San Francisco nonprofits brace for layoffs after budget cuts

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An estimated $160 million in cuts are looming for San Francisco’s hundreds of nonprofits, after Mayor Daniel Lurie’s budget was approved in an early morning vote last month.

Now, nonprofits are starting to determine how their organizations will change over the next two years, and whether they will have to close their doors.

Last year, San Francisco spent $1.5 billion on 745 nonprofits across the city, the majority of which cover homelessness and supportive housing. This year and next, that number will appear slightly smaller, but with big consequences for nonprofits and those they serve, many of whom are new immigrants, low-income or unhoused. 

Several nonprofits have reported that they will have to lay off dozens of staff members, if not shut down their programming altogether, if their funding is not restored. 

The San Francisco Human Services Network, a coalition of health nonprofits, may lay off more than 50 staff members “at the very least,” according to Rocio Molina, the network’s director of human services.

The network had asked for a 4 percent increase for members to keep up with rising costs for its members, and received just 1 percent. Molina considers that a cut, given that insurance and property costs have gone up, and the provider can’t afford to keep up. 

The San Francisco AIDS Foundation has already laid off 19 staff members, as first reported by The Bay Area Reporter last week, after the start of the fiscal year on July 1. The nonprofit is in the midst of a battle to restore its federal funding, and has faced financial challenges for months. 

Others, including the Latino Task Force and Project Homeless Connect, are seeing their city contracts zero out. They say they may lay off the vast majority of their staff, if not shut down altogether, and are looking into all possible ways to avoid closure: Trying to find a generous donor, for instance, or doing what they can with just a couple staff members. 

Since the 1970s, San Francisco has worked with hundreds of nonprofits to provide public services for the city. Residents get public services without having to pay the higher wages most city workers earn, and without pension obligations.

“The idea of contracting out is a conservative idea,” says Patrick Murphy, a professor of urban and public affairs at the University of San Francisco. “For the last 40 to 50 years, this has become a hallmark of city government. Rather than hire an employee on a government payroll, you could achieve that more efficiently and more cheaply.” 

Elected officials are also more beholden to city workers than nonprofit ones, even if they’re both providing public services. After an arduous night of negotiations, the Board of Supervisors managed to retain 57 city jobs out of the roughly 100 positions the mayor’s budget threatened to cut. 

But the nonprofits were, for the most part, not as lucky. 

“It’s harder to break the relationship with a government employee,” Murphy said. But, with a nonprofit worker, you can just say: “Your contract is up for removal.” 

That’s the message that Project Homeless Connect received in the mail last spring. The 21-year-old organization, formed in 2004 by then-Mayor Gavin Newsom, did ultimately lose all its funding when the budget was finalized, essentially shutting the organization down.

Pamela Grayson-Holman, the group’s executive director, says the organization, which provides drop-in services to connect homeless people to social, medical, and supportive resources which can take months to secure, had a close relationship with the city for decades. The nonprofit sees an average of 60 homeless clients a day, she said. 

Grayson-Holman was “baffled” when she learned their funding had been cut. 

“It’s devastating,” said Grayson-Holman. “We have been a dedicated partner to the city for 21 years. … We didn’t get the opportunity to plan.” 

But more than that, Grayson-Holman says the cuts will be more harshly felt by her clients. She says that providing homeless San Franciscans with a one-stop-shop for services that are often daunting to navigate on their own is “an everyday need.” 

Grayson-Holman says her best guess as to why her organization was cut off this year is that it doesn’t directly provide shelter beds, which has become a campaign priority for Mayor Daniel Lurie, who vowed to stand up 1,500 shelter beds across the city before walking that promise back last week. 

But Grayson-Holman says they do help homeless San Franciscans find a bed, by helping homeless residents go through the system. “It doesn’t happen overnight,” says Grayson-Holman. “It never does.” 

Correction: A previous version of this story said HealthRIGHT360 might lay off 50 staff members. Those numbers were for the entire San Francisco Human Services Network, of which it is a member.