San Francisco’s budget approval signals potentially dire consequences for the city’s hundreds of nonprofits, with an estimated $160 million in cuts looming over essential services aimed at aiding new immigrants, low-income residents, and the unhoused.
Mayor Daniel Lurie’s budget came under scrutiny in an early morning vote last month, revealing an impending contraction in financial support that could reshape the operational landscape for many organizations.
Last year, the city allocated $1.5 billion to 745 nonprofits that provide critical support, predominantly in homelessness and housing services. This figure is expected to decrease slightly in the coming two years, intensifying challenges for nonprofits that rely heavily on city contracts to serve their communities.
Many organizations are currently assessing the impact of these budget cuts, with some nonprofits indicating that they may need to lay off staff, reduce services, or even close their doors entirely.
The San Francisco Human Services Network, a coalition that includes major health organizations like HealthRIGHT 360, anticipates laying off over 50 staff members at a minimum, according to Rocio Molina, the network’s director.
Despite requesting a 4 percent increase to support rising operational costs, the network received only a 1 percent increase, which Molina argues effectively represents a cut, as inflation and other expenses continue to escalate.
Other nonprofit entities are also bracing for considerable reductions. The San Francisco AIDS Foundation has already laid off 19 staff members following the onset of the new fiscal year, highlighting the persistent financial challenges they face as they work to restore lost federal funding.
Organizations such as the Latino Task Force and Project Homeless Connect are confronting complete zeroing out of their city contracts, which could lead to significant layoffs or total shutdowns. They are actively exploring various avenues to prevent closure, including seeking philanthropic donations or operating with a minimal staff.
The practice of contracting public services to nonprofits in San Francisco has a long history, dating back to the 1970s. This model allows city residents to access crucial services while sidestepping the higher wages and pension obligations typically associated with city employment.
According to Patrick Murphy, a professor at the University of San Francisco, contracting out services has emerged as a preferred strategy for local government seeking to maintain efficiency and cost-effectiveness over the decades.
Despite the ongoing viability of such arrangements, elected officials tend to prioritize city employee interests over those of nonprofit workers, especially during budget negotiations. In an arduous session, the Board of Supervisors managed to preserve only 57 city jobs from the mayor’s proposed cuts.
Unfortunately, many nonprofit organizations have not been as fortunate. Murphy notes that it is easier for the city to sever ties with nonprofit workers by simply opting not to renew contracts.
This was the message received by Project Homeless Connect last spring, ultimately leading the storied organization to lose all of its funding when the budget was finalized. Founded in 2004 by then-Mayor Gavin Newsom, the organization has been serving as a vital resource connecting homeless individuals to essential social, medical, and supportive services.
Executive Director Pamela Grayson-Holman expressed her bewilderment upon learning of the funding cuts that would cripple the organization’s operations.
“It’s devastating,” she stated, reflecting on the lengthy history of collaboration with the city over 21 years.
Grayson-Holman emphasized that the repercussions of losing their services will be severely felt by the homeless population, which relies on them for navigation through bureaucratic processes that can often be complex and overwhelming.
While the organization doesn’t directly provide shelter beds, they play a critical role in helping to connect homeless residents to available resources.
“It doesn’t happen overnight,” Grayson-Holman reiterated, emphasizing the ongoing needs of her clients amid the shifting landscape of service provisions in San Francisco.
As the city grapples with budget constraints, the future of numerous nonprofits remains increasingly precarious, risking the stability of essential services vital to the community’s most vulnerable individuals.
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