Big Squeeze Faces Valley Charities : Economy: Volume of donations shrinks as foundations, businesses feel pinch of recession. Yet agencies are called on to expand services as deprivation spreads.

After three years of recession, the San Fernando Valley’s network of charitable service organizations is weakening under the strain of ever-rising demand for services aggravated by diminishing resources.

With unemployment rising and government support for safety-net programs declining over the past three years, the leaders of private nonprofit agencies that feed and house the poor, train the disabled, counsel child abusers and reshape troubled youths say they are being forced to go into the red, turn away the needy and redouble their fund-raising efforts.

Yet in recession-bashed Southern California charitable giving appears to be weaker than elsewhere in the country. Corporations and foundations, hit by multiplying requests to help charitable causes, are holding the line on their contributions or, in some cases, cutting back. Many small businesses that Valley charities depended on for sustaining donations are having troubles this year or simply disappearing from the area. And people seem to be more reluctant to buy a $75 ticket to a fund-raising dinner than they were in the past.

“The forces in play are that there are more agencies and organizations as compared to a few years ago, there’s less government funding, there’s less money coming from the traditional large corporations and foundations that heretofore have been the wellspring of contributions,” said Don Shellgren, senior vice president of corporate relations for Transamerica Life Cos., summing up the fragile condition of the charitable world.

Three years of deficit spending, for instance, has left Meet Every Need with Dignity, an agency that helps feed and clothe the northeast Valley’s poor, at a crossroad.

Over the past three years, the number of people who come to the charity for help has risen 30%, standing today at 10,000 per month. Last year, MEND spent $50,000 more than its income, eating nearly to the bottom of a fund that had been put aside for an emergency such as an earthquake. Now, a new way to bring in private contributions must be found or the philanthropic mission will be cut back.

“Our board of directors has informed us that if we don’t see a sizable increase in income, we may have to look at reducing our services,” said Executive Director Marianne Haver Hill.

As a result, Hill said, the board of directors is planning for the first time to put on special fund-raising events this spring to supplement its declining revenues from private foundations and corporations.

Much the same story is being repeated from Burbank to Santa Clarita as charity organizations try to reconcile dwindling sources of money with mushrooming demands for service. With the usual sources of governmental funding holding level at best, and in some cases dwindling, charities are now competing more aggressively for corporate and foundation grants and dedicating a greater proportion of their energy to direct public solicitations.

Some have found service cuts unavoidable. Some find such reductions too repugnant to consider and instead are making 1994 a year of reappraisal as directors struggle to piece broken budgets back together.

*

This year, the Los Angeles Family Housing Corp., which operates the Valley’s largest temporary homeless shelter, has seen a 20% decline in corporate, foundation and individual donations, the source of more than half of its $2.5-million budget, said Executive Director Nathaniel Hutton.

“It’s very difficult to get funding from the foundations and individuals like they’ve been giving in the past, because they don’t have it to give,” Hutton said.

In some cases, the difference has been made up in other ways. Hutton said some churches that used to donate money are now sending volunteers to prepare a meal once a week.

Hutton has also laid off two employees and pared the supply budget. But he said the next logical step, cutting back on the essentials such as food and bedding, is out of the question.

“We can’t scale back on our mission,” Hutton said. “Our mission is becoming even more prevalent because of the number of people on the streets.”

Consequently, the agency is contemplating its first aggressive public solicitation. The possibilities under consideration include special events and even telemarketing, Hutton said.

Most organizations that provide direct services to the needy find it necessary to cobble their budgets together from multiple sources. Money comes from local, state and federal government, from churches and small companies in the neighborhood, from wealthy individuals and large corporations, from charitable foundations and from events such as dinners and golf tournaments.

Struggling to keep pace as human hardship multiplies with the region’s rising unemployment, hundreds of organizations find themselves competing for donations that at best remain stagnant.

In its most recent Giving U.S.A. survey, the American Assn. of Fund-Raising Counsel reported that charitable giving grew slightly nationwide in 1992, as it has every year since the 1950s. However, the $11.57 billion given to human services was less than projected at the beginning of the year. Also, corporate and foundation giving has remained flat for three years.

Moreover, though the AAFRC does not publish regional reports, United Way’s annual campaign suggests that donations from the Los Angeles region are falling well behind the rest of the nation. The agency’s worst campaign in two decades brought in 4.3% less than the prior year nationwide, but was off 11% in Los Angeles, said Patricia Murar, vice president for the North Angeles Region.

Meanwhile, state benefits for the poor, the disabled and the elderly have all been reduced from 20% to 25% over the past three years as a result of California’s budget crisis.

*

The softening of philanthropic giving has many causes: the exodus of the Valley’s large aerospace firms such as Lockheed and Hughes, the demise of many smaller companies that depended on aerospace contracts, recessionary belt-tightening and the fall of interest rates, which shrinks the annual production of endowment funds.

Over the past five years, government funding of programs that help the needy has leveled off or declined as local, state and federal agencies struggle to control growing expenses. Last year, for example, the city of Los Angeles cut $91,000 from its grant to Van Nuys-based Organization for Needs of the Elderly, said board Chairman Michael Goodman. Consequently, the agency was forced to cut several services and will be forced to increase its private appeals to prevent further service cuts.

Long-established sources of private contributions are also in decline, sometimes disappearing in huge chunks. Lockheed’s relocation of its Aeronautical Systems Co.--the famed Skunk Works--from its Burbank facility probably cost the Valley area $1 million in private charitable contributions, including the company’s public benefit gifts and the employees “Bucks-of-the-Month” contributions, said Valley business consultant Ross Hopkins, the company’s former director of public affairs.

In spite of the recession--or because of it--some corporations have been able to increase their charitable giving. Yet, even those are growing more selective.

Warner Center-based Blue Cross of Southern California has recently announced a public benefit program that provides $5 million annually over the next 20 years. But only a small percentage of organizations will qualify.

“We are tending to focus our charitable contributions in areas of our industry,” said Jo Cazenave, director of constituent relations for Blue Cross. “Unfortunately there are a lot of good worthy programs out there we wish we could support, but we feel we just have to focus in the area we have been mandated to do and have a responsibility to do.”

By far the most dramatic disruptions have visited community organizations that rely on United Way funding. Buffeted by an internal scandal at the national level two years ago and the broad decline in charitable giving, the United Way has suffered substantial deterioration of its contribution base.

Over the past two years, the United Way’s North Angeles Region has cut funds to its 63 Valley affiliates by 50%. The agency’s volunteer fund allocation committee has tried to protect small, struggling organizations such as Haven Hills, the Valley’s only shelter for battered women, but has consequently had to extract huge cuts from other agencies considered more able to absorb the loss. Among those worst hurt was Catholic Charities, which this year received $400,000 less than its 1990-1991 United Way allocation of $783,000.

*

As one source slacks, an organization will lean more heavily on another, invariably finding the competition heightened by other organizations doing the same.

Few philanthropic organizations have escaped the erosion of their financial resources.

“Not only I, but almost every nonprofit organization I talk to is having much more difficulty raising funds than they have in the past,” said Barry Smedberg, executive director of the San Fernando Valley Interfaith Council, which operates nutrition, health and day-care programs for the frail elderly and coordinates interdenominational church activities including a shelter program for the homeless.

About 75% of the council’s $3-million annual budget comes from the government, but the leveling off of funding forced Smedberg to go after more corporate and foundation money five years ago. Now his corporate donors are getting shaky, Smedberg said.

Some donors have reduced their contributions and others have advised Smedberg not to expect the same amount next year.

Another recourse is to pick up the pace of community fund raising, but even proven methods such as charity dinners seem to be producing less.

The Independent Living Center of Southern California Inc., a Van Nuys agency that prepares people with serious injuries or congenital disabilities to live on their own, derives almost 90% of its $700,000 budget from government contracts but relies on community fund raising to sustain services that cost more than the government pays.

This year, proceeds from the center’s annual dinner were 20% to 25% lower than in the past, said Executive Director Norma Vescovo.

“It’s just not there,” Vescovo said. “People that were able to give before are not able to give as much. Even though it was costing us more, we charged a little bit less.”

*

A silent auction of items donated by community merchants also produced less than usual.

“Not only did you have fewer things donated for it, you have fewer people willing to buy something from it,” Vescovo said.

Also, only 30 businesses bought space in the event’s advertising book, compared to the usual 75 to 100.

“You just cut back,” Vescovo said. “We have cut back on staff in a couple of offices in Bakersfield. We’re going to cut back on our transportation because transportation is such an expensive item.”

The one saving grace for Independent Living Center is that demand for its services is not driven by the economy.

But organizations that serve the most basic human needs are being squeezed both ways. As the worsening economy diminishes the sources of money to pay for their work, the demand for what they do rises in direct proportion.

At MEND, the demand for food and clothing has grown 30% each year for three years, said Hill, the executive director.

In the first 10 months of last year, the agency had 66,074 people come through its doors, 56,891 of them for food. This year, the total for the same period rose to 104,998, of whom 81,221 came for food. In October, food was handed to 10,318 people, 966 of them never before seen by the agency.

Individuals can come back for food only once a month.

Three mornings a week, they line up in the cold outside the MEND office on Van Nuys Boulevard, waiting for their turn to be interviewed by a counselor who takes down information on their housing, employment and health.

After the interview, they go to a counter to pick up a box stuffed with three days’ supply.

*

Since its inception in 1971, MEND has built a volunteer corps of 500 who pack food baskets, sort clothing and furniture, teach English and administer medical and dental care. Large quantities of food are donated by supermarkets and churches. Other goods come in periodically.

Such donated goods and services allow MEND to deliver a mountain of goods on a relatively low annual budget of $330,000.

But, the cost of operation has risen steadily, as more was spent on utilities, transportation, insurance, salaries for new office workers and occasionally food purchases when donations were not sufficient.

“The problem for us is that our income has become flat,” Hill said. “We just can’t keep up with the demand.”

Some of their once dependable donors are pulling back.

“One company gave us $7,500 every other year,” Hill said. “This year they’re giving us $1,000. According to them, they’re getting a lot more competition for their funds.”

MEND’s directors are hoping that a surge in giving during the holiday season--when the bulk of donations from the public come in--will pull the organization through, Haver Hill said.

Although many organizations are hoping to get a boost from this year’s year-end appeals, there are signs that the spirit of charity may not be bouncing back yet. The Salvation Army’s annual Christmas kettle drive is down 21% from last year, reflecting a nationwide pattern, said Capt. James Halverson, commanding officer for the Valley.

“Last year I raised $127,000 through our Christmas kettle program,” Halverson said. “This year the projection is $100,000.”

The kettle campaign supplies about a third of the cash the Army spends annually serving four meals weekly at the Corps Community Center in Van Nuys and to buy housing vouchers and food for the homeless.

“We try not to turn anybody away anyway,” Halverson said. “We’ll have to go in debt a little bit to do so. We hate to operate in the bad, but that’s a possibility.”

Deficit spending has almost become the norm for the organizations on the front line of the struggle against human deprivation.

“We’ve been running a deficit on food donations every month since July,” said Cherie Combs, executive director of the Burbank Temporary Aid Center, which gives food and lodging to the needy.

Last year, in the five months from July to November, the agency gave away food worth $37,000. This year’s total for the same period is $46,000, Combs said.

When donated food runs out, Combs buys more.

“We’re running about $3,000 a month short in food donations,” she said.

“With your donor base shrinking and the same agencies requesting more money, your donors are having to decide who they are going to give to,” Combs said. “They have some hard decisions, your donors. It seems like we’re all equally deserving, but we’re all taking money from the same base that is shrinking.”

*

In the face of such deprivation, charitable organizations call on resilience and hope to continue.

“Our problem is that we don’t turn people away,” said Carlos A. Reyes, executive director of the Home Visitation Center in Pacoima, which helps poor families in Pacoima with food, clothing, counseling and referrals to government services. “That increases our cost too. It increases the wear and tear on the human beings who work here, the volunteers.”

In the past, United Way sustained about half Home Visitation Center’s $105,000 budget, and government grants and other private contributions provided the other half.

Trying to protect the fragile agency, United Way reduced its allocation by only about $5,000, but the agency also lost a $25,000 grant from the county of Los Angeles that paid for a temporary shelter in Santa Clarita.

Reyes said he was forced to close the 17-bed shelter when its founder, Sister Mary Dominic, retired and he would have had to come up with $30,000 to fill the position.

“Financially, we just couldn’t replace her,” Reyes said. “That was very heartbreaking for us.”

Reyes also had to lay off the shelter’s other staff member.

He’s going to try his hand at corporate and foundation grantsmanship hoping to prevent further losses. It’ll be a long haul. Most charity heads who are successful at it say they had to work diligently for five years before the effort paid off. But Reyes has faith.

“We ain’t giving up,” he said.

“We’re going to get some grants, one way or another. There’s no way we could survive this long and be denied.”