An invisible earthquake is shaking the nonprofit sector in California. That’s how Jan Masaoka, executive director of CompassPoint Nonprofit Services, a consulting and training firm for nonprofit organizations, described the effect of the latest blow to nonprofits in the Bay Area: a growing energy crisis in an uncertain economy.
Combined with escalating occupancy costs and a shortage of labor, the energy crisis is throwing Northern California’s nonprofits into a budget nightmare.
“It’s killing people,” Masaoka said. “Utilities have always been a budget item, but not a major budget item. Now they are (a major item), particularly this summer in warmer climates than in San Francisco, like Southern California. Everyone is going to have to take this into account.”
David La Piana, principal of La Piana Associates, a management consulting firm working on strategic issues for nonprofits and funders, said increased power costs just add insult to injury to already stretched nonprofits.
“Most nonprofits budget occupancy costs,” he said. “The rent part of occupancy costs has been going up for years and has reached a critical juncture. If your power bill doubles, which it probably has in the last month, coupled with the current proposed 50 percent increase by PG&E (Pacific Gas & Electric Co.) — that could be really hurtful.”
In an effort to ward off a potential budgeting disaster, most nonprofits are already taking steps to conserve energy. CompassPoint, for example, has started turning computers on 15 minutes before a class begins versus one hour before, which had given them time to test for problems. Others are asking employees to turn off lights in rooms where natural lighting is available.
Organizations that rely on energy to serve their clientele have had to find more creative ways of dealing with the energy crunch. For example, Project Open Hand, an agency that provides meals and nutrition for people living with AIDS, seniors and people who are homebound and critically ill, prepares 1,200 meals each day. Tim Etheridge, director of communications, said that despite the fact that employees are very conscious of their energy use, they have to be able to use their kitchen every day or people will not be fed.
“The kitchen is something we have to keep going,” Etheridge said. “What we can do is work with energy conservation more so in the office. Energy costs are a major concern, but we’ve got plans. We’re not wasting energy, and we’re doing what we can to help the whole state in general.” Project Open Hand’s biggest fear was that frequent rolling blackouts would keep the nonprofit from serving meals to clients. Organizers had to come up with a contingency plan for all steps of the cooking process, depending on the time of day of the blackout. For example, if a blackout occurs in the morning when meals are being cooked, there is a generator in place; if a blackout occurs in the afternoon when meals are being packaged, volunteers package them by hand.
The Berkeley-Albany YMCA is another example of an organization that uses its facility for more than just office space. With approximately 1,200 square feet, including 80 hotel rooms and three swimming pools, the YMCA must consider the safety of its members during blackouts, especially in the shower rooms. According to Neal Henderson, director of property, the YMCA is doing everything it can to conserve energy, including “de-lamping” the building, but its utility bill has already increased by almost 50 percent in one month.
“I’m concerned about the long-term effect on everybody, from staff to members,” Henderson said. “It’s already expensive to live in the Bay Area. We need to attract good, quality employees, and this just makes it all the more expensive to live here.”
Rolling blackouts seem to be less of a problem than cost. How will struggling organizations that operate on a fixed budget deal with rising energy costs in the future? Organizations like the Diocese of San Jose, which relies on contributions from its parishioners for its funding, are particularly stuck. According to Andrew Kille, assistant in the Office for Parish, there is no way to pass an increase in energy costs along to contributors; instead, any increase in fixed costs means a diversion from other program resources.
“Our organization runs on a very slender budget, which is common to most nonprofits,” Kille said. “Every year our budget is based on looking at what the past year’s budget was like. An increased anticipation of costs will entail shifting funds from other sources. We can anticipate that there will be increased costs, but we can’t anticipate saying we’re going to receive more in donations. People are giving what they can give. We can’t go back and take a second collection, for example, because energy costs have gone up.”
La Piana said that nonprofits are used to dealing with adversity, but the fact that nonprofits in the Bay Area have also been hard hit by rising occupancy costs and a shortage of labor makes the energy crisis that much harder to handle.
“Nonprofits are very resilient in finding ways to deal with things like this,” he said. “This is not a make-it-or-break-it issue for most nonprofits. They will work it into their budgets, but it will be an added stressor. The bigger threat is that the energy crisis, coupled with the economic downturn, will impact corporate and foundation giving. This could be a much bigger chunk of money lost to the nonprofit sector.”
According to Masaoka, funders and government organizations have not yet increased their contributions to nonprofits to compensate for any of the problems affecting the Bay Area. “If you’re a nonprofit, your rent is doubled, your energy costs have tripled, and there’s a lot of vacancies employment-wise,” she said. “That’s a lot of problems to deal with. You have to address it both on the fundraising and the managerial side. Trying to solve it on one side or the other probably won’t be enough.”
Gina Bernacchi is a reporter for the Denver News Bureau.