Linda Dunphy gazes fondly at the Cape Cod house on a quiet street in Arlington, Va. It's painted avocado green with a purple door, easily the nicest house on the block — and the newest.
Dunphy is the executive director of Doorways, a charity for abused women and homeless families. Four years ago, she says, she was talking with a large donor and mentioned that she wanted to renovate the homeless shelter.
"And he called me back three hours later, and he said, 'How would you like $500,000 to make that happen?' And I nearly fell out of my chair," she recalls, laughing at the memory. "And I said, 'You're just making my dream come true here.'"
Thus was born the Freddie Mac Foundation Family Home.
Funds Dry Up
Inside the home, which houses seven families, there are picture windows and pastel walls with classic moldings.
"The whole home has a cottage feel to it," she says, noting that an interior decorator donated her services.
There's also an open kitchen with granite counter tops and brand new Whirlpool appliances. The renovations were finished in flusher times — before Freddie Mac and Fannie Mae were crippled by the mortgage crisis. And then more money dried up, she says — money from other foundations, government and individuals.
"It's like a triple whammy to the nonprofits," Dunphy says.
In every city, charities have their big benefactors. In the Washington area, it was Fannie and Freddie. They gave $47 million to local charities last year. When they went into conservatorship in September, Dunphy says, her heart sank. Freddie Mac had promised Doorways $300,000 to operate the family home and other programs next year. Now all bets are off.
"We have not heard any confirmation that we're going to be getting those funds," she says, noting that she should find out in December. "We're a little anxious about whether we're going to get this money, whether we'll get all of it or some of it, or none of it."
"This is a situation that I have not encountered in my career in fundraising," says Christy Cole, a fundraising consultant who serves on the board of Doorways. "This is new territory for all of us here in the Washington metro area."
She says Fannie and Freddie are the tip of the iceberg. As exhibit A, Dunphy picks up a letter from the corporate giving arm of FBR Capital Markets. The firm had given $15,000 the year before.
"This letter is dated June 2," Dunphy says, and begins reading: "At this time we're not able to act favorably on this proposal."
In fact, FBR's mortgage arm filed for bankruptcy protection soon after and all its charitable donations screeched to a halt.
And it gets worse. For example, Dunphy raised a lot of money last year from corporate donors for the annual walk for the homeless — donors that turned out to be a who's who of the Wall Street meltdown.
"Merrill Lynch, Morgan Stanley, Lehman Brothers, Goldman Sachs," she says, ticking them off. "And this year we're going from a budget of $60,000 that we were hoping to receive, to $10,000."
If this keeps up, Dunphy says, Doorways could face a $500,000 shortfall in a $2.6 million budget. She says the safe house and family home will survive, but other programs may not.
Cara Panzarella-Tara sifts through a projected monthly budget with Fanny, a client who fled her abusive husband last year. She and her two young children came to Doorways homeless and desperate.
"I was living in a room and sleeping on an air mattress with my children," she recalls. "I was about to go back to him, I said... take me back."
Panzarella-Tara says financial insecurity is a major reason women return to abusive partners. But Doorways secured an apartment for Fanny, and every week, counselors meet with her about her budget, her children and her job search. The bad economy might force Doorways to shut down programs like this.
"Oh my God!" she sighs, verging on tears. "I don't want to think about it."
Which is how Dunphy feels, too.
"It's like you're in the Himalayas, constantly going up the hill and down the hill and up the hill and down the hill. And it's a journey, and you just got to take one day at a time," she says.
The irony is that the need for charities is rising even as donations fall. Dunphy notes that domestic abuse spikes during hard economic times — driving more women and their children to the shelters and safe houses that Doorways maintains. Last week, she says, they turned away seven families.