Nonprofits in a for-profit world

Publication Date: Wednesday Mar 22, 2000

Nonprofits in a for-profit world

Organizations still scrambling for money despite booming economy

Jennifer Kavanaugh

From a fund-raising standpoint, La Comida de California might appear to have a less complicated mission than other nonprofits. The organization that serves nutritious lunches to senior citizens receives about 90 percent of its $175,000 budget from the county, with the other 10 percent collected from the city of Palo Alto, donations and other sources.

But La Comida volunteers had a scare three years ago when Santa Clara County couldn't come up with the money needed to continue the program. The city of Palo Alto had to bail them out, and the county ultimately got back on track with its payments. But the incident served as a lesson to the small organization: Don't take any source of funding for granted, and be creative with the money you do have.

"It's just a constant struggle to maintain a balance," said Dave Kabakov, president of La Comida's board of directors. "To manage the money, to get people coming and buying the food."

La Comida's difficulties illustrate the precarious nature of nonprofit funding and how charitable organizations can face famine even in a time of feast. Many nonprofits have benefited from increased fund-raising opportunities in Silicon Valley. But the economic boom has placed more pressure on nonprofits as they struggle to serve increasing numbers of people lagging behind the rush for wealth.

And while Silicon Valley may have its share of generous benefactors, several nonprofits say the level of giving hasn't exactly kept pace with the skyrocketing stock values of companies down the street or around the corner.

Nonprofits typically raise money from a combination of different sources, which may include government agencies, private donors, foundation grants, corporations and fund-raising events. Many organizations have the equivalent of several full-time employees who keep tabs on not only on fund-raising trends but also what goes on in the business pages of the newspaper.

"We're always dropping (newspaper) clips on each other's desk, saying 'this company's doing this, this company's losing money,' or if their stock is declining," said Karin West, community relations coordinator for Achieve, a Palo Alto organization that provides services to children who are emotionally and developmentally disabled.

At Achieve, which receives help from corporations such as Hewlett Packard and Lockheed Martin, West said her organization has to pay attention to business changes. In particular, mergers can impact nonprofits that rely on one or both of the companies for grants or donations, she said.

"Mergers usually leave whatever giving program they have in a lull or completely wiped out," West said. "It all depends on the priorities of the new company."

Other events, such as the highly publicized bailout of the local United Way agency last year, highlighted the challenges of nonprofits in the area. Even after it averted its immediate $11 million shortfall, the United Way was forced to cut its funding to local nonprofits. The agency got in trouble after years of paying out more money than it had received.

"The whole incident was good to raise awareness," West said of the United Way crisis. "There are so many nonprofits, and there's a lot of competition for funding."

To stand out and grab the attention of potential donors, nonprofits are trying to speak the Valley's language, tailoring their fund-raising approaches to the area's business culture. Organizations are also putting up their own Web sites to describe how they serve their community, while others are putting their names on Internet charity sites that collect donations online.

Charitable organizations also try to go after what the valley has in abundance: extra computer equipment and stocks. Several computer companies in the area have been known to donate equipment to organizations. As for stocks, charities have different ways of dealing with the unpredictable nature of stocks. The Community Association for Rehabilitation Inc. (C.A.R.) in Palo Alto, for instance, has its broker sell any stocks it receives within 24 hours.

But for C.A.R. and others, the Internet, stocks and other Silicon Valley-type approaches aren't the end of the story. Lynda Steele of C.A.R. said her organization emphasizes good old-fashioned human contact: getting to know potential donors in the community and having families served by C.A.R. spread the word.

Steele said C.A.R.'s services--which also involve working with people who have developmental disabilities--doesn't translate to a Web site as well as having people see the facilities for themselves.

"People need to see what we do and meet us personally to know that their money's being well spent," Steele said.

When the funding sources have been tapped, nonprofits have to find ways to make the most of the money they do get. At La Comida, manager Elaine Myers works with different vendors to get good deals on food and also receive reduced rates on milk through county contracts. The organization, which has three paid employees, also makes use of about 40 volunteers, dramatically reducing overhead.

"We wouldn't be here without the volunteers," Kabakov said.

Other organizations, however, can't make such widespread use of volunteers. While C.A.R. relies on volunteers to help out with fund-raising events, Steele said, the services provided to clients are so specialized that payroll takes up a large part of C.A.R.'s $3.8 million budget.

"We can't run it all on volunteers," Steele said. C.A.R. has about 50 full-time and 60 part-time employees. "We need speech therapists, occupational therapists, special education teachers."

C.A.R.'s staffing needs put it in direct competition with companies who are also struggling to hire and retain employees in such a high cost-of-living area. The nonprofit's pay scale also puts it at a distinct disadvantage. According to Steele, employees who work directly with clients only make about $22,000 a year.

"We can't pay them what they could make at Home Depot or Burger King," Steele said. "They can't afford to live here. And we're caught in the middle."

Back up to the Table of Contents Page