Pratt details an alleged corruption model where an NGO received $57M in city funds to purchase a building listed for $11M just days earlier. This highlights how non-profits can use opaque real estate transactions and developer kickbacks to profit from public grants without providing services.

The core issue for many on the streets is not a lack of housing but severe addiction. By mislabeling it 'homelessness,' society builds an 'industrial complex' around providing services that enable addictive behavior instead of mandating effective treatment.

Unlike for-profit businesses that must deliver value to survive, NGOs rely on donor fundraising. This creates a perverse incentive where solving a problem eliminates their reason for existing. Thus, they often "move the goalposts" or even foment crises to ensure continued donations.

San Francisco's non-profits are often paid based on the number of homeless individuals they serve. This creates a perverse financial incentive to maintain and manage the homeless population like a "flock" rather than pursuing solutions that would permanently reduce their numbers and, consequently, the NGO's funding.

Pouring more money into homelessness without fixing the underlying incentive structures does not solve the issue. Instead, it funds the bureaucracy around the problem, making it larger and more entrenched, as evidenced by NYC's budget nearly quadrupling while the homeless population grew.

NYC spends more per homeless person than the median household income, yet its homeless population is growing. This suggests that without proper outcome tracking and incentive alignment, massive funding can simply make a social problem more comfortable and entrenched, rather than solving it.

For-profits must create value or die. Non-profits survive on "narrative pressure," convincing donors their cause is vital. This can create a perverse incentive to keep the problem alive, ensuring their own relevance and funding.

Criticism of the 'non-profit industrial complex' is misplaced. The root cause of misaligned incentives is politicians failing to tie public funding to performance. Elected officials must create outcome-focused contracts that hold service providers accountable for measurable results, rather than just activity.

For many in government, the state is their "startup." They are incentivized to increase their budget and influence. This can lead to perverse outcomes where a homelessness agency's success is measured not by reducing homelessness, but by growing its budget, which paradoxically requires more homeless people.