The North West Simon Community is to cease operations and go into receivership in the coming weeks.
The board of the charity, which employs seven people, said it made the difficult decision to wind up operations due to the inability to secure increased funding.
Board Chairperson and Independent TD for Donegal Thomas Pringle said: "The last three financial statements published on our website have reflected the ongoing financial insecurity North West Simon has experienced, and we have been trying to resolve this issue over these last years.
"In September of last year, we were told that the three local authorities – Donegal, Sligo and Leitrim – had been unsuccessful in their attempts to secure Departmental approval to support the maintenance of our homeless prevention services.
"Unfortunately, it has come to this point that we cannot prudently go on any longer. We have a responsibility to tenants, all service users and staff, and ultimately, following lengthy discussions and considerations, we had to take the difficult decision to wind up operations."
Mr Pringle added: "The well-being of North West Simon clients and all service users has always been our priority and will remain our priority.
"They are understandably very concerned about their future and we will continue to do all we can to ensure that people are taken care of during this period of transition."
Mr Pringle said that the tenancies of current clients are secure as another voluntary housing agency will take over the North West Simon properties.
It owns 19 one and two-bed apartments in Donegal and two four-bed semi-detached houses in Leitrim.
Mr Pringle said the charity has no significant debt or long-term liabilities.
On behalf of the voluntary board, Mr Pringle paid tribute to the staff of the charity and early intervention and homelessness prevention services in Donegal, Leitrim and Sligo.
He said the staff members "have always been so committed to our clients and dedicated to the mission of North West Simon. Even as this is a difficult time for them as well, their concerns have been for clients and service users".
The average monthly expenditure for North West Simon is €25,000 and approximately 64% of the charity's operating income comes from a variety of fundraising activities.
