Giving drops with economy

Charitable donations in Minnesota reflected the recession, falling from $5.4 billion to $4.9 billion.

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The shaky economy has put a crimp in Minnesotans' philanthropic spirit. Individual donations to charities, though still a hefty $3.6 billion, fell 11 percent from 2008 to 2009, according to a report by the Minnesota Council on Foundations.

Foundations and corporations, meanwhile, reduced their grants to charities and nonprofits by 4 percent during the past fiscal year, ending March 31, 2010, donating $1.4 billion.

"People's sense of wealth was compromised: They didn't feel they had as much money to give as in previous years," said Bill King, council president.

Project for Pride in Living in Minneapolis was among the nonprofits that witnessed the drop in individual giving.

"We got a lot of notes from people in the past two years," said Sara Garry, director of fundraising at the nonprofit. "They'd write on note cards or on our [fundraising] remittance forms, things like, 'I support your work and would like to give more. I will give you what I can.'"

The report, Giving in Minnesota 2011, found that overall giving dropped nearly 10 percent, according to the most recent figures available. Even so, nearly $4.5 billion was donated despite a deep recession.

Education and human services received the biggest share of the funds, 26 percent and 23 percent, respectively.

Among the findings: For the first time, less than half of the dollars given by Minnesota grantmakers stayed in Minnesota.

Fifty-two percent of grants funded projects across the nation and the globe, the report said, up from 48 percent in the previous report. It's the largest portion since the council began keeping tabs on the figure in 1976.

"In general, more corporate grantmakers' dollars go out of state, as multinationals typically distribute their funding between Minnesota, where they are headquartered, and other regions of the world where they have facilities and do business," explains King.

Where it went

The arts: Arts funding dropped 10 percent, to $106 million, its lowest level since 2003. The drop reflects a shift in donations by corporate grantmakers, who donated about half of all arts dollars last year, the report said.

Education: Education funding did not decline, totaling $243 million.

Human services: Grants for human services dropped 16 percent last year, to $209 million. But the number may be deceiving, because several one-time capital grants were reported in 2008, said King.

In a sign of the times, grants to employment-related programs increased 97 percent, the report said, in part driven by $8 million for new jobs from the Carl and Eloise Pohlad Family Foundation.

"The family called it the "economic crisis initiative," said Terry Egge, senior program officer at the foundation, which launched a program to retain jobs at both nonprofits and small businesses.

The report was based on data from Minnesota's 100 largest grantmakers, as well as the charitable deductions listed on tax returns of individual Minnesotans in 2008 and 2009.

Room for optimism?

The grantmaking figures could have been much worse, but some foundations and corporations stepped up their donations in light of the recession, said King.

In addition, foundation assets are regaining momentum, he said, meaning more funds will be available for charities. Assets increased 6 percent, from $17 billion in 2008 to $18 billion, the report showed.

"And that bodes well for the future," said King.

Nonetheless, the cutbacks were felt at nonprofits and charities across the state. Groups such as Big Brothers, Big Sisters of the Greater Twin Cities say they've been hit by changes in foundation priorities.

"Because of the economic downturn, a lot of foundations really focused their efforts on basic needs -- housing, food and transportation," said Terry Velasquez, a vice president at the organization.

"That affected a lot of organizations," she said. "It impacted us."

Project for Pride in Living, which provides "basic needs" for thousands of Minnesotans, found it was hit from the other end of the giving spectrum -- from individual donors.

"I would say during that first round of layoffs in 2008 and 2009, we saw a precipitous drop [in giving]," said Garry.

"This year is better," she said. "But now we're wondering how the [stock] market changes will affect our year-end appeal."

King believes the rocky road facing foundations and nonprofits is now part of the "new normal" in Minnesota giving.

"We're on this economic roller coaster, and that has an impact on whether people think they can give," said King. "But I think we'll see the resilience of Minnesota givers."

Jean Hopfensperger • 612-673-4511

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