Providing services for people with disabilities and their families since 1951.
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Providing services for people with disabilities and their families since 1951.
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News/Press Releases
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Nonprofits find they need aid of their own Charities have little cushion in tough economic times
By
Jennifer Vigil November 29, 2003 It has become a regular complaint of leaders in private industry – with California's high costs, they say, it may be better to pick up and do business someplace else. However, nonprofit agencies, many of which depend on those same businesses for contributions, don't have the luxury of leaving. Yet they face the same expensive web that has ensnared companies in California, said Skip Covell, executive director of Arc of San Diego, an agency that aids the developmentally disabled. Charities, Covell said, have little recourse when their expenses skyrocket. "This is a tough time for all businesses, but it really is for all nonprofits," Covell said. "We're at the mercy of the state budget and at the mercy of what the Legislature does in terms of business. Our problem is we don't set our rates. We can't offset our costs by charging a little more." At a time when California residents and business owners are grumbling about everything from surging workers' compensation costs to the now-vanquished tripling of the vehicle license fee, heads of nonprofit agencies say their already strapped budgets have taken substantial hits. Covell has seen his organization's spending on workers' compensation jump from $500,000 two years ago to $3.3 million today. Part of that leap is due to new employees Arc brought in to administer a large contract, but Covell estimates that without the steep increase in workers' compensation expenses he still could have kept his rates at about $1.5 million a year. The burden is pushing him to explore self-insuring the agency, which requires permission from the state. He also fears the effects of a new law that by 2006 will require firms with 200 or more employees to provide workers with health-insurance coverage. That, Covell said, has the potential to "just end the program." Gov. Arnold Schwarzenegger has made revamping the workers' compensation system one of his priorities. He has proposed reforms that could save up to $11 billion. The Assembly passed reforms two months ago, but legislators said those changes might be rolled back so the governor can take a fresh look. But as part of the effort to balance the state's budget, the governor has also proposed steep cuts to social services, which could force charities, some of which have contracts with the government, to make cutbacks. St. Vincent de Paul Village, a San Diego nonprofit that serves the underprivileged, had been concerned about the status of the vehicle-license fee because it maintains a fleet of trucks to pick up bulky donated items, and often rents larger vehicles. The charity dodged that bullet, which they estimated could have cost an additional $31,000 a year, but officials are also confronting workers' compensation woes. Father Joe Carroll, the head of St. Vincent de Paul, which employs 580 people, is calling for state leaders to consider how workers' compensation and other policy issues affect nonprofits. "We definitely want the governor to work on that issue as quickly as possible," Carroll said. Pat Libby, who helped launch the University of San Diego's graduate Nonprofit Leadership and Management Program last year, says all charities are facing a daunting convergence of several problems. They include the economic malaise that followed the 2001 terrorist attacks, which led to a reduction in giving, to the current funding issues facing public agencies, which often contract with nonprofits to coordinate health and welfare and other programs. Libby said there has been a steady reduction in government support for those programs over the past decade. Yet, San Diego, despite the recent outpouring of gifts to aid fire victims, faces more challenges, Libby said. That's because, unlike the nation's other large cities, it lacks a foundation with the resources to distribute more than $100 million a year. "Even for the state of California, San Diego has always gotten a smaller piece of the pie," Libby said. "We really are at an enormous competitive disadvantage." The area's biggest charitable foundations, the San Diego Foundation and Jewish Community Foundation, distributed $42.8 million and $27.8 million, respectively, last year, according to San Diego Grantmakers, a nonprofit trade association. Julie Holdaway, of the grant-making group, said donations in San Diego were up slightly last year. But the Chronicle of Philanthropy, which oversees charitable giving, estimates that nationwide contributions fell about 1 percent last year, following several years of growth. Walter Lam of San Diego's Alliance for African Assistance has seen that loss in support firsthand. He said the refugee-aid agency he founded in 1989 has a $1.5 million budget, $1 million less than it was two years ago. As a result, Lam has laid off 15 workers. He now has a staff of 35, and trusts volunteers to handle simple administrative tasks. But those people don't have the skills to provide the level of case management or counseling the alliance used to provide to the 20,000 refugees it serves each year. "This has been one of the most challenging years of my life in the nonprofit world," Lam said. "I don't think we have seen the worst yet."
Jennifer Vigil: (619) 718-5069; jennifer.vigil@uniontrib.com |
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