Oregon nonprofits are critical to the state’s social service network — and going broke

Sisters of the Road, a homeless advocacy nonprofit, used to have more than a dozen paid staff but now employs less than half of that. It announced plans in July 2023 to move into a new building and reopen its cafe to provide cheap meals in Chinatown, but the group returned the building on November 30, 2024, because they couldn’t afford it.

OPAL, an environmental justice nonprofit that advocates for public transit in the city, recently laid off its paid staff — nine people — to cut costs and moved out of a building on Southwest Third Avenue.

The Community Alliance of Tenants, a renters rights nonprofit, laid off eight people, dropping to 20 staffers, and moved out of a building it was renting to reduce costs.

Nonprofit organizations across Portland are facing serious financial and staffing challenges that imperil groups working in everything from social services to public transportation to biking. Some are on the brink of shutting down entirely.

“It feels like almost every month there’s an emergency fund going,” said Kat Mahoney, an attorney who previously worked as the executive director of Sisters of the Road.

Leaders attributed their financial challenges to a variety of compounding problems. Bureaucratic red tape left some groups waiting months for funds promised through government contracts. Meanwhile, inflation has increased costs, pandemic funding has dried up, and some nonprofits have struggled to acquire grants they rely on.

“While we’re very important, and many of us have been around for decades, all of our situations are extremely tenuous,” said Kim McCarty, the executive director of the tenants alliance.

Nonprofits lead on sticky societal problems

Portland, like many American cities, relies heavily on nonprofits, which contract with local governments to address some of the city’s biggest challenges, such as homelessness, addiction and mental illness. Staff help people find housing, jobs and rental assistance. They clean beaches, hold events, cook meals and build community. They are religious groups, sports teams, hospitals and more. (OPB is also a nonprofit.)

“They really are at the center of American social fabric,” said Dyana Mason, a professor of nonprofit management and governance at the University of Oregon School of Planning, Public Policy and Management.

Between 2012 and 2022, about 10% of Oregon’s wage and salary workers were employed by nonprofits, according to a recent study. Nonprofit staff are often heavily involved in local politics, lobbying city leaders for new policies and advocating on behalf of residents who can’t regularly attend government meetings. As Portland begins its transition to a new form of government in the coming months, leaders say that the industry’s struggles couldn’t be happening at a worse time.

“Losing the nonprofit sector, I think, is a serious threat to a lot of communities and individuals who are systematically underrepresented,” said Aaron Golub, the board treasurer for OPAL, which has actively pushed TriMet to adopt public transit policies, including reduced fares, over the past 20 years.

“We have no paid staff at the moment. Whether that’s just a few months or a year, we don’t know,” said Golub, a professor of urban studies and planning at Portland State University. “We are not closing, but we are trying to achieve our goals through leveraging and volunteering.”

Nonprofit leaders in Portland say their staff have struggled with burnout while working tough jobs, particularly those with social services nonprofits. And staff wages aren’t keeping up with inflation and rising housing prices, leaders say.

“All of the work that we have done … puts us really in close contact with a lot of marginalization and trauma that’s happening in the community,” said Matt Chorpenning, the vice president of the board of directors for Sisters of the Road. “And so I think it’s also just a factor of people getting exhausted. They get burnt out in this work.”

Surveys suggest this is a widespread problem. Out of 239 nonprofit leaders surveyed nationally, 95% expressed concern about burnout, and about 75% said this was at least slightly impacting the organization’s ability to achieve its mission, according to a 2024 survey by the Center for Effective Philanthropy, a nonprofit that works with donors and foundations.

A separate survey of 311 organizations by the Nonprofit Association of Oregon organizations found that 23% reported having positions open that they have been unable to fill. Another study of social services nonprofits found that nonprofit wages were 15% lower than for-profit and 11% lower than the public sector.

“We know of people who have left the nonprofit sector and gone to the private sector because they’ve said, ‘Well, at least I don’t get spit on once a week by one of the clients because these clients are going through mental health or addiction crises,’” said Jim White, the executive director of the Nonprofit Association of Oregon. “... They simply can’t make it work anymore within a system that is kind of rigged against them.”

In some cases, that staffing exodus creates problems stretching beyond the nonprofits themselves. Impact NW, a social services nonprofit that, each year, helps tens of thousands of people experiencing housing instability in Portland, has struggled to fill vacant jobs. Some people who needed help finding housing and paying basic expenses have had to wait because there wasn’t enough staff to help them, said Andy Nelson, the organization’s executive director.

“It has real delays and an impact on the people who are hoping to engage in our programs,” said Nelson.

A broken model?

It’s not just social services and justice groups dealing with these problems. The Community Cycling Center, which provides bike education for kids and runs a Northeast Portland bike shop, nearly closed after it fell into such dire financial straits that it couldn’t pay employees. The bike group was revived by community support in the form of about $150,000 in 15 days, but the Cycling Center has downsized from 30 paid staff and six administrators to 18 employees. It also had to stop renting a storage facility.

“We’re definitely in a shore-up moment,” said Ruben Alvarado, the center’s executive director.

Mason, the University of Oregon professor, said that as government budgets have shrunk in recent decades — particularly since the administration of President Ronald Reagan — some government agencies have lacked the capacity to do social services work. They have increasingly shifted this work to nonprofits. In general, Mason says, about 10% of nonprofit funds come from individual donations, so many nonprofits rely heavily on government contracts and grants.

“If the government isn’t funding those activities, those programs, those services, their philanthropy and individual contributions are not really going to be able to make up the difference,” Mason said.

A recent audit found that Multnomah County’s system for monitoring health and human services contracts was beset with outdated policies and unnecessary bureaucratic hurdles that created delays for large payments.

White, the director of the nonprofit association, says that part of the problem for nonprofits also stems from a 2017 change in tax law. The Tax Cuts and Jobs Act lowered income tax rates, increased the standard deduction and got rid of itemized deductions, “provisions that significantly reduced the number of itemizers and hence the number of taxpayers taking a deduction for charitable contributions,” according to the Tax Policy Center, a nonpartisan think tank based in Washington D.C.

“A group of people who may have been itemizing before and would count a charitable deduction in their itemization no longer needed to do that,” said White. “So it swept a whole bunch of people out of needing to do that itemization, which then no longer incentivized them because they wouldn’t get any kind of support through their tax deduction.”

Nonprofit leaders said they have seen some progress since the 2023 passage of Senate Bill 606, the Oregon Nonprofit Modernization Act, which created a task force to address compensation — wages, grants, contracts — for nonprofits.

For the upcoming legislative session, White says the association is working to pick through the task force’s recommendations to see what can be implemented by Gov. Tina Kotek’s office and what would require legislative action.