Twin Cities nonprofits dive into fundraising in wake of United Way cuts

Merrick Community Services has unveiled a new logo and website touting its nonprofit community roots — caring for St. Paul's East Side since 1908 — and a menu of services, from a food shelf to career counseling.

The idea is to draw attention, share its work and step out of the shadow of Greater Twin Cities United Way, which channeled money its way for years. With United Way's revenue down by nearly $25 million in three years, organizations such as Merrick are learning they have to make their own pitch to a broader base of donors or risk cuts to services.

"We are looking for ways to diversify our funding," said Brandon Griffin, director of development at Merrick, which used to get a quarter of its $2 million annual budget from United Way. That aid has been cut in half in the past decade. "It's hard. It's a very different landscape."

United Way has been a giant in charitable fundraising through its workplace campaigns for decades; its Twin Cities chapter is one of the largest in the nation. Smaller nonprofits have relied, in part, on its grants rather than competing for donors' attention. Now that model is under stress as United Way's giving at the office campaign falls out of favor with donors, who are turning to new tools, including online giving and donor-advised funds.

"People seem to have a more vested interest in controlling their money," said Patina Park, executive director of the Minnesota Indian Women's Resource Center, which decided to rely less on United Way grants after seeing others struggle with cuts.

United Way's revenue has dropped from $101.9 million in 2014 to $77 million last year. The drop in available grants has shaken the Twin Cities' huge nonprofit sector.

Greater Minneapolis Crisis Nursery has lost more than half of its United Way funding this year. In St. Paul, Neighborhood House's United Way grants dropped by $126,000. Phyllis Wheatley Community Center in north Minneapolis has lost a third of its United Way funding in three years.

United Way officials say their role has evolved from simply a grantmaker to public policy advocate, with emphasis on programs for children, immigrant families and job training. They are also trying to broaden their fundraising.

"Our plan to address changes in donor behavior and community need includes engaging people directly, regardless of where they work," said Sarah Caruso, United Way's president and CEO. "We're also taking a holistic approach to solving poverty via public policy work; our 2-1-1 resource hotline; corporate partnerships; volunteer engagement; and nonprofit leadership support."

United Way also organizes 77,000 volunteers annually and remains a large grantmaker. It will give away $67 million this year.

Even with that, however, many nonprofits are scrambling for financial support and making painful cuts.

Community cuts

The Family Partnership eliminated 40 full-time staff last year, tightened its priorities and scrapped several programs, including after-school care for children and a teen pregnancy prevention program, after cuts to its United Way and government grants. The Minneapolis charity, which provides services for families in poverty with an $8.5 million annual budget, saw its United Way grants shrink from $1.3 million in 2015 to $500,000 this year.

"As you can imagine, that is challenging," said The Family Partnership President and CEO Molly Greenman.

She doesn't fault the United Way, which announced its new strategic plan last fall to confront changes in giving.

"I trust they are doing what they think is best to sustain their mission," Greenman said. "What is happening at the United Way is part of a whole larger trend."

Jake Blumberg, who teaches fundraising courses at Hamline University and the University of St. Thomas, said nonprofits should be mindful of diversity in funding.

"You want to always be looking around the corner and asking those big 'what if' questions. 'What if that stream of revenue goes away? What do we do?' " said Blumberg, who is also executive director GiveMN.

At one time, United Way funding made up more than 90 percent of Phyllis Wheatley Community Center's budget. Last year, the north Minneapolis nonprofit received about $200,000 of it $1.2 million budget from United Way.

"United Way used to be our primary funder, and we relied heavily on them," said interim Executive Director Theartrice Williams. "That is going to make it very challenging for a number of nonprofits, particularly the smaller nonprofits brought up on United Way support."

As the center's board now looks for a new leader, the ability to network and raise money is critical, Williams said.

Reaching out to donors

Some nonprofit leaders lament the decline of United Way's community chest model where working- and middle-class donors, not aware of all the needs, created a pool of money and relied on experts to distribute it.

Tim Marx, president and CEO of Catholic Charities, praised United Way's new advocacy work even as his charity has lost some funding.

"We need more people laying out the facts, framing and reframing issues and inspiring action," he said. "That is a key role United Way is playing."

Private foundations and donors demand innovation and new ideas. Crowdsourcing campaigns are popular, but only go so far, nonprofit officials say, when what they need are long-term commitments from donors.

"We have to be nimble. What's the latest trend?" said Jennifer Harrison, development director at Greater Minneapolis Crisis Nursery, which saw its United Way funding drop from nearly $225,000 to $95,000 this year. "Millennials give very differently than their grandparents did. It used to be easy. We wrote a letter, and they sent a check back. Millennials, they want to get their hands dirty. They want to get involved."

Neighborhood House in St. Paul lost $126,000 of its United Way funding this year, but still receives $410,000 in aid that supports several programs including its food shelf and early childhood education. The cut hit the nonprofit's youth programs hardest. It cut a youth manager position in order to keep a drop-in teen center open, and a few donors helped keep a scaled-back version of its youth programming going, said Sarah Berger, director of resource development and communications.

Neighborhood House had started moving toward individual donors three years ago, she said, when it realized United Way funding wasn't certain going forward. It has also seen an uptick in workplace giving through other agencies, including Benevity, an online giving and volunteering platform founded in 2008 that offers donors more control over where their money is going. It works with 450 large corporations, including Cargill and Ameriprise Financial.

"People want to vet nonprofits themselves," Berger said. "They really don't want a third party making that decision for them."

Shannon Prather • 612-673-4804