Sat, Jul

Does The Homeless Industrial Complex Exist?


 iAUDIT - When people look at the web of non-profit organizations and government agencies that are supposed to be providing homeless interventions, they see a failed system. Despite huge increases in funding, homelessness in Los Angeles continues to climb. As previously reported, LAHSA’s budget has increased by 13 times since fiscal year 2014-15, from $63 million to more than $800 million in FY 2022-23. At the same time, L.A. County’s homeless population has increased from just over 40,000 to about 75,000.  Los Angeles is not alone. Farther north, according to a 2022 report, “Since the City of San Francisco created the Department of Homeless and Supportive Housing in 2016, its spending has tripled to $668 million, while the number of homeless people has increased by nearly 16%, despite a small recent decline”.

A common explanation for the increase in homelessness is the existence of the Homeless Industrial Complex, (HIC). Those who believe the complex exists see the close relationships between developers, non-profits and government agencies as perpetuating homelessness for their own profit.  Because Los Angeles uses a deeply flawed version of Housing First, non-profits, developers, and labor unions stand to make millions in construction costs building housing that will likely never achieve the numbers needed to house all who need it.  Outreach agencies rake in millions through poorly written contracts that allow them to charge by the contact hour rather than outcomes. The Homeless Industrial Complex is a model of inhuman efficiency: rather than helping people lift themselves out of homelessness, it perpetuates it by keeping them unhoused and unsheltered, guaranteeing a steady supply of people living on the streets.  The HIC knows there will never be enough new housing built to accommodate all the homeless, but its advocatess insist congregant shelters are little better than Victorian-era charnel houses, and refuse to discuss them, thereby creating a permanent, albeit rotating, underclass of unhoused people dependent on various agencies, (and their income) for existence.

According to its believers, one of the prime examples of how the complex works is the career arc of LAHSA’s current CEO, Dr. Va Lecia Adams Kellum.  Before being hired as LAHSA’s CEO, Adams Kellum was briefly Mayor Karen Bass’ chief homelessness advisor.  Before that, she was executive director of St. Joseph’s Center, a homeless services non-profit that has hundreds of millions of dollars in contracts with the agency she now controls.

Industrial complexes often exist to funnel income to people at the top of the industry. Believers in the Homeless Industrial Complex point to the high salaries of many public and non-profit homeless agency leaders.  For example, Dr. Adams Kellum makes about $430,000 per year as LAHSA’s CEO.  Many other agency heads make well into six figures, while the people doing the actual work in the field barely make enough to pay their own rent.

All of these facts make it easy to believe the Homeless Industrial Complex exists. I’ve used the term myself, primarily as shorthand for the complicated relationship among public agencies, non-profits, special interests, advocacy groups, and the unhoused themselves. But if the Homeless Industrial Complex exists, how does it operate?  And if it doesn’t exist, how can we explain the billions of dollars spent on homeless programs with no tangible results?

Based on a career in public service evaluating many types of organizations, I believe the Homeless Industrial Complex exists, not as a nefarious conspiracy of back-room oligarchs, political hacks, and non-profit leaders, but through a combination of organizational silos, lack of oversight and performance measurement, blind ideology, and plain incompetence.  Organizations, public or private, act much like humans in their desire to preserve their existence; organizations do this by creating silos. Silos protect an organization by giving it exclusive control of a program or process.  Using homeless programs as an example, one agency provides outreach; another operates a shelter; a third provides support services; a fourth builds supportive housing, and a fifth manages the housing’s operations.  Each may do a reasonably good job at its assigned task, but because coordination among them is poor, many unhoused never receive the support they need, or in LA’s case, simply drop out of the system and are lost to the streets.  Although one organization may refer a client to the next, none is accountable to the other, so there is no continuity of services.  The agencies that are supposed to be providing accountability (e.g, LAHSA) are so mired in their own processes, they have almost no capacity to demand and enforce coordination. In LAHSA’s case, an agency that puts a contract through 140 steps before approval has little time left to measure the results of that contract. 

Silos thrive when there is little oversight of their operations or results. The lack of oversight is another manifestation of siloing.  As Andrew Hening, a homeless services systems analyst based in the San Francisco Bay area, points out here, neither the State of California nor the counties of San Francisco [and Los Angeles] have a single point of authority over homelessness programs.  In LA, homeless program services and management are split between the County, LAHSA, and the City, and within the City, multiple departments manage different parts of homelessness response. Each of those departments has its own policies and procedures.  Although the City has a nominal head of homeless policy, Mercedes Marquez, Chief of Housing and Homelessness Solutions, neither she nor Mayor Bass have much real power over operating departments.  LA has a weak mayor form of government and Bass can’t direct departments without City Council support.  Without unified oversight and authority, homeless policies become disjointed and prone to turf wars. The result is the farcical inability of a city with 50,000 employees to close one gate at a park, as described here.

Along with a lack of oversight comes a lack of performance measures.  Both Hening and Ian McCuegg, a non-profit executive advisor, cite the lack of meaningful performance measures as a critical weakness in California’s homeless response. Programs that spend hundreds of millions of dollars and that are supposed to help the most desperate among us should have robust data analytics and continuous evaluation so they can adjust their programs to best serve their client populations.  Unfortunately, as Hening, says, “When it comes to homelessness, this level of evaluation rarely happens. Again, this isn’t nefarious. I truly believe communities and organizations would if they could, but a big limitation is capacity. Very few communities have the resources (people, funding) to conduct rigorous studies like this. 

As a consequence, when programs celebrate their successes, it is often self-reported from the organization itself. Self-reporting can make it extremely difficult to make apples-to-apples comparisons across programs, particularly if programs have different enrollment requirements.”

There is a certain irony in McCuegg’s words, since organizations that spend billions on homeless programs dedicate nearly nothing to evaluating the effectiveness of those programs. A great example is one I cited in last week’s column where LAHSA claimed it has more shelter capacity than ever, yet sheltered fewer people than the previous year, and still doesn’t know (or won’t tell us) how many were repeat clients.

A natural consequence of this vacuum of accountability and meaningful performance measures is that opportunistic developers, labor leaders, and builders would step in. Much of their work has already been done for them because many political leaders have been convinced by the Housing First lobby that homelessness is really just a housing affordability problem, and that a few billion dollars in construction will solve the crisis. No organization, or its leaders, would voluntarily give up the opportunity to make millions of dollars in an environment virtually free of consequences for being ineffective.

I’m a great believer in Occam’s Razor, “The simplest explanation is usually the correct one.”  A city that’s incapable of closing a gate can hardly be expected to perpetrate a vast conspiracy required of a sophisticated Homeless Industrial Complex cabal.  An agency like LAHSA that has no idea of how many individuals it shelters is probably incapable of orchestrating a massive nefarious enterprise.  I’m far more inclined to believe what the evidence suggests: a combination of organizational inertia, poor management practices, and resistance to change has created the perfect environment for non-profit organizations to make millions from poorly managed contracts, while producing questionable results. If there is a Homeless Industrial Complex, its more bumbling Keystone Kops than Doctor Moriarty. It has grown organically, bit by bit, until now, civic leaders are faced with a nearly unreformable system that is unaccountable, unmanageable, and unable to change.


(Tim Campbell is a resident of Westchester who spent a career in the public service and managed a municipal performance audit program.  He focuses on outcomes instead of process.)