were unlawful. Without authorization, the FY 2026 NOFO set aside a whopping $1.3 billion – nearly one-third of available funds – for new projects only, despite Congress’s command that appropriated funds be available to renew existing projects, and despite the fact that this set-aside guarantees that significant numbers of existing projects will be ineligible for renewal, no matter how effective. Worse, this massive set-aside is earmarked principally for unproven strategies, to the detriment of permanent housing that Congress directed HUD to prioritize. The NOFO additionally attempted to force grantees to agree to comply with requirements that have little to nothing to do with the CoC program – including by committing to adhere to executive orders that, among other things, seek to eradicate lawful diversity, equity, and inclusion initiatives; reject transgender and nonbinary individuals’ identities; and coerce jurisdictions to help with federal immigration enforcement.
Democracy Forward and the ACLU Foundation of Rhode Island represent the coalition of nonprofit organizations in the matter; the National Homelessness Law Center represents NAEH and NLIHC; Public Rights Project represents the cities of Boston and Cambridge, King County, Nashville, and Tucson; and Santa Clara County represents itself. The Lawyers’ Committee for Rhode Island represents all plaintiffs. The legal team at Democracy Forward on this matter includes Kristin Bateman, Madeline Gitomer, Christine Coogle, Carrie Flaxman, and Robin Thurston.
Plaintiff and co-counsel quotes regarding today’s decision are available here.
Read today’s decision here.
Democracy Forward Foundation is a national legal organization that advances democracy and social progress through litigation, policy, public education, and regulatory engagement. For more information, please visit www.democracyforward.org.
Source: Democracy Forward
