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Nonprofits Can't Afford San Francisco
http://www.businessweek.com/articles/2014-11-13/nonprofits-cant-afford-san-franciscoIn one form or another, Lutheran Social Services of Northern California has been helping San Francisco’s poor, homeless, and disabled for more than 130 years. Among other things, the group now advises more than 2,000 formerly homeless people on money management. Last year the owner of the building where the agency’s office was located—in a gentrifying neighborhood near Twitter’s (TWTR) headquarters on Market Street—told Deputy Director Nancy Nielsen that he wouldn’t renew Lutheran Social Services’ lease. A tech company had moved in upstairs, and the owner, structural engineering company Nishkian Menninger, wanted to make room for another tenant that could pay twice the $113,000 annual rent the social workers were paying. “She said they can’t afford it,” says Levon Nishkian, the president of Nishkian Menninger, “and so it was time to move on.”
Left scrambling, Nielsen found a rental office in the Tenderloin, one of the city’s seediest neighborhoods. The building, vacant for two years, required $600,000 in renovations to repair fire damage and a deteriorating staircase. “Money we would have raised for more services is going to the construction,” says Nielsen, who has been a social worker for almost 50 years. While she remains upbeat, Lutheran Social Services owes $400,000 on a bank loan for the renovations. Most of its 29 social workers make less than $40,000 a year.
San Francisco is a boomtown with an unemployment rate among the lowest in the country, as Google (GOOG), Uber, Airbnb, and a seemingly endless array of startups snap up massive amounts of office space. But just as an influx of programmers with six-figure salaries has pushed residential rents higher than many of the city’s longtime citizens can afford, skyrocketing commercial leases threaten the groups providing the social safety net that thousands rely on. A city report from October of last year showed that close to 2,000 nonprofits in San Francisco, almost one-quarter of the total, had to move out of town or shut down from 2011 through 2013. Those forced to find cheaper digs include not only organizations offering services such as alcohol counseling and in-home care, but also those focused on affordable housing, environmental preservation, and discrimination. “We’re all being displaced,” Nielsen says.
Story: Home-Cooked Meals From the Cloud
The cost of San Francisco office space has more than doubled since 2009 and by next year will eclipse Manhattan as the highest in the country, according to commercial real estate brokerage CBRE Group (CBG). The area around Market Street where Lutheran Social Services was uprooted has been a flash point; once packed with city-funded social-services organizations, it’s now home to many tech companies that have received tax breaks and other incentives to move in. “The basic concepts are in conflict,” says Sarah Gort, the head of operations for CompassPoint Nonprofit Services, a group that provides training and support for social-services organizations. CompassPoint moved to Oakland last year. “You have nonprofits operating in a completely capitalized environment that is on steroids right now,” says Gort.
Left scrambling, Nielsen found a rental office in the Tenderloin, one of the city’s seediest neighborhoods. The building, vacant for two years, required $600,000 in renovations to repair fire damage and a deteriorating staircase. “Money we would have raised for more services is going to the construction,” says Nielsen, who has been a social worker for almost 50 years. While she remains upbeat, Lutheran Social Services owes $400,000 on a bank loan for the renovations. Most of its 29 social workers make less than $40,000 a year.
San Francisco is a boomtown with an unemployment rate among the lowest in the country, as Google (GOOG), Uber, Airbnb, and a seemingly endless array of startups snap up massive amounts of office space. But just as an influx of programmers with six-figure salaries has pushed residential rents higher than many of the city’s longtime citizens can afford, skyrocketing commercial leases threaten the groups providing the social safety net that thousands rely on. A city report from October of last year showed that close to 2,000 nonprofits in San Francisco, almost one-quarter of the total, had to move out of town or shut down from 2011 through 2013. Those forced to find cheaper digs include not only organizations offering services such as alcohol counseling and in-home care, but also those focused on affordable housing, environmental preservation, and discrimination. “We’re all being displaced,” Nielsen says.
Story: Home-Cooked Meals From the Cloud
The cost of San Francisco office space has more than doubled since 2009 and by next year will eclipse Manhattan as the highest in the country, according to commercial real estate brokerage CBRE Group (CBG). The area around Market Street where Lutheran Social Services was uprooted has been a flash point; once packed with city-funded social-services organizations, it’s now home to many tech companies that have received tax breaks and other incentives to move in. “The basic concepts are in conflict,” says Sarah Gort, the head of operations for CompassPoint Nonprofit Services, a group that provides training and support for social-services organizations. CompassPoint moved to Oakland last year. “You have nonprofits operating in a completely capitalized environment that is on steroids right now,” says Gort.
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