Sonoma Gives: Nonprofits become a billion-dollar sector in Sonoma County

Challenged by years of doing more with less, the nonprofit sector is now thriving in Sonoma County, where 1,375 organizations generate at least $1.2 billion in annual revenue, employ more than 16,000 workers and marshal an army of tens of thousands of volunteers.

Hospitals and community clinics are the largest sector in the local nonprofit world, generating more than a half-billion dollars in annual revenues, according to an analysis of financial reports from nonprofits headquartered in Sonoma County.

The remaining $700 million is divvied up between large and small organizations that do everything from feeding and sheltering the poor and homeless, housing runaway teens and providing seniors with hot, delivered meals.

Whether the need is medical or environmental research, human services, disaster preparedness and relief, youth development, civil rights and advocacy, or arts and culture, Sonoma County has a nonprofit to address the issue. Some rely almost exclusively on government grants, while others have aggressive fundraising mechanisms that tap into the county’s generous pool of big and small private donors.

“One of the reasons we have such strong nonprofits is because we have such generosity from donors who are either on stage or behind the scenes helping us,” said Todd Salnas, president of St. Joseph Health in Sonoma County.

St. Joseph Health operates both Santa Rosa Memorial and Petaluma Valley hospitals, both nonprofits incorporated in the county, with a combined revenue of $460 million, making it the largest nonprofit based in Sonoma County. Beyond the hospital’s walls, St. Joseph provides a wide array of services in partnership with about 250 other local nonprofits.

That collaboration, a growing trend in the nonprofit world, is both inspiring and necessary to meet the needs of the community, Salnas said.

“You feel the energy and vibe from a strong sense of community with nonprofits here,” he said. “Every single thing we do involves another partner to serve the community.”

Sonoma County benefits from a staggering concentration of nonprofit revenue.

The Bay Area, which includes Sonoma County, has just 19 percent of the state’s population but captures 53 percent of the state’s $208 billion in nonprofit revenue - more than $110 billion a year, according to the California Association of Nonprofits, a trade group based in San Francisco. Contrast that with $43.6 billion generated annually by nonprofits in the Los Angeles area, which is home to 29 percent of the state’s population.

While 52 of Sonoma County’s 1,375 nonprofits generate more than $5 million annually in revenues, most are far smaller. Half of the nonprofits generated less than $100,000, according to data compiled by CAN using IRS Form 990 reports from 2012, the most recent data available. The figures include donations, public and private grants, income from fees charged for services, investment income and other revenue.

Overall, the local nonprofit sector employs at least 16,173 workers and utilizes 50,000 volunteers, based on reports by nonprofits incorporated in Sonoma County that file the 990 long form.

The figures exclude nonprofits that are incorporated outside Sonoma County, including several that maintain a major presence in the community. Sutter Medical Center in Santa Rosa, for example, generates $500 million in annual revenues and employs about 900 full- and part-time workers, spokeswoman Lisa Amador said. Kaiser Permanente, an Oakland nonprofit that employs 2,555 workers and 375 physicians in Sonoma County, does not break out local revenue figures, spokesman David Ebright said.

A handful of service categories dominate the nonprofit landscape in Sonoma County, led by education with 297 organizations; human services with 225; and arts, culture and humanities with 208. Health care, an economic dynamo, has only 23 nonprofits, while recreation and sports nonprofits such as youth sports leagues number 99.

The work of a nonprofit is often tied to health of the local economy, said Juan Hernandez, executive director of La Luz Center, a social services organization primarily serving Sonoma Valley’s immigrant community.

A major downturn such as the Great Recession sometimes forces local nonprofits to redefine themselves, as both private donations and government funding shrink.

Hernandez said La Luz used to provide more case management “wrap-around” services with intensive follow-up for each family that came to the center for help. However with the recession, the number of people entering the center’s front door shot up from 100 to 300 people a week.

“The capacity of the organization changed,” Hernandez said.

During the recession, La Luz went through a period where it was “triaging” casualties of the economic downturn, connecting people to the services they need. Large personal donations to the center dropped, into the range of $10,000 to $25,000, Hernandez said.

“Now we’re getting gifts of $50,000,” he said. “Donations and the life of a nonprofit is hinged to the economy.”

The center employs seven full-time and four part-time employees, and is supported by 150 volunteers, a roster that includes its 16 board members.

As with many other nonprofit groups, La Luz is trying to align its goals with other organizations and the county in an effort to achieve greater “collective impact.” The objective is partly driven by large donors and foundations who want to see more collaboration between nonprofits.

“Imagine if all the nonprofits had a common goal,” Hernandez said. “We know that if we’re aligned, the foundations will support us. ... Foundations love collaboration. The reason they like it is because they know their dollars will go further.”

There is a clear “trend toward partnership and collective action,” said Elizabeth Brown, president and CEO of Community Foundation Sonoma County, which pools donations for investment purposes and reinvests them in the community through grants to local charities.

Brown cited county-wide education and anti-poverty efforts such as Cradle to Career and Upstream Investments, which combine county resources with nonprofit and private business partners. Such cooperation was largely driven by the recession, which saw reduced government funding and a “kind of chill” on private donations, Brown said.

But philanthropy is now getting back to pre-recession levels and cooperation among nonprofits is still strong, she said.

“There’s a culture of collaboration in Sonoma County,” Brown said, adding that nonprofits in Sonoma County are beginning to view projects as “shared soil of our collective effort.”

“You can’t just have the need. You have to have innovation,” she said.

Some local nonprofits were more or less spared the impact of the recession and grew dramatically in the past few years.

Santa Rosa Community Health Centers, like other federally qualified health centers across the country, experienced significant growth in patients as a result of full implementation of President Barack Obama’s Affordable Care Act.

In Sonoma County, the new federal health care law resulted in thousands of newly insured patients through the state’s Covered California health exchange. It also greatly expanded the state’s Medi-Cal program, which provides government-subsidized insurance to low-income residents.

Santa Rosa Community Health Centers saw an increase of 11,000 new Medi-Cal patients, though not all were new to the center. Before Obamacare, 7,000 of those patients were previously uninsured, receiving free care or paying sliding scale fees determined by their ability to pay.

“We still need to grow to meet the need,” said Naomi Fuchs, CEO of the Santa Rosa nonprofit. “We didn’t have the hit that many nonprofits did in the recession with respect to federal funding.”

Behind the success of many nonprofits in Sonoma County are people like Phyllis and Bob Clement of Santa Rosa.

The Clements give about $10,000 a year, spread among about 50 or 60 nonprofits whose missions range from feeding the hungry to protecting open space.

Phyllis, a retired social worker, said she and her husband, a retired oil company patent attorney, live frugally and feel compelled to give back to the community. Both are 91.

“I’ve been a volunteer for many years, mostly for the League of Women Voters, and everybody needs money,” she said. “We don’t get anything except the satisfaction of knowing we’re supporting things that need supporting.”

She said her husband’s old company matches their charitable contributions. Their donations include a $5,000 donation to the Unitarian Universalist Service Committee and $1,000 to the Sebastopol Senior Center, where she served previously as a board member.

Other donations include $100 to the Santa Rosa Community Health Centers; $100 several times a year to the Redwood Empire Food Bank; $100 to the Sonoma County Museum; $50 to Habitat For Humanity; $25 to the Sebastopol Library; $50 to Becoming Independent, and so on.

Many of the couple’s annual donations were started years ago. The Clements have been giving to the Santa Rosa health centers since they opened in 1996, and they still donate to the United Negro College Fund.

“It’s hard to stop,” she said. “You get mail, mail, mail. Oh my God, the mail that comes into our house you can’t imagine.”

Hard times usually bring greater focus on “basic human need,” said Brown at Community Foundation Sonoma County. The Great Recession did that and more.

“There was a humanizing element that happened during this recession,” Brown said. “Most people knew someone that had a foreclosure or was laid off.”

Nonprofits that focused on such basic human needs as food became a priority among donors.

“The economic downturn generated an immense amount of compassion,” said David Goodman, executive director of the Redwood Empire Food Bank. “Everybody got it.”

The food bank, with $26.8 million in revenue in 2012, is the third-largest nonprofit based in Sonoma County, after the local St. Joseph hospitals and Santa Rosa Community Health Centers. With 49 employees and more than 4,000 volunteers, it serves 82,000 people a month and distributes about $22 million in food each year.

“Hunger has done nothing but grow,” said Goodman, who started working in the food bank sector in 1994.

Since then, the number of hungry people in the United States has grown by 13 million, to 46 million. One in seven people in America now experiences hunger, he said.

“Sonoma County is no different,” he said. “We feed 1 in 6 people in Sonoma County.”

Goodman said a growing trend in the food bank sector is the demand for organic and nutritious food, and that comes at a higher cost.

“Everybody wants organic. It doesn’t really matter if you’re low-income or not, everyone recognizes good quality poultry and fish,” he said. “Fortunately, we have a community in the donor base that recognizes that.”

The last few years saw major changes in some nonprofits’ funding portfolios. As government grants dwindled, nonprofits were forced to rely more on private donations.

For example, Social Advocates for Youth, which has been around for nearly 45 years, was more than 90 percent funded by federal, state and local grants.

“Philanthropists stepped up” during the economic downturn, said Katrina Thurman, SAY’s chief operating officer, reducing the share of government grant reliance to 78 percent.

“We’ve really shifted our priorities of where we seek the resources to support the work,” she said.

And yet there are some nonprofits whose work simply cannot rely on private donations.

Burbank Housing, for example, which manages and develops affordable housing, is funded primarily by government low-cost loans and tax mechanisms such as tax credits. The sums required to develop and build new housing are beyond the scope of private donations.

Chuck Cornell, executive director of Burbank Housing, said the cost of developing a single unit in an apartment complex is between $300,000 and $400,000. An 80-unit apartment complex would cost at least $24 million, he said.

“We can’t really have a fundraiser to raise $30 million for an apartment complex,” he said.

As a result, the recession all but froze Burbank Housing’s building campaign as government funding for new developments became scarce. Prior to the recession, the nonprofit built an average of 250 units of affordable housing each year.

“Now, we might finish 30 or so each year,” he said. “That will dwindle unless there is more money.”

Burbank Housing now focuses mainly on managing its portfolio of 2,800 apartment units in almost 60 properties. It has property assets that could be valued at $500 million or more, Cornell said.

The lack of affordable housing has a profound impact on the community. It is the last stage in the effort to get people off the streets, from homeless shelters to transitional housing to permanent affordable housing, he said.

Rents are also affected by a lack of affordable housing.

“Market rents are going up, exacerbated by our inability to house lower-income people,” he said.

Burbank’s work, he said, requires greater government commitment and taxpayer dollars. “It is bigger than any one group of people.”

However, most of the county’s nonprofits greatly benefit from private donations, and collaboration is a big part of what the future holds for the sector.

Mike Johnson, chief executive officer of the Committee on the Shelterless in Petaluma, said donors are demanding that nonprofits find ways to work together to deliver results.

“The funders themselves are saying, ‘I’m getting tired of moving 50 peas across the table, I’d rather move two peas a mile,’” he said.

You can reach Staff Writer Martin Espinoza at 521-5213 or martin.espinoza@pressdemocrat.com. On Twitter @renofish.