By Matthew S. Bajko
Bay Area Reporter, Vol. 32 No.52 December 26, 2002

If anything, 2002 brought a perfect storm to the city's non-profit agencies. Just as they began to see revenues decline and funding cut, many agencies experienced an upswing in demand for their services and support.

All indicators point to 2003 as being even nastier financially for many service providers.

Already the AIDS Emergency Fund has announced next year it is cutting back cash grants given to people living with HIV and AIDS, and Project Open Hand is bracing for another difficult year feeding the Bay Area's hungry.

But not all the news is bad. Positive Resource Center pulled itself out of a near catastrophic budget crisis and expects to finalize several long-term contracts next month to ensure it longevity. And the Horizons Foundation remained a strong safety net for many community groups faced with dire monetary woes last year.

AEF slashes grants

Beginning in January, AEF will implement new guidelines on how it makes grants, cutting off for the first time in the agency's 20-year history clients who have come to rely on it for help in times of crisis.

Clients who have accessed grants in any two calendar years since January 1, 1997 will no longer be able for another round of funding next year. However, those clients who are eligible for a second round of funding will receive $500, an increase of $100 over the previous cap of $400 for second-year clients.

AEF will continue to give $600 to first time clients. But it will no longer cover non-emergency expenses, such as utilities bills, gym memberships, cell phone costs, or long distance telephone bills.

The fund estimates that the new restrictions will affect 600 people who previously could have applied for new grants in 2003. Those individuals will now have their applications for funding rejected.

“ It gets us back to our original mission, which was emergency money for people in crisis,” explained Mike Smith, who became the fund's first paid executive director this year. “Unfortunately, there is a large number of people in San Francisco who are always underfed and on the verge of being homeless. We are not able to continue to put a Band-Aid on that problem.”

Next year, the agency hopes to pare its client list down from 3,000 to 2,400 people. Also, the fund is sending a somewhat different message than the one its clients have come to expect.

“ We are going to be there for somebody who has HIV and is about to lose their house. But theoretically, the money from us and other sources would get that person back their feet and fix their short-term financial crisis,” said Smith. “We do have probably close to 1,000 clients who are sort of constantly in that emergency crisis stage and every year show up on their emergency date to get money from us.

“ We cannot be an entitlement program. We can't be part of the general homelessness safety net in the city,” added Smith. “We are not big enough. We have limited resources and what the board has said with this decision is we want to focus those resources in those people most in need for whim we an make the biggest difference.”

But the timing of the announcement and how the board made its decision has brought about criticism from some of the agency's clients and supporters. AIDS advocated question the fund's changing from being volunteer-run to hiring an executive director and wonder why the agency sent out letters announcing its plans a week before Christmas, when many people are out of town or distracted by the holidays.

“ If they are going to stick to this policy, I want to see some equitable sharing of this burden. Where is the balance?” asked Paul Graham, an AIDS activist and fundraiser. “Some people are being overpaid at other agencies. It brings back in the mind of people in the community ‘Here we go again.'”

Graham said while $400 many not sound like a lot of money, for someone suffering with AIDS it gives them a psychological boost more than a monetary lift. He said instead of making people ineligible for grants, the agency should have taken a different approach.

“ It certainly would have been more palatable for people not to be cut off and to receive a lesser amount or for them to establish some other dynamic,” he said.

The agency's board of directors has said it will reexamine the new eligibility requirements if the financial picture for the fund improves next year. To meet its clients' needs this year, the board drew down more than $600,000 from its reserve fund to maintain clients grants.

“ These changes reflect the painful reality of the current tough economy,” said Ralph Peterson, AEF's president, in a statement. “We have carefully drawn these new guidelines to best serve as many of our clients as possible. In lean times, we are committed to serving our neediest clients – those facing shut-off notices, evictions and uninsured medical expenses.”

The board said hiring Smith has already paid of several dividends. Smith has reduced projected overhead for the agency next year by $97,000 by signing a new lease on cheaper office space and moving many previously contracted-out services in-house.

And Smith said he has already turned his focus on better planning of the many community fundraisers held on behalf of AEF and providing more assistance to those people who raise funds for the agency.

“ It is amazing how much that kind of stuff happens all over town for us. Our year would have been just horrible if we didn't have those community events,” Smith said.

Feeding more with less

When Tom Nolan became Project Open Hand's executive director eight years ago, he was warned there would be challenges, except on one front.

“ My predecessor said you will have problems, but he said money won't be among them,” recalled Nolan.

That prediction remained true until this year, when money problems forced Nolan to lay off staff and implement across the board pay cuts, including that of his own salary.

While he had hoped to dole out raises to his staff next month, Nolan said it does not appear that will be possible.

“ It has been very hard for some of the staff people. I eliminated six upper staff positions, so the remaining staff has to do more,” said Nolan.

He said he is watching closely how much in donations the agency brings in the last two months of the year. And since before Thanksgiving, Nolan and his staff have launched an aggressive media campaign to ensure the public is aware of the agency and how many people in the Bay Area it feeds.

“ We raise 40 percent of our money between Thanksgiving and New Year's. We are watching that on a daily basis,” he said, “So far, it looks pretty good. These next two weeks are absolutely critical.”

With all agencies in the city bracing for more cuts in funding due to the growing government deficits on the federal, state and local levels, Nolan said he wants to work more closely with various agencies in the new year to help offset the drop in funding.

“ I think the financial reality is really going to offer us an opportunity to think outside the envelope. Maybe we can do structural kinds of things together like combining functions into one person in some cases,” he said.

Surviving a budgetary disaster

The staff a Positive Resource Center has already spent the last year looking at how they can be more efficient with less and tightening their belts. After losing a large contact in the fall of 2001, the agency began the new year by laying off staff and worrying the end may be near.

Through the community and government help, the center survived its toughest year to date. According to its interim executive director, there has been an upside to the struggle.

“ Organizations in financial crisis do often fall apart. People often scatter. But what doesn't kill you makes you stronger and that is my assessment of PRC,” said John Lipp, who expects to announce in the coming week several new contracts worth $400,000 for the agency.

It recently received a $25,000 grant from the San Francisco Foundation to pay its general operating expenses. And last week the agency finally received $150,000 from the state.

The money, secured by former Assemblywoman Carole Migden had been put on hold die to the state's budget crisis. After an inquiry by newly elected assemblyman Mark Leno (D-San Francisco), the state released the cash grant to the agency.

The agency also hopes to announce in February the hiring of the new permanent executive director. And it has spent the last year building up a donor base it hopes to cultivate into a strong network of support over the next two years. Though the agency's enthusiasm for the future is tempered by the continuing downturn in the economy.

Part of what we are doing for planning in 2003 is being very conservative about how many dollars will be there. We are being very careful not to over spend,” said Lipp.

Though he added, “we are feeling very good about next year, which for a nonprofit is a lifetime.”

Providing a safety net

Amidst all the monetary hardship of the past year, this month more than 40 LGBT organizations received an early Christmas present. The board of Horizons Foundation, the Bay Area's only community foundation dedicated exclusively to funding LGBT issues, approved recommendations for new grants ranging in size from $1,000 to $8,000 to the numerous groups.

In 2002, the foundation awarded more than $1.6 million to approximately 80 different LGBT groups. And to help meet an ever growing request for grants, the foundation hired Julie Dorf as its new director of philanthropic services and development. Dorf is a founder and former long time executive director of the International Gay & Lesbian Human Rights Commission.

Dorf joins the foundation's recently hired executive director Roger Doughty, who said the foundation will embark on a strategic planning process early in the new year to guide the institution's growth for the coming three years to five years.

“ The level of need in the community is enormous, and in many places, it is urgent,” said Doughty, “The economic situation has effected all organizations, from the strongest to the most fledgling. The number of requests we receive for help is absolutely growing.

“ Everyone I know expects it to be the same in 2003,” he said. “It is absolutely my goal and my board's goal to increase the amount we provide to the community and we will do everything possible to make that a reality. But given the economic circumstances, I cannot promise we can reach that.”