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(Editor's Note: This is the first in a series on how Petaluma nonprofits are finding creative ways to survive despite an uncertain economy.)

With local nonprofits like the Committee on the Shelterless and Petaluma People Services Center facing an unprecedented loss of government funding this year and other financial challenges brought about by the recession, it might come as a surprise that they are making risky-sounding moves like expanding some programs and hiring new fundraising staff.

But, nonprofit leaders say such actions are critical for their survival, marking a shift away from unpredictable government funding to more self-sustaining strategies.

Just this May, COTS acknowledged a "devastating" loss of funds after redevelopment agencies were dissolved and Petaluma lost $3 million for organizations that provide affordable housing, such as COTS, PPSC, and PEP Housing.

At the time, COTS predicted that it might have to close its Mary Isaak Center homeless shelter during the day and cut programs.

Unexpected financial assistance came from city's in-lieu housing fund —?an amount that is about half of what COTS previously received from redevelopment agencies — and is easing the transition from government funding. But, within two to three years, that money will be gone and organizations like COTS will need to have other funding sources in place.

To address the issue, COTS' leaders have crafted a new strategy to shift from relying primarily on government funding to focusing on private donations.

"It's always a story of less funding, of nonprofits struggling to make do," said Mike Johnson, chief operating officer at COTS. "This is the other side of the story — because we've got such great support, because we're doing a phenomenal job, other opportunities have opened up that allow us to grow and keep serving."

COTS' Executive Director John Records explained that his organization has traditionally received about two-thirds of its funding from government sources and one-third from private sources. Now, he says, it is in the process of reversing that ratio.

To help spread the word about COTS' financial need, the organization recently appointed two high-profile board members and hired two new fundraising staff members.

Bill Schrader, President and CEO of Exchange Bank, and Joel Humphries, Restaurant Project Manager and Coordinator for Charitable Events at Amy's Kitchen, have joined the board of directors.

"Our new board members are in a position to go knock on doors, see if we can get support," Records said.

COTS has also hired two people to help with fundraising: Courtney Comer, formerly of St. Joseph Health Systems/Santa Rosa Memorial Hospital, will be director of major gifts. Kristin Nelson, formerly of WestEd and the James Irvine Foundation in San Francisco, is the new director of leadership giving and events.

Records acknowledged that there was some risk in taking on the expense of hiring new staff to fundraise, but he said there was no other option. "It would be like not putting gas in the car" not to increase fundraising efforts, he said. "And our work is too important to (fail). I don't think we will.

"We've got to help the community understand that with the loss of government funding, if we're going to continue to help the most vulnerable members of the community as we've shown we can do, the community has to step up," Records said. The "Invest in Miracles Campaign," as COTS has dubbed its new fundraising effort, also includes expanded mailings to community members, grant writing, and its annual fundraising breakfast, which will take place in November.

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One thing Records thinks will help in that endeavor is COTS' good reputation. Even as he spoke to the Argus-Courier on Friday, Records was traveling in New York to talk about COTS after a prestigious social work journal published a case study highlighting the nonprofit as a national model for how to break cycles of homelessness.

"The national recognition further documents that we really do amazing work at COTS," he said. "It will give confidence to people who invest in (us)."

COTS has received $150,000 in matching funds for that breakfast from anonymous local foundations. That's triple the $50,000 in matching funds COTS received last year.

Records added that even though COTS has had to cut back in some areas, it has been able to expand in others thanks to new partnerships, such as that forged with the County of Sonoma to renovate a home in Petaluma and open it as a shelter for homeless families. COTS lost its emergency center for families in 2010.

"It's something we sorely miss," Johnson said. "This will get us back some capacity to provide emergency shelter."

COTS is also expanding its program for homeless veterans.

Some programs are still tenuous, however — COTS' emergency food program has only stayed open "on a wing and a prayer," Records said.

But he's hopeful donations will enable the program to continue and the Mary Isaak Center to stay open during the day.

"The community has been very supportive," Records said. "We get help from congregations and kids."

That support includes a recent $10 check from some children who raised money by recycling bottles and cans.

"That's an example of the spirit of the community, that elementary-age kids are pitching in."

(Contact Jamie Hansen at jamie.hansen@arguscourier.com)