Sept. 11 exacerbates burden to local charities

Leaders of Silicon Valley's charities are worried.
During the past months, they have seen a drastic increase of people coming for help, which they soon might not be able to offer.

"Our shelter is almost full…We are really anxious," said Maureen Wadiak, associate director the Community Services Agency of Mountain View and Los Altos.

Some shelters in the Bay Area have reportedly been forced to send away clients. In San Francisco, one-night homeless count found 55 percent more people than a year ago, surging from 5,376 to 7,305, and almost half of them were living on the streets, according to a count conducted by 121 volunteers in October.

As the unemployment rate was rising, the welfare rolls continued to fall. Prior to the Sept. 11 attacks, local non-profits have already suffered because of the economic downturn, and the Sept. 11 just pushed that along even further, social workers said.

"It's definitely hurting," said Sue Simpson, a leader of the United Way Silicon Valley (UWSV), which has seen a $1.5 million drop in overall donations over the last year. Stock gifts to the UWSV have plunged nearly 90 percent from $1.3 million last year to about $200,000 this year.

That meant over 100 community services organizations, which provide everything from emergency shelter and food assistance to crisis family counseling, would face a 15 percent cut in their United Way funding. About 1.5 million people are supported by these agencies.

Many non-profits leaders are also worried that contributions to the Sept. 11 funds would be made at the expanse of local community services. The valley is estimated to have sent $20 million to New York after the Sept. 11 attacks, local media reported.

Michelle McGurk, spokesperson of the Community Foundation Silicon Valley (CFSV), stressed it was too early to tell the full view of contribution levels, as the busiest fund-raising season just started and will last through early January. But she also said local non-profits will face a formidable task.

"We have accumulated one thing after another that hit the charitable community…layoffs and the stock market drop came in the midst of energy crisis; the state surplus has disappeared; the flood of money poured into New York, and on the top of that there are state budget issues that are related to the Sept. 11," McGurk said.

"Each one impacts the next level down," she added.

The Silicon Valley is one of the areas hardest hit by the economic downturn and the Sept. 11 aftermaths, local non-profits said.
With an extraordinary growth during the previously prosperous years, the valley had provided tremendous job possibilities, attracted numerous job seekers, and now many are becoming the burden of the social safety net. Some social workers are beginning to hear back from their success stories who have recently lost their jobs.

Gil Villagran, an official with Santa Clara County's social services agency, said he has seen an emergence of what he called "a new level of poor people" - people who were previously working and now becoming unemployed.

"Everyday I meet people who say, 'I worked for a dot-com and it just went out of business,'" Villagran said.

The Silicon Valley posted its highest unemployment rate in seven years on Nov. 9. State figures show that Santa Clara County's jobless rate rose to 6.4 percent in October, up from six percent in September and four times higher than the 1.6 percent in October 2000. There are now 27,000 fewer jobs than last October.

Cutbacks in government spending and acts on terrorism also exacerbated the burden of local charities, many of which heavily rely on government subsidies.

Maureen Wadiak, associate director of the Community Services Agency of Mountain View and Los Altos, said Santa Clara county officials had informed her of a 10 to 30 percent cut in county funding to non-profits next year.

Bioterrorism preparedness for the next six months may have to drain an additional $80 million from the coffers of California county governments, which support most social services and already have tight budgets, local health officials said.

More people could fall on the social safety net once they lose government subsidies.

Thousands of California parents, able to work only because the state government pays for their child care, will have their aid end early next year because of a cut to the state's subsidized child care program. In Santa Clara County, 121 children are affected. Another 132 will lose their subsidies the following month.

According to the California Report Card 2001, almost half of all California school-age children live in families with low incomes and 20 percent live in poor families.

"The only way these people can get off welfare is to have child care for their children," Villagran said.

Besides that, about 88,000 California residents - including more than 28,000 in the Bay area - also began to be notified in late September that they are losing their Medicare HMO coverage, as the insurer cited low federal reimbursement rate, local media reported.

At the same time, California officials are considering cuts to the state's $26 billion Medicaid budget.

At a time when local charities are needed most, over half of non-profit groups in Bay Area said they have taken streamlining measures due to economic downturn, according to a November survey on 198 local agencies by the CompassPoint Nonprofit Services, a management consulting and training firm for nonprofits.
The measures included scale back expanses, hiring freeze, delay or cutback programs, freeze wages, and lay off staffs.

"The impact is happening all over the valley," said Joni Podolsky, a leader of Center for Excellence in Non-Profits (CEN).

In another recent survey based on data of 63 public benefit corporations in the valley, overall donations were down 7 percent over last year, with education, health, and arts hit hardest.
The survey, conducted by the CFSV, attributed the drop in education to a narrow reliance on foundation and corporate funding. As for performing arts and culture groups, they are severely hit by the Sept. 11 attacks because they mostly depend on local government support that comes from hotel tax. And in tough times, some private donors may consider the arts as a luxury.

Some non-profits may not be able to survive through tough times, especially new charities formed during the boom and heavily rely on stock gifts from the newly rich, Podolsky said.

Not all non-profit groups gave pessimistic reports. Both the Peninsula Community Foundation (PCF) and the Second Harvest Food Bank (SHFB) said they saw no significant drops in their local donations and they should be able to get through the hard times with reserves left from the past fat years.

Still, the SHFB has seen a 9 percent increase of needs over last year. With 618 member agencies, the food bank serves over 120,000 people monthly in Santa Clara and San Mateo counties.

"With high costs of living in the Bay area, many people have to choose between rent and food, so they don't have much food on the table," said Carlene Schmidt, SHFB's community events manager.

There is good news. Some philanthropic leaders in Silicon Valley have stepped forward to address local issues. EBay co-founder Jeff Skoll is committing $2.5 million worth of eBay stock in an effort to raise $25 million - his estimate of what valley non-profits will need in the coming months to make up for what they expect to lose.

On Nov. 19, Gov. Gray Davis said he was channeling $40 million of federal money to help unemployed Californians find new jobs. The Silicon Valley will get $14 million of the grants to aid people who are laid off after the Sept. 11 attacks.

Debbie Ford-Scriba, PCF's spokesperson, urged the public to "give locally."

"We remember what happened to the Sept. 11 and a record amount of money has been raised for it. It showed the generosity of American people. However, there is a severe recession in this community, and our non-profits partners are concerned," she said.
In a poll released late October by the Independent Sector, 73 percent of Americans who made charitable gifts in response to the Sept. 11 attacks said they will continue to give as much or more than they usually give to other charities.

But the poll also found that 26 percent of Sept. 11 donors said they will not give as much as they usually do or they won't give any more at all, and that almost half of Americans interviewed said they would reduce their charitable giving in the next six months if the economy slowdown worsens.

"We are all scared," said Jeanne Labozetta, president and chief executive of Family and Children Services.

"I usually sleep pretty soundly. I've been waking up at 3 or 4 a.m.," she said.