Minnesota nonprofits grapple with closures in the New Year

After three decades of fundraising for drinking water and other environmental projects, the Minnesota Environmental Fund will close its doors for good this year. The same will be true of Community Shares of Minnesota, which has funded social justice initiatives since 1978.

The two St. Paul nonprofits attribute their demise to the decline in workplace giving campaigns – a decline that only accelerated during the COVID-19 pandemic.

“I think if COVID hadn’t struck, we would still be here,” said Rylee Hince, who sits on the board of directors of the Minnesota Environmental Fund.

More than 300 Minnesota nonprofits have been dissolved since the outbreak of COVID in March 2020, either by shutting down or merging with other organizations, according to the state attorney general’s office. While this is not a significant change from the previous two years – unlike the catastrophic shutdowns some predict for nonprofits nationwide – nonprofits that have lost funds and employees during the pandemic are only now embarking on the long road to recovery.

The state’s nonprofit workforce has shrunk by 7% since the start of 2020, according to a new report of the Minnesota Council of Nonprofits. Nearly 30,000 nonprofit employees who worked before the pandemic have not returned. In the past six months alone, nearly a third of the 300 organizations surveyed by the council have cut budgets while 43% have cut programming.

Part of the decline in the nonprofit workforce is due to holidays and layoffs in 2020, which affected around a third of the sector and disproportionately affected women. But in the second half of 2021, nonprofits began to notice people choosing to leave in what has been dubbed the “Great Resignation.”

Candid, a national philanthropic research organization, to analyse the financial future of nonprofits in July 2020 and said that 3% to 30% of nonprofits across the country could shut down due to COVID. But even one or two closed nonprofits can have a ripple effect on the community, especially in rural Minnesota.

For example, after a mental health care provider closes, Lakes and Pines Community Action Council in Mora has nowhere to refer clients for assistance.

“We rely on our partnerships here because we can’t do it all,” said Bob Benes, executive director of Lakes and Pines, which provides housing assistance and other social services to 15,000 people a year in seven counties. . “It’s the ultimate team game here in rural Minnesota.”

The mental health care provider that shut down in the fall had struggled to fill jobs, Benes said, and lost money in the switch to telehealth because some clients don’t have online access for virtual tours. Now, some people will have to drive more than an hour to get mental health services.

“If a [nonprofit] farm in Minneapolis, there are probably three more that offer a similar service, ”Benes said. “If one closes in Kanabec County, guess what? It was that one. “

According to the Minnesota Council of Nonprofits’ December report, about 20% of nonprofits surveyed said they expected to experience financial hardship in the next six months or less – although that was less than non-profit organizations only last spring or in 2020.

One of the reasons why Minnesota nonprofits haven’t seen dire predictions happen during the pandemic is an influx of funding, ranging from federal loans clawed back into the Paycheck Protection Program to a increase in foundation grants. Donors also shelled out more money, setting a new record on Give to the Max Day in 2020, then breaking that record in November with donations of $ 34 million in statewide fundraising. .

“It’s been quite extraordinary. It’s really universal, the level of support,” said Kate Barr, president of Power non-profit organizations in Minneapolis, which helps nonprofit organizations with finances and loans.

After receiving questions from a handful of associations about closing options, Propel Nonprofits developed a to guide in 2021 on how to terminate an organization.

Nonprofits close even in times of financial stability, such as when an organization’s work is no longer needed or when its resources expire. There are so-called limited-life foundations like the Robina Foundation, which closed in 2020 after donating all of its money, and ClearWay Minnesota, established until the end of 2021 with funds from the 1998 settlement on the state tobacco.

“The shutdown is not a defeat, the shutdown is just a step for organizations,” Barr said. “The problem is … which ones leave a big void in their community?” “

More than 40,000 nonprofits are registered with the Minnesota Secretary of State’s office, although a number of them may not be financially active. The State Council of Nonprofit Organizations has more than 9,000 nonprofit organizations that have at least one employee, from small food shelves to large healthcare organizations.

“There aren’t a good number of nonprofit organizations,” said Nonoko Sato, executive director of the State Council of Nonprofit Organizations. “Nonprofits exist because of the needs of the community. “

In Minnesota and across the country, workplace campaigns – which allow employees to donate through payroll deductions – are on the decline due to the increase in online giving and the desire for donors to devote their money to certain projects or groups.

The Minnesota Environmental Fund’s workplace giving campaigns fell 30% during the pandemic, following a more gradual decline in recent years, Hince said. Greater Twin Cities United Way, which has long relied on giving in the workplace, has also had to find new ways to raise dollars to balance its declining income.

“People like to donate to something you see on the news, or a text message you get from a friend, or something you see on Facebook,” said Maureen Hartung, executive director of Minnesota Community Actions in Saint-Paul. “Donating in the workplace, where it comes out the following year … is difficult for new generations.”

By announcing their closings, Community Shares and the Environment Fund encouraged donors to directly support the nonprofits they have funded for years. Community Shares has awarded more than $ 25 million to social, arts and community justice organizations since 1978, while the Environmental Fund has distributed more than $ 14 million since 1991 to groups working to preserve areas like the Mississippi River and the Boundary Waters Canoe Area Wilderness.

The Environmental Fund has attempted to diversify its funding sources, downsize, and close its St. Paul office. But this fall, the board of directors announced that it will close permanently on April 30.

nonprofit of Hinc, the Pepin Lake Heritage Alliance at Red Wing, will lose $ 10,000 per year when the Environmental Fund closes. She tries to increase giving from individuals rather than relying on large organizations to deal with future philanthropic changes from the small, nonprofit organization, which has three employees and an annual budget of $ 250,000.

“There are so many other changes in the world of philanthropy right now,” Hince said. “It’s just a challenge for all nonprofits.”

Community Shares developed its own online donation tool in 2008, but that was not enough to completely replace lost money and compete with new technology, Hartung said. The last straw has come with COVID, leaving companies – some facing their own cuts – reluctant to ask for donations from employees.

“We honor what the community seeks,” said Hartung, one of two employees of Community Shares. “But it’s also sad.”

Funding for community actions helped support the Hmong Arts and Talent Center, a small non-profit organization in St. Paul with an annual budget of $ 150,000. “They were an incredible lifeline,” said executive director Steve Thao. “It’s not just the money. It’s the reminder of the mission of what we do.”

The lack of funding, coupled with foundations dropping funding for the arts, will hurt small nonprofits like Thao’s the most.

“The big picture is that fewer people are being served. It’s really disheartening,” he said of nonprofit closures. “I hope the economy picks up… some of these nonprofits will come back and be revived.”

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