The only way to get a government grant to operate a halfway house is to be recognized by the Internal Revenue Service (IRS) as a 501(c)(3) nonprofit faith-based or community-based organization (FBO or CBO). FBOs are loosely defined by the federal government as “connected with an organized faith community.” CBOs are “small neighborhood non-profit organizations that are located in the same zip code as the people they serve.” You can download the 501(c)(3) application at the IRS website. Even with non-profit status, there are limited resources and plenty of rules to navigate.

Types of Government Funding

There are three main types of government funding for halfway houses: contract for services, government-guaranteed loans and government grants. For-profit and non-profit entities are generally eligible to apply for government guaranteed loans and to contract with the government agencies to provide “transitional housing” for specific target populations such as ex-offenders, homeless veterans, recovering alcoholics, abused women and recovering drug addicts. For-profit entities are generally barred from government and private foundation grant eligibility by federal law and IRS rules. Some states, such as New Jersey, even bar for-profit entities from obtaining halfway house contracts. Therefore, if you plan to operate a for-profit entity, check with the appropriate state agency, such as your Bureau of Prisons, to see about your state's eligibility requirements for obtaining a contract to run a halfway house.

Government Grant Limitations

According to the U.S. Small Business Administration, federal and state governments do not provide grants for starting a business, paying off debt and covering operational expenses. Government grants generally fund specific industries, target populations and target programs. In the case of halfway houses, government grants may be available to fund, say, innovative re-entry programs for ex-offenders, transitional housing for abused women and recovery programs for recovering addictions. Implicit in all government grants for halfway houses is the requirement that your halfway house be an ongoing entity rather than a startup.

Types of Government Grants for Halfway Houses

The primary federal agencies that fund grants for halfway houses are the U.S. Justice Department, the Department of Housing and Urban Development and the Department of Labor. These agencies, as all other federal agencies, fund two types of grants: formula grants and discretionary grants. Formula grants, also called “block” and “entitlement” grants, are generally allocated to various state agencies based on formulas. In turn, state agencies award “sub-grants” to faith-based and community-based halfway houses for specific programs and specific target populations. The federal Substance Abuse Prevention and Treatment – or SAPT – Block Grant is an example of a block grant relevant to halfway houses. With discretionary grants, federal agencies can exercise judgment in selecting grant recipients through a competitive grant process.

Sources for Government Grant Information

The principal federal websites for listing all government grant opportunities and announcements are and the Catalog of Domestic Federal Assistance. is the general website for all federal agencies to list discretionary grant opportunities. The Catalog of Federal Domestic Assistance lists all federal block grants available to state and local governments which could be helpful for halfway houses. In addition to these resources, check with the relevant state and local agencies in your location to learn about the grant opportunities that are funded directly by state and local agencies.

Applying for Government Grants

Refer to the website for the specific steps to take when applying for government grant opportunities online. Although these steps may appear simplistic, they are not. You may want to consider securing the help of a professional grant-writing service such as the Grantsmanship Center to learn precisely how to win government grants.