‘A race against time:’ Silicon Valley nonprofits face uncertain future as deficits loom

Like everyone, nonprofits are hurting during the coronavirus pandemic, but local leaders are trying to find ways keep those organizations alive until the economy starts to rebound.

Nonprofits offer some of the most critical services in communities, often on the frontlines of helping homeless, hungry and mentally ill residents. But as enormous city, state and federal deficits loom, local nonprofits are grappling with how they’ll stay afloat through the coronavirus pandemic to meet fast-growing need but dwindling budgets.

Nonprofits are often funded in part by grants and contracts with government agencies and programs, meaning they’re likely to feel the trickle-down effect of budget deficits.

Silicon Valley’s elected leaders, including Santa Clara County Supervisor Dave Cortese, state Assemblyman Ash Kalra and Congresswoman Zoe Lofgren, who represents Silicon Valley in the U.S. House of Representatives, joined local nonprofit leaders Tuesday to talk about the challenges nonprofits are facing and what the government will do to help during a virtual town hall. The event was co-hosted by the California Association of Nonprofits.

“I, and all the elected officials here, have been through deep recessions, earthquakes and every known disaster that California can face, but this is an order of magnitude beyond anything we’ve ever experienced,” Cortese said. “Somehow, we have to get tax revenue back into generation quickly enough to avoid local government running out of money and essentially collapsing the entire safety net system.”

Nonprofits working on thin margins make up a critical cross section of California’s economy and core services. The industry generates about 15 percent of the gross state product and provides services governments rely on heavily to keep communities healthy and happy, according to recent data by the California Association of Nonprofits.

But early on in the crisis, nonprofits struggled to get some of the help that the private sector businesses got through the federal CARES Act and relationships with major banks as the pandemic began shutting down the economy. Silicon Valley was among the first regions to feel the impact, as local leaders issued the first shelter-in-place order in the country.

Now that seems to be getting better, said Kyra Kazantzis, chief executive officer for the Silicon Valley Council of Nonprofits, who was on the call Tuesday.

“It was a huge pain in the tuchus to get those loans,” she said. “The banks weren’t ready, some of the banks didn’t do what they were supposed to do, obviously the guidelines were late. But now some of that money is in play, and it’s going to save a bunch of nonprofits.”

Even so, the help that is available is not enough to meet the need, she added.

Lofgren agreed. She and other House Democrats are pushing for another coronavirus-related stimulus bill, which would funnel about $1 trillion into states, counties and municipalities and would open more funding accessible to businesses and nonprofits.

The $3 trillion bill, known as the HEROES Act, passed the Democrat-majority House last week, but has been characterized as “a grab-bag” bill and dead on arrival by leaders in the Republican-led Senate.

House Speaker Nancy Pelosi said she hopes the HEROES Act will serve as a starting place for negotiations on a bill that can pass both the House and Senate. But that means it is still unclear what federal relief for states, businesses and individuals hoping for another stimulus check may look like in the future.

“The approach we’re taking is that this is obviously an emergency that none of us have experienced in our lifetimes — I mean, no one living in America today has seen anything like this,” Lofgren said. “We have to step up to the bat and keep our country from sinking.”

In the meantime, state and local leaders are pushing to support local nonprofits, which employ one in every 14 jobs in California.

Cortese said he’d support an extension of the county’s moratorium on evictions for renters affected by the coronavirus and for small businesses. Currently, that moratorium is expected to expire May 31.

He is also advocating for additional funding relief related to mortgages and rent payments at the state and federal levels, and wants the county to continue contracting with nonprofits, though he acknowledged that funds are becoming increasingly scarce.

“If we don’t get continued assistance from Washington, especially on the fiscal side, all of us — everybody who’s involved in this call — we are going to be in even deeper trouble,” Cortese said, characterizing the situation as “a race against time.”

Much of the work that nonprofits do is funded by grants for specific projects, or through events and major fundraisers, many of which have been canceled this year. But cities — particularly San Jose — and local governments have been flexible about rerouting grants to new uses around the pandemic response, Kazantzis said.

At the state level, Kalra has signed letters to Gov. Gavin Newsom to continue to fund and award contracts with nonprofits in the state. He’s supported efforts to enact a statewide eviction moratorium on commercial properties that small businesses and nonprofit call home and to approve more funding for food banks and other social safety net programs.

Kalra also co-authored bills aimed at protecting renters and small businesses and nonprofits, though those bills have not yet been approved.

“These letters and legislation we’re introducing … are ways to put pressure on and send signals as we have conversations with the governor to protect our most vulnerable nonprofits and small businesses through this crisis,” he said. “And of course, protect our renters, who many of the nonprofits … support every day, especially through this crisis.”

Contact Janice Bitters at [email protected] or follow @JaniceBitters on Twitter.