It will cost you about $200,000 to start a small-scale homeless shelter and $1,000,000 or more to open a standard homeless shelter.
However, it is important you know that your exact startup cost will vary due to the influence of certain factors, which we will discuss in this article.
According to reliable reports, at least 2.5 to 3.5 million Americans per year are sleeping in shelters, transitional housing, and public places not meant for human habitation.
About 7.4 million more individuals are displaced from their homes due to economic reasons.
A homeless shelter more or less starts with a group of individuals who want to develop a plan to help people in the community who need shelter.
This idea eventually graduates into a plan to put up a homeless shelter. Most homeless shelters are being funded by sponsors such as hospitals, companies, professionals, and individuals.
Also note that organisations that manage homeless shelters (or sponsor them) create events that can benefit homeless individuals.
Such charity events are very common, such as lavish gala dinners and small bake-off festivals.
For adequately funded homeless shelters, they are able to provide programs for homeless people so that they will feel that they belong to the community.
In these shelters, homeless individuals usually check in between 5:00 PM and 7:00 PM. Most shelter allows individuals to stay in for the night or a couple of days.
Exceeding the allowable number of days will mean having to pay for each night after.
Estimated Cost Breakdown for Opening a Homeless Shelter
1. Property Acquisition or Lease:
- Purchase: $300,000 – $600,000 (depending on location and size)
- Lease: $50,000 – $100,000 (first year’s rent, possibly including security deposit)
2. Renovations, Repairs and Modifications to meet zoning, safety, and operational requirements: $50,000 – $200,000
3. Furnishings and Equipment: $50,000 – $150,000
Annual Operating Expenses
- Utilities (Electricity, water, gas, internet, and waste removal): $20,000 – $40,000
- Insurance: $10,000 – $30,000
- Staff Salaries for administrative staff, care workers, and security personnel: $200,000 – $400,000
- Food and Supplies: $100,000 – $200,000
- Professional Services (Legal, accounting, and consulting services): $20,000 – $50,000
- Programs and Services (Educational programs, job training, counseling services, and recreational activities): $50,000 – $100,000
- Marketing and Fundraising: $10,000 – $30,000 (initial budget)
- Emergency Fund/Contingency: $100,000 – $150,000
Total Estimated Cost of Opening a Homeless Shelter: $960,000 – $1,850,000
Revenue Sources
- Government Contracts and Grants: $300,000 annually
- Private Donations: $100,000 annually
- Fundraising and Other Income: $50,000 annually
Yearly Financial Forecast
Year 1 – 3 Revenue:
- Total Annual Revenue: $450,000 (Government Grants + Private Donations + Fundraising)
Year 1 – 3 Costs:
- Total Annual Operational Costs: $600,000 (Sum of all operational costs)
Net Profit (Loss):
- Annual Net Profit (Loss) = Total Annual Revenue – Total Annual Operational Costs
- Year 1 – 3: $450,000 – $600,000 = (-$150,000) annually
Breakeven Analysis
To reach the breakeven point, your homeless shelter needs to either increase its revenue streams or decrease its costs to make up for the $150,000 annual shortfall.
This might involve securing more government contracts, increasing private donations and fundraising efforts, or finding ways to reduce operational expenses.
Breakeven Solution:
- Increase Revenue: You can aim to increase the total annual revenue of your homeless shelter to at least $600,000 to match operational costs.
- Reduce Costs: Alternatively, you can choose to explore opportunities to lower expenses in your homeless shelter without compromising the quality of care and services.
6 Factors That Determine the Cost of Opening a Homeless Shelter
By starting a homeless shelter you can aid your fellow man and also offer great services to your community.
Aside a kind and compassionate spirit, homeless shelters require resourceful and level-minded staff to create a sustainable environment that will provide for the poor and the needy.
Note that starting or working in a homeless shelter will not only provide those in need with food and a roof, it will enable you to find a fulfilling position.
On the average, a homeless shelter in the United States will cost about $82 per square foot.
If you have decided on the size of your shelter, all you have to do is multiply the number of square feet by $82.
Although this is just an average, it is advisable to consider the factors analyzed below.
1. Location
One of the first steps in starting a homeless shelter is to find a large and viable location to hold those staying there.
Also have it in mind that where your shelter will be located has an enormous effect on the cost of construction.
If you decide to build a homeless shelter in high end cities like New York, you should expect to pay a lot more than average; it may cost you almost $120 per square foot.
For a homeless shelter in Dallas, expect to be at the lower end of the scale – around $80 – $98 per square foot.
The cost per square foot varies for a number of reasons. For instance, the costs of land varies from city to city. Buildings in Vegas tend to be more expensive than buildings in Rhodes.
Also note that location will also determine how much you’ll be spending on labour.
For instance, construction workers in New York make an average of $43,311 per year but those in Alabama make just $28,580. The cost of materials also depends in part upon where you build.
2. Building Size
To clearly estimate the cost of building a homeless shelter, you also have to take size into consideration.
Constructing a 2-story homeless shelter is a lot more complicated than building a bungalow structure.
Have it in mind that the bigger a building is, the higher the cost per square foot will be.
3. Type of Materials Used
Another very important factor to consider when calculating the cost of a homeless shelter construction is the type of materials you plan to use.
Are you planning to build a high-end homeless shelter with a brick exterior and hardwood floors?
Or would you prefer to lower your building costs by using vinyl siding and laminate flooring?
4. Equipment
Coupled with your space and other factors mentioned above, you will have to budget for the supplies and equipment you need to fit your Homeless Shelter with.
Indeed there is a significant need to provide for the homeless population in the United States.
In fact, as a large majority of the shelters are specific for women and children, there is an even greater challenge to identify shelters that men can access. Irrespective of gender, the items that many shelters need are:
Bottled water, new underwear and socks, gift cards from chain stores for shoes, personal grooming products such as deodorant, toothbrushes, toothpaste, combs, brushes, tissues,
Toilet paper, feminine hygiene products, travel size soap and shampoo, baby wipes, sleeping bags and reading glasses.
At the top of the needs list for shelters are: toiletries, portable privacy screens, twin bed sheets, towels, and new socks.
5. Feeding and Health Program
The homeless shelter organization usually sets up a feeding program on a regular basis, wherein they support a certain community particularly the elderly and abandoned children.
They also encourage children from well-to-do families to take part in such programs to imbibe positive attitude and to nurture compassion for others.
The homeless are also often sick, most notably because of poor hygiene. With the help of homeless shelters, homeless individuals are provided basic necessities and taught on how to take care of themselves.
Those with medical conditions are given proper care and medication with the help of hospital sponsors and health professionals.
6. Paperwork
Even though starting a homeless shelter can be done with the very purest of intentions, it’s still a business and it must hold a business license and other necessary paperwork in order to operate legally.
You will be expected to contact your local courthouse or other shelters to find out what paperwork you will need in order to operate a shelter that can legally receive donations and government grants.