Ask Craig Bahr, director of Bread for the City, what he thinks about when he gets up in the morning. "The homeless and Bread's budget," he answers without hesitation. "I feel so guilty because everyone doesn't have a place to stay. And I've worried about the budget every day for the almost two years I've worked at Bread."

Lately, as his agency is pinched between higher costs, greater demand for its services and relatively stable resources, his budget worries have intensified.

Bread for the City is a store-front agency at 14th and N streets NW that distributes food and clothing to needy families, the elderly, the disabled, and the homeless. Clients come to Bread because their food stamps are late, because they are new to the area and aren't receiving other assistance, or because they have exhausted their resources. "I live only on my Social Security check," said a permanently disabled woman who was interviewed at Bread. "After I pay my rent, I have $50 left to buy food and live on. Sometimes, I don't know what to live on."

During the past year, more people have been going there for help; Bread now supplies clothing to about 1,000 people and food to about 850 or 900 people a month, a 50 percent increase over last year.

But donations have not kept up with increasing needs. Bread, which has never received government funds, is supported by donations from churches and individuals. Regular contributions from these sources have continued and in some cases increased, and new contributors have shown exceptional generosity. Nevertheless, Bahr says that by August or September things will be really desperate. "These are the months of high vacations and low giving, when reserves are depleted and giving is really down," he said.

Bread's bank account has its peaks and valleys. The peaks come at the end of the year, after Thanksgiving and Christmas appeals and as the deadline for tax deductions nears. "In the fall, for two or three weeks, we were down to $2,000," Bahr said. "Then the holidays came and now we are back up to $20,000. But we had almost that much last July. Next fall, we'll have no money to coast with."

The pinch is being felt already. "We rarely give juices now, and no fish or meat products unless someone donates them," Bahr said. "We used to give a lot of canned salmon and tuna fish. We'd spend about $200 to $250 a month on meat or fish. Now, with today's prices and the increase in people, we'd probably have to spend $350 to $400" to keep serving those items.

One of the few places in the city where grocery items are available on an emergency basis, Bread will provide a bag of groceries once a month to needy families with children and to elderly or handicapped persons. Each bag contains enough canned and packaged food to feed the household's members three meals for two days.

A typical bag contains canned fruit, vegetables and soup; cereal and muffins, and occasionally something extra like a bag of flour or a jar of cooking oil. "We try to have protein, but it has to be where we can find it and that's not regularly," said Bahr. "We have to buy the most food to feed the most people.

"Its unfortunate that people have to continue with poor diet habits," he added. "Some people characterize the poor as 'fat and lazy,' but you can trace obesity to their diet: high stomach-filler and not enough protein and vitamins."

Bread also serves as a distribution center for used clothing, picking up boxes and bags of clothing in drives throughout the area and making them available to inner-city residents.

Bread's clients may sort through stacks of clothing boxes and take one complete outfit each week. Because Bread has neither fitting room nor full-length mirror, a female client often will hold a dress or skirt against her body and ask whoever is nearby, "Will it fit? . . . How does it look?"

For street people whose lifestyle might not include visits to laundromats, this makes possible a change into clean, dry clothing every seven days. For someone like the 31-year-old mother of four, who has been coming to Bread almost every month since 1977, free clothing means money saved for other needs. Last fall, she outfitted each child with a winter coat from Bread.

The supply of used clothing doesn't always match the demand. "It depends on the day," Bahr says. "In a typical week, when we are in good shape, there's always something we are short on. . . . We are almost always short of men's shoes and clothing in large sizes. . . . We've started to ask for trade-ins on clothing in short supply. If the old coat is good, trade it in. If it's falling apart, then take another free."

Bread was started nearly six years ago by five inner-city churches: First Baptist, Foundry Methodist, Luther Place Memorial, Metropolitan AME and National City Christian. Each church was being called upon by a growing number of troubled people seeking help, and they decided to pool their resources.

Bread opened in July 1976 in a building owned by Luther Place Memorial, with support from the budgets of all five churches, donations of food, clothing and money from individuals, and a lot of volunteer help. Since then, support of these churches has continued, supplemented by donations from other churches, synagogues and persons throughout the metropolitan area.

At first, Bread's budget averaged $20,000 to $30,000 a year and the agency accumulated a savings account. But during the 1980-81 fiscal year, expenses rose to $38,000; this was $8,000 more than donations received. For fiscal 1981-82, with 50 percent more clients than last year, the expenses will be $55,000, Bahr said. Next year, Bread anticipates a $60,000 budget.

Short of cutting food rations or turning people away, there seem to be no more corners to cut. Salaries for three full-time and two part-time workers range from subsistence level for fresh-out-of-college Lutheran Service Corps workers, to minimum wage for staff members from the neighborhood, to Bahr's compensation, which he describes as "not enough for my wife and me to start a family." Bahr said he is leaving the agency at the end of July when his two-year term as director ends.

Shopping for food, Bahr has learned how to stretch a dollar, sometimes as much as tenfold. "Everything we buy is at least wholesale," he said. Several times a week, he makes the rounds: to the bakeries for day-old bread, to food wholesalers and to the Capital Area Community Food Bank where outdated or damaged food packages donated by local food chains as tax write-offs are sold at a flat rate of 10 cents a pound or a can.

"If it gets to an emergency situation," Bahr says, "I hope people will respond."

That is what happened recently when Bread's station wagon, used for picking up donations of food and clothing and shopping for inexpensive food, finally quit.

When word got out that Bread needed a vehicle, several people offered older cars, and one church gave enough money to buy one. While Bahr is waiting for the 17-member board to decide how best to use the offers, "a nice young couple started volunteering," he reported. "They have a truck and once a week we go out in the truck and make pickups and shop. A lot of people really came through. It shows people want to get involved. That's the best way."