Continued: Minnesota nonprofits seek upside in downturn

For 30 years DARTS mini-buses have transported low-income and disabled people across the Twin Cities, now making 750 trips a day. But when its gas budget soared to $440,000 this year, and its funding stayed flat, it faced a year-end fuel budget deficit for the first time in history.

Like many Minnesota nonprofits, it's grappling with how to respond to the volatile economy.

"It's very scary going forward,'' said Sherri Weiss, spokeswoman for the West St. Paul agency. "All nonprofits rely on donations -- foundations, government, individuals. So everything they experience has a double impact on us.''

DARTS staff were among hundreds of Minnesota nonprofit leaders who convened in downtown St. Paul on Friday to figure out how to keep their organizations economically healthy while being hit by a triple whammy -- often flat or declining donations, rapidly increasing community needs and huge government budget deficits that threaten nonprofit contracts.

Minnesota boasts one of the largest, per capita, number of nonprofit organizations in the nation, covering everything from the arts, to the environment to health and human services. About 10 percent of the state's workforce, or 269,000 people work in nonprofit agencies, said Jon Pratt, executive director of the Minnesota Council of Nonprofits, the conference sponsor.

"This is a very fragile time,'' Pratt said. "There's a huge question mark on people's minds.''

Trixie Goldberg, executive director of Lifetrack Resources in St. Paul, was among the nonprofit leaders on hand. Lifetrack, which offers employment services for hard-to-place workers, sees more people looking for jobs, more financial problems facing them and fewer places to refer them to work, Goldberg said. While employers are still hiring, it's definitely a slowdown cycle, she said. "We're getting fewer contracts from businesses, and shorter orders from the ones we receive,'' said Goldberg, referring to orders for its Packaging First job training program. "That means fewer work hours for program participants.''

Meanwhile, the Alexandra House in Blaine, which offers domestic violence services to Anoka County residents, is among the agencies troubled by trickle-down economics as government funds are harder to get. A legal advocacy program typically funded by city governments is in jeopardy because municipalities are feeling the impact of state cuts in Local Government Aid and levy limits, said Connie Moore, executive director of the agency.

"The overall economic situation has a huge impact on nonprofits,'' said Moore. "We're all asking what services we might have to let go, but it's hard to cut services when you're talking about women in domestic abuse situations.

"It's going to be more competitive to get funding. Whether we're talking about [funding from] individuals, foundations or government, it's going to be tight.''

Meanwhile, Lutheran Social Service, the state's largest nonprofit human service, offered a mixed report. On one hand, the agency has nearly reached its $27 million fundraising goal to build a Center for Changing Lives in Minneapolis, said Jodi Harpstead, chief operating officer.

But the agency's fastest growing service is now debt management and mortgage foreclosure prevention services, serving 14,000 people each year, she said. And with 70 percent of its budget coming from local, state and federal government, government budget deficits loom as a huge issue, she said.

"On the federal level, given the war in Iraq, the budget deficit and now the bailout, what will be left?" she asked. "What will be the impact on health and human services?''

No one is predicting massive layoffs or program cuts at this time. Nonprofits, in fact, don't feel the full impact of economic downturns until the end of their contract cycles, which is about a year after the rest of the nation, Pratt said.

But nonprofits already are responding to the bleak economic outlook in different ways. DARTS, for example, has more tightly coordinated its rides, has imposed a "no idling'' rule for van drivers and is seeking funds to buy some energy-efficient vehicles, Weiss said.

At Lifetrack, the job counselors have increased their caseloads. Alexandra House is scrutinizing its services, determining which are "core'' and which might have to be let go. And, Pratt said, the Council of Nonprofits is planning to offer seminars on how organizations can shrink their budgets.

"A lot of people think there will be a shakeout,'' Pratt said.

Jean Hopfensperger • 651-298-1553