San Francisco’s spending on nonprofits has nearly doubled since 2019, taking up a larger share of the city’s tight budget. In 2019, City Hall spent $809 million on nonprofits, about 6.6% of the budget. In 2025, that figure rose to $1.63 billion, or 10.2% of the budget.
Why Nonprofit Spending Increased
The growth in funding reflects several factors:
- Voter-approved ballot measures that raised money for homeless services, child care, and other priorities
- San Francisco’s response to the COVID-19 pandemic
- Efforts to support people struggling with drug addiction during record overdose levels
- Rising costs, including labor expenses for nonprofits
Nonprofits act as an extension of City Hall, providing housing, shelters, addiction services, and other programs for the city’s most vulnerable residents. Their expertise and close community ties often make them more effective than city agencies in delivering critical services.
Benefits and Challenges of Relying on Nonprofits
While nonprofits provide essential services, there are challenges:
- Less oversight compared to city-run agencies
- Some organizations have faced scandals, such as misusing public funds or charging ineligible expenses
- The city’s budget is under pressure due to slow economic recovery and large deficits
Supervisor Matt Dorsey highlighted that nonprofits provide services the city cannot manage alone, like drug-free recovery housing. However, he cautioned against over-reliance and emphasized the need to protect city workers and ensure accountability.
Nonprofit “Industrial Complex” Debate
Critics sometimes call San Francisco’s nonprofit system the “nonprofit industrial complex,” suggesting over-dependence on nonprofits. Supporters, like Randy Shaw of Tenderloin Housing Clinic, argue that nonprofits merely execute city-directed programs and cannot control budgets themselves. Others, like sobriety advocate Tom Wolf, acknowledge some truth to over-reliance but stress the need for more oversight of certain nonprofits.
Which Departments Increased Spending the Most?
The two city departments that increased nonprofit spending the most are:
- Department of Homelessness and Supportive Housing: Spending rose from $159 million in 2019 to $487 million in 2025, tripling in six years. Funding expanded shelters by 85% and permanent housing by 27%.
- Department of Public Health: Spending increased from $237 million to $387 million, supporting emergency responses to COVID-19, mpox, fentanyl, and overdose prevention.
Much of the increase was funded by voter-approved Proposition C, a 2018 ballot measure taxing businesses to expand homeless services. Despite initial delays due to lawsuits, $1.2 billion in Prop C revenue has been spent since 2021.
Top Nonprofits Receiving Increased Funding
The nonprofits with the largest funding increases since 2019 include:
- Five Keys Schools and Programs: +$51.8M, managing multiple homeless shelters and supportive housing for young people
- HealthRight 360: +$40.1M, expanding addiction treatment and opening new sobering centers
- Tenderloin Housing Clinic: +$37.3M, managing over 20 supportive housing sites
Other nonprofits also saw funding increases due to rising costs, expansion of programs, and state-level support. Leaders stress that growth reflects community need, not mismanagement, and caution against judging the entire sector based on a few bad actors.
Conclusion
San Francisco’s investment in nonprofits has grown dramatically since 2019, funding critical services like homeless shelters, addiction treatment, and public health programs. While challenges remain, including oversight and budget pressures, these organizations provide expertise and capacity the city cannot replicate on its own. As the city balances spending and accountability, nonprofits will continue playing a key role in addressing San Francisco’s most urgent social needs.
