The San Francisco-Bay Area's social sector is at a critical junction. Surges in real estate prices are forcing nonprofits to close their doors or relocate. Many of these organizations' beneficiaries have also faced eviction, or have had to move. Foundations and city governments are searching for solutions and innovative strategies to maintain the Bay Area's cultural integrity, and long-standing social institutions. At Foundation Center West, we strive to highlight the issues and trends that are important to our region. We provide a platform for the voices and the perspectives of our social sector community. We were inspired by the Northern California Grantmakers' recent study on displacement and eviction in the San Francisco-Bay Area, and reached out to representatives from nonprofits, foundations, city governments and others to continue the conversation. We are excited to bring you this blog series, Could We Stay or Should We Go? Perspectives on NonProfit Displacement in the San Francisco Bay Area. Join us every Wednesday over the next few weeks to learn new perspectives on this timely and critical issue. In this third installment in our blog series, we speak with Landon Williams, program director of community development and investment at The San Francisco Foundation.
How has the San Francisco Foundation been affected by displacement?
The San Francisco Foundation has mainly been affected by displacement by the impact it's having on our grantees. In our new focus on racial and economic inclusion, we are about people, place, and power, and a large part of how we exercise that influence is through nonprofit organizations. And they are having a harder and more difficult time to try and remain in the places where they are.
We started to hear about grantee displacement a couple of years ago. Some of our grantees wanted to know if we would increase our administrative percentages on the grants that we were giving them because their rents were rising. They felt that, sooner or later, they would come up against this barrier where they just wouldn't be able to pay their rents.
Almost two years ago now, we were approached by the Mayor's Office in San Francisco to be a member of a taskforce looking at nonprofit displacement in San Francisco. At that point in time they had been getting the same kind of requests from their grantees for an increase in the administrative percentage. Also, the Board of Supervisors in San Francisco wanted hard data of the extent of potential displacement, because they were poised to pass a revenue measure that would put aside several million dollars to mitigate nonprofit displacement. First they wanted to survey the nonprofit community to see what was going on. The survey results revealed that there were a number of nonprofits in San Francisco facing displacement, or that had even been displaced from San Francisco because of increases in rent. For some who were having difficulty renewing their leases, it was largely because the landlords would only give them a one-year or two-year lease at the most.
We took the results of this survey and we presented it to several foundations to get a temperature check of the issue. Initially what was challenging was that there wasn't a great interest from foundations around this issue, and we have to recognize that it was something that was outside of typical grants and issue expertise.
To dig deeper we decided to partner with a few foundations to hear directly from our grantees. As we started to put together our survey, word got out into the philanthropic community that we were actually doing this type of analysis, more foundations gained interest. The result was a survey to 1,500 grantees, which Northern California Grantmakers then circulated. And by the time the survey was taken, and we were beginning to report out the results of the survey, the interest had grown to over 20 foundations in the San Francisco Bay Area who wanted access to the survey results, or who had found that their grantees were experiencing the same kinds of things. What we found out was that they were hearing the same story from their grantees: Nearly two out of every three nonprofits say they will have to make a decision about moving within the next five years. The cost of renting office space is 122% above where it was just five years ago. And finally something that we must take notice of is that nonprofits serving communities of color and low income communities show an especially high level of concern about the market.
How has displacement affected your grantees?
The grantees are facing a phenomenon where, in order to remain in their space, the rent has doubled and in some instances quadrupled over what they were when they initiated the previous lease. They're also facing this phenomenon where the lease that they can renew is only for one year or two years. Which makes us all think that the landlords have in mind significantly raising the rent as the demand increases for space in San Francisco. What's also happening with our grantees is that they are facing the issue of having to move out of the neighborhoods where they currently provide a lot of their services. So it's becoming more and more difficult for those who have had to relocate because of rising rents. It's more and more difficult for their clients, or the constituencies that they serve, to get to their location. Also in some instances it's making it more difficult for their staff to get to where the new location is.
Other nonprofits have been forced to downsize, which means they're being forced to look for smaller places. Some of them are place-based: they're being paid by the city and county of San Francisco to provide services in San Francisco to San Francisco residents. If they're forced to move out of San Francisco, they lose that revenue source.
Any instances where grantees' beneficiaries can't live here anymore?
Yes. There’s a nonprofit that is in the Mission District of San Francisco that provides services to a largely Spanish-speaking population for several decades. A part of that population is monolingual, and so they feel very much at home in the Mission neighborhood. Or, they did.
I left the city to work in Louisiana for about five years on hurricane recovery work in Louisiana in 2006. Just before I left, I connected with a nonprofit colleague at New College, which used to be on Valencia Street. (Which is now The Chapel, a music venue.) That was the Valencia Street I knew. In 2014, I went to visit the organization and I couldn't believe how it had all changed. The rising rates of housing in the Mission District have forced so many folks out.
Another organization is in East Palo Alto. The Executive Director there told me a story about one of their clients; she's been in their program for about a year now, so she's pretty close to the point where she's graduating from the program. Her rent was raised about 30%. Because she was a single mom, working a job that paid minimum wage, she had to move out. She couldn't afford the rent. So now she lives all the way in Merced and she drives from Merced into East Palo Alto to the job training program in order to continue her training for the for the job that she wants to get. Once she finishes that training, she'll get that job. But still, she’s facing major hardships because of the Bay Area real estate market.
What he continues to explain is that because of the difference in the rent, she can find a place in Merced, but that no place in Merced pays the same minimum wage as any place in San Francisco. So for her to stay where she is in Merced, she has to drive into San Francisco and look to get a job in San Francisco that pays her a minimum wage so that she can afford to feed her family. And what that means though is she spends 1.5-2 hours driving each way. So a total of about four hours out of her kids' life when she's not there. So she leaves coming out this way at like six o'clock in the morning or so, which means she had to get up at five. Then, when she gets home in the evening, it's the same thing. She leaves here at five and gets home at seven o'clock at night and they have dinner and then it's time for the kids to go to bed and she's gone before they get up the next morning.
So that's the kind of extreme that you're seeing with what's happening to the people in the Bay Area.
And one of our other grantees is in Chinatown. They have this phenomenon happening where a lot of the S.R.O.s (single room occupancy apartments) that have been used for decades by newcomers and some families as an affordable place to live. These families are used to paying $300-$400 per month for that unit with the bathroom down the hallway, no kitchen facilities. But it was what they called home. These places are being taken off the market and converted, and I imagine you could go online and find that you can have a nice vacation space in Chinatown for about $1200 a month.
Have you been seeing more asks for capital from your grantees?
In 2013 most of the requests that came through our Program Related Investment Fund (PRI), or TSFF’s low-interest loan program, were for intermediaries who provided loans to small businesses. Every now and then there would be requests for bridge loans for a nonprofit organization that was purchasing its property, or they wanted to improve its property. In the last year and a half, that has shifted where we're having more and more loans coming in from nonprofit housing developers who are requesting a loan after either purchasing some property that has come up for sale, and trying to preserve the affordability of those units, or they're looking to put in place an acquisition fund that would allow them to quickly purchase a residential property once it hits the market. This is because they are finding that when a residential property becomes available on the market, if they don't move on it right away, it gets bought up by speculators, or by for-profit developers who will grab that property, improve it and then raise the rent, getting around the Ellis Act. So the nonprofit housing developers who are coming in to us are trying to be able to get some of those units, and maintain them.
And then there's another phenomenon that's happening, which also has to do with nonprofit housing, is around some of the properties that were built in the 60s, 70s, and 80s using HUD (Department of Housing and Urban Development) money. HUD had programs to support small family housing units. They had funding to support senior housing. Those properties all had covenants that limited the rent to a certain percentage of the tenants' income. Thee rent restrictions are expiring because the covenants only lasted for 30 to 40 years and time is running out. So now we have nonprofit developers coming to us, saying "Hey this property where these families live is about to flip over. Can you help us get the property?" So now 30% of our existing PRI are from nonprofit housing developers. If I look at the pipeline of prospective borrowers who come into us asking for a PRI it's now about 70% nonprofit housing developers. It really is a critical issue that everyone is trying to figure out.
What does the future hold for the social sector in the San Francisco-Bay Area?
We have to recognize that nonprofits serve a vital community purpose. They provide critical services like food pantries and shelters for residents in need, but also anchor a sense of identity and place for communities through arts, music, dance, youth programming and cultural activities.
We're meeting with a group of about 25 different foundations including all the usual suspects: San Francisco Foundation, The Marin Community Foundation, The East Bay Community Foundation, Haas, Y & H Soda, and also includes folks like Hewlett, and Sobrato. We really don't want to meet and just talk about the nonprofits’ struggles and then go back to eating a meal. Instead, we're really looking for solutions.
There are a bunch of things that we're putting on the table that we're now trying to see if we can work our way toward implementation. One is to engage our donors in this discussion and see if they're willing to put up resources that can be used for acquisition funds or can help defray some of the increased rents and leases that nonprofits are facing.
Another one is public policy, which is difficult because commercial property is considered differently from residential property. There are very few places where there are commercial rent controls, and nonprofits pay commercial rent. So the issue is: can we get some public policies in place somehow that act to constrain rental increases or lease increases for nonprofit organizations? Another thing that's been talked about is: we have community benefit agreements that are being negotiated with developers when they are using public resources, or in some instances are using their zoning power to build a new development. Right now those community benefits usually look at housing, and they look at community infrastructure: parks, and other amenities like that. So the question now is: can we influence the elected officials who make those decisions around the community benefits agreements to include a dedicated space for nonprofits and affordable rents in development as we go forward?
We are looking at influencing foundations to use their Program Related Investment (PRI) programs to target support toward space for nonprofits. Another innovation is to follow the lead of a sister foundation in the South Bay, Sobrato, that actually owns some buildings where they provide space for nonprofits. In San Francisco, the Mayor’s office is in conversation with the school district looking at underutilized district buildings. So there's a lot of things that are on the table discussion around increasing nonprofit space.
When we look at residential displacement, we're engaged in a couple of things in a major way as we are beginning our equity frame, specifically when we think about what it takes to support and anchor communities. One is that we are supporting the Board of Supervisors in Alameda County who has just unanimously voted to put a bond on the ballot in November that will provide $580 million for housing in Alameda County. They've been working on resident engagement and public hearings on this for the last two and a half months and we are very pleased to see this move forward.
It is absolutely critical to address the scale of displacement we are seeing in the Bay Area. We are also helping some of our grantees who work in affordable housing to become more engaged in this process.
Beyond that, we're determining how best to support grantees that provide social services to the folks who usually would be displaced by the high cost of rents.
The second thing that we're doing with respect to residential displacement is we are supporting a coalition of organizations in San Francisco from five neighborhoods who are all facing displacement. Groups from the African American, Latino, Asian and newcomer and low-income communities came to us wanting to know what we could do to stop the bleeding that's happening in their neighborhood. We've been working with them now for going on six months, and they are starting to develop a collective strategy to influence the elections here in San Francisco around tenant protections.
Landon Williams is the program director for community development and investment at The San Francisco Foundation. Landon is a Bay Area native with more than 30 years of experience in the community economic development field.
To learn about funding patterns and trends among Bay Area foundations, please stop by our regional Center or one of our Funding Information Partners to access Foundation Maps. The new Foundation Maps platform allows you to create maps illustrating funding flows in specific regions and issue areas, including visualizing those who support capacity building and technical assistance, which could be helpful for organizations developing strategies to mitigate displacement. If you are a member of Northern California Grantmakers, you can access Foundation Maps: California with your member log-in, and if you aren’t already part of the Get on the Map campaign, you can learn how you can benefit from contributing your funding data to the collective whole.