San Francisco Helps Its Nonprofits Pay the Rent

May 26, 2017; San Francisco Chronicle and Hoodline

Perhaps it seems obvious, but the degree to which local economies drive the revenue streams and financial needs of many nonprofits make the management of each its own special puzzle. For instance, in some locales, municipal governments are pushing for payments in lieu of taxes, or PILOTS, but in others cities must subsidize the costs of some nonprofits’ facilities costs to keep them where they are needed.

For example, the San Francisco Bay Area is at or near the top of the most expensive real estate markets in the U.S. On the other hand, it also has one of the highest per-capita incomes in the country and is the engine pulling California’s economic recovery after the Great Recession. Despite all the prosperity, there is plenty of need for charities and nonprofits to support the underserved communities and populations in the midst of it all, and the high rents have been especially tough on the nonprofits that survive on grants and donations, struggling to stay open in the neighborhoods they’ve long served.

Help is on the way, according to reports in the San Francisco Chronicle and on Hoodline. The city, understanding the importance of local charities, awarded $2.7 million this year to 13 nonprofits so they could afford to buy or lease facilities amid skyrocketing real estate prices. A strong local economy, bolstering the city’s tax rolls, gives it the wherewithal to help.

“The role of nonprofits in the city of San Francisco was, in my opinion, born in the Summer of Love,” Mayor Ed Lee said at a news conference where he announced the grants from the Office of Economic and Workforce Development. Making reference to the “hippie era 50 years ago,” he added, “Our city registered itself as the place of love and embracement of different cultures and populations.”

The strong influence that nonprofits exert over San Francisco’s civil society and local political and government leaders is evident in the support they are getting. The responsiveness of the city’s leadership is testimony to the importance of local advocacy efforts by any community’s nonprofit sector.

Lee is seeking $1.2 billion in city contracts for nonprofits in a nearly $20 billion two-year budget proposal that he will present to the Board of Supervisors (San Francisco’s city council). A total of $6 million in grants, distributed over two years, will be included in the mayor’s budget proposal.

“In San Francisco, leases for many of these groups are being terminated and not renewed, or they’re being renewed at substantially higher rates,” said the director of consulting services and program development at the Northern California Community Loan Fund, which is helping administer the subsidies.

The Chronicle points out that, unlike a business or household, community-based nonprofit service providers can’t just move across the Bay to lower-cost Oakland (which is experiencing its own real estate boom with escalating prices). They need to be rooted in the communities they serve. Most of the grants will enable local charities to purchase the buildings they have been renting, or will provide the funding to withstand the rent increases that come with new, more expensive, leases.

The grants are part of the city’s Nonprofit Sustainability Initiative, an effort Lee launched in 2015 to keep more service organizations in San Francisco. Hoodline reports that there are approximately 7,000 nonprofits in the city. The grant money will create 26,000 square feet of new, permanent nonprofit space and 36,000 square feet of leased space for nonprofits.

The director of business development for San Francisco’s Office of Economic and Workforce Development told the website that “she’s pleased with the diversity of this year’s grant recipients, noting different districts and types of services are represented, ranging from arts classes and legal services to child care and employment training.”—Larry Kaplan