Nonprofits are feeling the pinch

  • Article by: TODD NELSON
  • Special to the Star Tribune
  • November 15, 2011 - 1:08 PM

Like many in the state, Minnesota's nonprofit organizations are caught in the financial squeeze of the slow recovery that has settled in following the recession.

The unfortunate reality -- for both Minnesotans and the state's nonprofits -- is that the challenges in place now aren't likely to go away soon. At least, not without a dramatic upturn in the economy, hiring, housing values and the stock market.

So, as many nonprofit organizations plan next year's budget, they have a simple request: Dig deep or, if you can, even deeper.

"This is a moment to ask people who have the financial wherewithal to provide more support," said Judith Alnes, executive director of MAP for Nonprofits, a St. Paul-based management consultant for small- and medium-sized nonprofits.

For those looking for such an opportunity, today (November 16) is Give to the Max Day, as declared by, an online portal for Minnesotans to donate charitable causes. Donations made today through give organizations the chance to win more money and many nonprofits will offer the opportunity to double your gift during the 24-hour event.

The call to dig deeper comes after a sobering call to action last month at an event staged by United Front, a community building collaborative of nonprofit and health and human service organizations, government agencies and foundations.

A future of slower economic growth, fewer wage earners, greater income disparities and rising child poverty in Minnesota took shape in a presentation by Jay Kiedrowski, senior fellow at the Public and Nonprofit Leadership Center at the University of Minnesota's Humphrey School of Public Affairs.

"For the next couple of years, everywhere you turn, there's kind of bad news," Kiedrowski said.

"The big story is that the world needs more of what the nonprofits do," said Jon Pratt, executive director of the Minnesota Council of Nonprofits.

Charitable giving dropped by 9.3 percent to $4.9 billion in 2009, down from $5.4 billion in 2008, according to the Minnesota Council on Foundations' Giving in Minnesota report released last month (see page 17). The financial information is from foundation and corporate giving programs with fiscal years ending between June 2009 and May 2010 -- or the depths of the recession, as the council notes.

Individual donations declined 11.3 percent to $3.6 billion, accounting for 72 percent of charitable donations. Foundation and corporate grants fell 3.6 percent, to $1.37 billion.

Nonprofits continue adjusting to the challenging financial landscape, Alnes said. Some have merged, found greater efficiencies or revised their business models. Others have cut or changed programs, shed jobs or shut down.

A new approach gaining momentum is "collective impact," said Rich Cowles, executive director of the Charities Review Council, an independent organization based in St. Paul that offers tools and resources to help the public make informed donations to charities.

Collective impact involves nonprofits work with government agencies, the private sector and other stakeholders to address problems. "I don't know that it's a miracle cure but in some ways it can look like one," Cowles said. "The nonprofit sector is beginning to realize that while there may be some loss of control, there is much more powerful impact and ability to further their message if there are other stakeholders at the table making decisions."

Some foundations are looking more closely at root causes of such issues as poverty and educational disparities, said Bill King, president of the Minnesota Council on Foundations.

"Many foundations see their role not as funding services where government has walked away ... but as looking at how do we continue to use these philanthropic resources to promote change, to develop systems to avoid some of the problems we have today, address problems today so we reduce disparities," King said.

Daniel Johnson, a Charities Review Council board member and former nonprofit management consultant, encouraged "informed, prudent giving." He suggested doing research in to the charities you support and looking or asking in particular about their accomplishments.

"It's a fragile time for this sector," Johnson said of nonprofits. "It's a fragile time for givers. Look beyond the anecdotes and testimonial to see if there is some evidence they're making a difference in their respective missions and program focus areas."

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