No Money” by Alina Sofia

March 21, 2017; San Bernardino Sun

Nonprofit Quarterly carried a story yesterday about the perils of community-based nonprofits competing for scarce public dollars—in that case, in Miami. But it’s a national issue, and today’s story from San Bernardino, California is a case in point.

The San Bernardino Sun reports that almost a half-million dollars in federal grants that the city usually distributes to local nonprofits won’t be going to them this year. Instead, the City Council voted to propose using all its Community Development Block Grant (CDBG) funding in 2017–18 on other eligible projects, such as parks.

According to the Sun, cities can allocate up to 15 percent of their CDBG money to eligible nonprofits, and San Bernardino has traditionally done that—the current 2016–17 budget divides $465,000 among 20 nonprofits. But the law also permits spending on other projects, and the city manager told the Sun that those projects would better fit the bankruptcy plan and the needs of residents of the troubled city, located some 60 miles due east of Los Angeles.

“In light of the city’s recent bankruptcy and lack of adequate funding to address deteriorating public infrastructure (including parks and community centers that serve families and persons with low to moderate incomes), the city staff recommends eliminating the use of CDBG funds to support local nonprofit public service activities for a period of up to five years,” he wrote in a report to the City Council.

As an alternative, these funds will be redirected to eligible fair housing (required per the federal regulations) and capital improvement activities to address the number of failing city-owned public facilities and infrastructure (e.g., streets, sidewalks, parks) in designated income eligible areas of the city. This approach will maximize the use of CDBG resources and result in a more expansive benefit to city residents.

Of course, all this could be moot if President Donald Trump’s proposed budget eliminates the $3 billion annual CDBG allocation next year.

“Simply doling out money to charitable programs is not consistent with the (bankruptcy exit) plan we’ve given to the court, the promises we’ve made to our creditors and the obligations we’ve made to our residents,” one council member told the paper.

“Some residents and city officials have long criticized certain programs designed to help homeless people in the city, for example, as a magnet that attracts needy people from other cities to collect services here…[but] others maintain that the nonprofits are a vital part of a strategy to eventually solve the [city’s] underlying problems,” says the Sun article.

“Healthy cities have healthy nonprofits, so at the end of the day, this decision is shortsighted,” one nonprofit leader said, who pointed out that the city’s appropriations “signal to funders from other areas that you have your city’s support. We’re not dependent on it—we won’t shut down because we don’t get that money—but that’s money we leverage to get funding from other sources.”

The chair of San Bernardino’s parks and recreation commission, whose department ironically would probably receive much of the money redirected from nonprofits, told the Sun that she was “shocked” that the decision was made without consulting the impacted nonprofits.

This development points out the importance of local charities being fully engaged with the public sector decision-makers who help fund them, as well as with their communities. It appears that San Bernardino’s nonprofit leaders not only failed to successfully advocate with the city government itself, but also didn’t seem to enjoy broad-based support from local residents.

Most local nonprofit leaders acknowledged that the loss of CDBG funding would not be fatal, but it would still present challenges.—Larry Kaplan