Julie Brown, the Executive Director of Holy Family Services -- the oldest adoption agency in Southern California -- tells TMZ there's a 50 percent decline in the number of people volunteering to foster kids from the same time last year.

She says surging COVID cases have scared potential foster parents ... for obvious reasons.

And, it gets worse ... COVID is keeping some foster kids from visiting their biological families. As you may know, some of these kids are from loving families that just don't have the resources to care for them. The fact these kids can't visit their birth families during the holidays has created anxiety and depression.

Janice Goldwater, founder and CEO of Adoptions Together in the Washington metro area, tells us they try really hard to get children into adoptive homes by the holidays, but travel restrictions and work-from-home difficulties have derailed their placement process. Sadly, this means more kids will be stuck in foster care or group homes this year ... and spend another holiday without a family of their own.

Foster kids are also being left out in the cold when it comes to Xmas festivities. Houston's Ascension Child and Family Services rely on donations to throw Christmas celebrations for the kids, but funds are way down this year. We're told the kids in their care are really struggling emotionally.