Since this is not a public service, then no rationing is not bad. In the US, a lot of the homeless shelter are faith based and each only have so many beds to go around each night.
There are not more since someone has to put up the money for the investments. And entrance fees would not likely work for anything new and not novel. Only the government can spend more than it makes.
I don't think you would be permitted to have a faith-based test for entry into a homeless shelter in the US, though, even if the shelter were faith based. I'm not a lawyer but I've seen enough fair housing act noticed when buying, selling, and renting housing.
Interesting, but since no money is changing hands I wonder if there are exceptions. I mean I can see some people preferring people sleep on the streets than see a faith-based test allowed to exist, but surely those people's irrationality doesn't prevail?
I mean, you could ask the same question for a race-based test, and come to the same basic conclusion: that it is "irrational" to prevent it.
I think you have to leave look a little deeper to reach a correct conclusion. Namely: I don't think significantly more free housing would in fact be offered without these regulations. So it would not be rational to allow this type of discrimination. The regulation in essence provides an anchor "price" for free housing, while not distorting the "market" very much. This is a good type of regulation to have.
There are not more since someone has to put up the money for the investments. And entrance fees would not likely work for anything new and not novel. Only the government can spend more than it makes.