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Government Cutbacks Leave Faith-Based Services Hurting

By Jacqueline L. Salmon
Washington Post Staff Writer
Friday, February 20, 2009

Faith-based charities, which provide an enormous array of private social services to the nation's sick, elderly and poor, are facing unprecedented cutbacks from one of their biggest funders: the government.

The nation's economic woes have led local and state government agencies across the country to reduce contracts and grants or delay payments to the groups, which have been forced to eliminate programs, lay off staff or try to borrow money in a tight lending market. In the Washington region, where the Maryland, Virginia and District budgets are being developed, faith-based charities from Catholic Charities of the Archdiocese of Washington to the Salvation Army's National Capital Area Command are freezing job vacancies, postponing initiatives and rallying their religious congregations to dig deeper into their pockets.

Government leaders are also urging the organizations to increase their fundraising, but political leaders and the groups say that the economy is causing deep cuts in private giving. Ken Kozloff, chief executive of the Jewish Social Service Agency, with offices in Montgomery and Fairfax counties, has seen its private donations fall almost 10 percent, but its client roster has grown 35 percent. It gets half of its revenue from federal, state and local governments.

Without government funding, "where are the resources going to come from?" asked Kozloff. "How do we serve people? How do we keep people's lives whole?"

Faith groups elsewhere in the country are feeling the strain. California is soon expected to make its payments to faith groups, and other organizations, as IOUs instead of cash. In Illinois, a local Lutheran social services agency is owed $4 million. A Lutheran social services agency in Minnesota closed four residential facilities for troubled adolescents after the state slashed its funding. And in Newark, New Jersey cut a $1 million contract to the local Catholic Charities, which provided job training and other assistance to 400 mentally ill welfare recipients, forcing it to shut down the program and lay off about a dozen people.

"It's only going to continue to get worse," warned Larry Snyder, chief executive of Catholic Charities USA, one of the country's largest nonprofit organizations, which gets about 65 percent of its revenue from government contracts. "Our folks out in the field are feeling a little overwhelmed because they can't see the end, and all they see are more and more people coming and fewer resources coming their way. And yet we don't have the luxury to say, 'You know what? We're going to close our doors for a while.' "

Faith-based charities' services run the gamut of social programs: They own hospitals and nursing homes, run substance-abuse and foster-care programs, operate homeless shelters and mental health clinics, build affordable housing and distribute food to the needy.

Researchers say it is impossible to calculate what percentage of total social service assistance comes from faith-based organizations, although they agree it is large. One San Jose State University study estimates the value of the social services provided by faith-based charities and other religious organizations across the country at $50 billion a year.

In the Washington area, at least one-third of faith-based charities and congregations get government money, according to a survey by Scott W. Allard, a professor in the School of Social Service Administration at the University of Chicago. Allard said that estimate is probably low because it misses many smaller congregations and social service organizations that also receive contracts.

But across the country, caring for the poor is growing more and more difficult, faith organization leaders said. The passage of the economic stimulus package is expected to do little to reverse the trend. In Virginia, for example, even with the funds expected from the stimulus package, the budget shortfall is anticipated to be at least $2.7 billion, with cuts for faith-based services all but certain.

In a survey of 50 Catholic Charities affiliates nationwide, about half have experienced cutbacks or unpaid state contracts. The problem appears slightly better locally, but not by much, because state and local governments are finalizing budgets. A survey by the Maryland Association of Nonprofit Organizations found that at least one-third of its members experienced a reduction in state funding or anticipate a reduction.

Not long ago, Montgomery County Executive Isiah Leggett (D) met with local nonprofit social service agencies, including a number of faith-based organizations, to warn them to expect significant cuts. "Government's ability and the ability of nonprofits [to respond] becomes more challenging when there is a greater need," Leggett said. "And that's the real irony of what we face."

In normal times, nonprofits can tap into bank credit lines to cover lags in payment. But faced with swelling late payments, many organizations have hit their maximum or struggling banks have cut their lines of credit.

Independent Sector, a coalition of charitable groups that represents nonprofits, estimates that at least $15 billion -- 18 percent of all government funding to nonprofit human service providers -- is delayed or will be delayed if the problem is not addressed.

Nonprofits unsuccessfully lobbied for a $15 billion bridge loan package for human services nonprofits, administered by the federal government, to be included in the fiscal stimulus package.

The charities say the cutbacks will only boomerang on the states. When California slashed more than $300,000 from a contract with Jewish Family Service of Los Angeles, it had to cut 70 slots from a program that kept poor elderly people out of nursing homes by providing them with services in their homes.

"Unless their families had some alternative," said Chief Executive Paul Castro, "they undoubtedly ended up in a nursing home," potentially costing California taxpayers even more money.

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