Nonprofits, charities brace for the worst Nonprofits, charities brace themselves as donors tighten belts

Seniors line up to eat a breakfast snack at Curry Senior Center in San Francisco, Calif., on Thursday, Oct. 9, 2008. The center, like many non-profits, is not receiving as much money from philanthropic organizations this year and the projections for the fourth quarter of 2008 suggest that it's not going to get better. less Seniors line up to eat a breakfast snack at Curry Senior Center in San Francisco, Calif., on Thursday, Oct. 9, 2008. The center, like many non-profits, is not receiving as much money from philanthropic ... more Photo: Kim Komenich, The Chronicle Photo: Kim Komenich, The Chronicle Image 1 of / 3 Caption Close Nonprofits, charities brace for the worst 1 / 3 Back to Gallery

At the Curry Senior Center in San Francisco's Tenderloin, which serves breakfast to hundreds of low-income elders every day, peanut butter for the toast is now a thing of the past. It is a $5,000 annual cost the center can no longer afford.

At the William and Flora Hewlett Foundation in Menlo Park, staff meetings are planned for the next three weeks to look at how the $8 billion organization - one of the biggest charities in the nation - will meet all of its pledges next year.

The economic downturn is hitting Bay Area foundations and social service providers hard. Charities are faced with cutting services at the same time people need more help.

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"We just toured the Second Harvest Food Bank in San Carlos and heard the director say she's seeing former donors and former employees come in for help," said Emmett Carson, CEO and president of the Silicon Valley Community Foundation, which has $1.7 billion in assets (having lost $9 million in the recent market downturn) and serves Santa Clara and San Mateo counties. "That was a pretty telling statement."

And, the grim economic news - including a global credit crunch, the slide in the Dow Jones industrial average, rising unemployment and a housing collapse - couldn't come at a worse time. Most philanthropic donations are made toward the end of the year.

"This is going to be a heck of a fundraising season," said David Knego, executive director of the Curry Senior Center, which has had its $2 million annual budget cut by 5 percent. "For a lot of people, the biggest chunk of donations comes in November and December. People in the nonprofit sector are looking over their shoulder fearing what's next."

There are more than 900,000 public charities in the United States. In the Bay Area, there are more than 2,000 foundations alone, as well as thousands of charities and nonprofits.

"There have only been two periods in the last 40 years when there were absolute declines in the amount of money going to giving," said Susan Raymond, executive vice president of Changing Our World, a national philanthropic consulting firm. The drops in giving followed the 1973 oil embargo and the terrorist attacks of Sept. 11, 2001.

"It takes a shock of that magnitude to the economy to really derail the stability of American cultural habits of giving," said Raymond. "Is this one of those times? We won't know for a couple of years. In the near term, it's going to be hard."

Paul Brest, president of the William and Flora Hewlett Foundation, said, "For the first time in the modern history of this foundation, we find ourselves in a national and global economic crisis."

Brest said that administrative budgets would be cut before grants. "There is no question we're going to have to do belt-tightening for 2009," he said. "We hope to keep our grant budgets as robust as possible."

Ira Hirschfield, president of the Evelyn & Walter Haas Jr. Fund, with assets of around $620 million, said the social sector will not feel the full ramifications of the downturn this year.

"If you think about nonprofit organizations and how they get revenue - from government support, membership fees, people who come though your gate, annual campaigns - the question is going to be, how many parts of their revenue sources will be hit?"

The Haas Jr. Fund distributed more than $30 million in grants last year. Hirschfield said the fund will meet its pledges for next year.

"I am concerned about now, yes," Hirschfield said. "But my deeper concern is the ripple effect we haven't yet seen but that is going to come."

Charities that received support from banks, including Merrill Lynch, Lehman Bros. and Wachovia, are left wondering what happens now.

"We've been fortunate in the past to get support from financial services, including Wachovia," said Phillip Kilbridge, executive director of Habitat for Humanity Greater San Francisco.

"We don't know what this will mean to us going forward. We are certainly doing contingency planning. We hope people will see the brand name and see we're meeting a basic need of housing. This is when we need community investment more than ever."

The Second Harvest Food Bank, serving Santa Clara and San Mateo counties, has seen a dramatic increase in the number of people needing help.

Cindy McCown, senior director of the food bank's programs, said calls to their food connection hot line rose 55 percent this year over last. Nearly 10,000 people called the hot line over the last three months beginning in July, seeking a free meal, food for a family, or ongoing help.

The food bank will launch its annual food drive Tuesday, and has a goal of raising $8 million and gathering 1.7 million pounds of food. "We get the majority of our donated dollars and food during this period," said McCown. "We're nervous going into it."

John Bell, founder of the Okizu Foundation, which operates a summer camp for children with cancer, said many longtime donors are telling him, "We won't be able to do as much."

"Basically, we're looking at our budget now and trying to figure out what it will mean if we have to cut by 20 to 25 percent next year," Bell said, noting that 750 children attended the summer camp for free this year - a 12 percent increase in oncology campers from last year.

Even the most experienced fundraisers are struck by the sense of gloom.

Dede Wilsey, who raised more than $200 million to build the new de Young Museum in Golden Gate Park, has committed to bringing in $500 million in private donations to build a new UCSF Medical Center in Mission Bay. She has raised $200 million to date.

"Everyone I call says, 'I'm sorry, I'm cutting back,' or, 'I'm not making the salary I was,' or 'I don't feel comfortable making a pledge right now,' " Wilsey said. "The effect is profound. Everyone is wondering what is going to happen next."

A generous philanthropist herself, Wilsey added, "This will sort itself out. The best thing we can do is reinvest, to get money back out, back circulating."

Susan Raymond, with the Changing Our World consulting firm, said her research on the relationship between calamitous times and levels of giving suggests there is a silver lining to the current financial storm. "When the economy recovers, giving will actually be stronger than it was before the shock. Philanthropy is to some extent a product of American culture."