Overall revenue for the 100 largest organizations grew 9.2 percent in 2006, up from 7.6 percent from the year before. However, expenses rose at a slightly faster pace, as they did in 2005. They climbed 9.5 percent in 2006, compared with 7.9 percent in 2005.
Minnesota's 100 largest organizations posted $34.7 billion in revenue and $33.4 billion in expenses in 2006, the most recent year for which comparable figures are available. In 2005, they had revenue of $31.8 billion and expenses of $30.5 billion.
The health care sector dominates the Nonprofit 100. Because of state law and regulatory policies, HMOs and most hospitals in Minnesota are incorporated as nonprofits. As a result, health care nonprofits account for 53 of the top 100 organizations in our survey and 90.5 percent of the revenue.
Altogether, there are more than 3,600 nonprofit employers in the state, according to the Minnesota Council of Nonprofits. They employed nearly 270,000 workers in 2006, one in every 10 in the state. The national average is about 7 percent. Nonprofits' jobs -- which include many health care-related occupations -- have been growing at about 3 percent annually since 1997, the council said. That compares with a 1 percent overall job growth rate for the Minnesota economy.
While private-sector hiring has slowed, especially in the manufacturing, housing and construction sectors, "hiring remains very active in the nonprofit sector,'' said Jon Pratt, executive director of the nonprofits council. "The nonprofit economy doesn't feel a recession until a year after the general economy'' because of the year-ahead funding cycle at most nonprofits.
As private-sector and government employers struggle to contain health care costs, revenue growth has slowed at hospitals, clinics and health insurance providers. In 2006, the average revenue increase for a health care nonprofit was 8.4 percent. Although that's up from the 7.6 percent growth rate in 2005, it's moderate by recent standards. For example, revenue grew 8.7 percent for this group in 2004 and 11.2 percent in 2003.
Expenses, which rose 9.2 percent in 2006, once again outpaced revenue growth in the sector.
At health insurance provider Blue Cross and Blue Shield of Minnesota, the largest nonprofit on the list, revenue grew 10.5 percent to $7.9 billion. Although Blue Cross had an operating loss of $45.4 million, the company's net income, including investment gains, was $4.9 million.
At the Mayo Foundation, which operates the largest health care services provider on our list, revenue jumped 9.7 percent to $6.7 billion.
Nine health care nonprofits spent more in 2006 than they generated in revenue, including Blue Cross and Medica; in 2005 the figure was 10.
Just two of the health care organizations surveyed had revenue declines in 2006, compared with seven the year before.
At Medica, revenue dropped 16.4 percent to $1 billion. HMOs such as Medica have struggled in recent years as employers trying to curb health care costs turn away from HMOs and toward less-expensive insurance.
Minnesota's social services organizations got some relief in 2006 after a tough 2005 that saw revenue drop more than 3 percent. Revenue in 2006 rose an average 4.5 percent among the 29 social services nonprofits surveyed while expenses rose an average 2.9 percent.
Jay Kiedrowski, a senior fellow with the Public and Nonprofit Leadership Center at the University of Minnesota's Humphrey Institute of Public Affairs, said that with the "Katrina effect'' behind them, and a strong 2006 economy, "those two factors set the nonprofits up pretty well for the year.'' Overwhelming public response to the victims of Hurricane Katrina in 2005 influenced giving patterns at some nonprofits in 2005.
Revenue fell year-over-year at 10 organizations in 2006 compared with 12 in 2005. Meanwhile, 10 social services nonprofits spent more than they generated in revenue last year, compared with 11 in 2005.
At the Greater Twin Cities United Way, the largest social services nonprofit on the list and a key provider of grants to smaller nonprofits, revenue dropped 1.4 percent to $88.6 million. The decline came after a record fund drive in 2005. The 2006 fund drive fell slightly short. CEO Lauren Segal said last week that the United Way is on track to meet its 2007 goal of $87.8 million.
Eight social services nonprofits recorded double-digit revenue gains, led by Catholic Charities of the Archdiocese of St. Paul and Minneapolis -- where revenue grew 59 percent to $31.3 million. The Rev. John Estrem, executive director of Catholic Charities, said the big revenue gain actually reflected an accounting write-off in 2005 for a discontinued program. Without the accounting changes, the organization had revenue of about $30 million in both years.
At the YMCA of Metropolitan Minneapolis, revenue rose 6.9 percent to $54.7 million while across the river in St. Paul, YMCA revenue jumped 13 percent to $42.3 million.
Revenue at Second Harvest dipped about 8.4 percent. The food shelf organization collected about the same volume of food donations in 2006 as in 2005, said controller Ray Ahlgren, but the cost per pound dropped slightly, depressing revenue. For the 2007 fiscal year, ended in September, both volume and prices per pound rose sharply, Ahlgren said.
That's good, he said, because "there are still hungry people to feed. With these foreclosures, our lines are getting longer.''
Northstar Education Finance Inc., a hybrid nonprofit that specializes in loans for graduate students including doctors and lawyers, joins the list this year as the largest organization in the education category.
St. Paul-based Northstar, with revenue of $316.7 million for the year ended in December 2006, has about $6 billion in its loan portfolio. The nonprofit entity makes the loans while a for-profit subsidiary of Northstar services the loans and pays employees. CEO Taige Thornton's total compensation of $739,733 makes him the highest-paid top officer in the education category and the 13th highest-paid CEO among the Nonprofit 100.
The University of St. Thomas remains the state's largest private college with $284 million in revenue, up nearly 24 percent.
Investment gains and losses typically skew results in the education category. Nonprofits must record their nonrealized investment gains and losses on the Form 990. For organizations with large endowments, which include many of the large education nonprofits, market trends and investment styles can lead to large year-to-year swings. Also, capital campaigns can affect the comparisons. For example, Minnehaha Academy is in the middle of a $12 million multiyear campaign for campus renovations.
Of 31 colleges, universities or preparatory schools in the education category, 14 recorded double-digit revenue gains. Seven posted revenue declines. Among the biggest revenue gainers in 2006 were Macalester (up 44.7 percent); Minnehaha Academy (up 36.1 percent), and St. John's University (up 29.2 percent).
Four education nonprofits had expenses greater than revenue in 2006, down from five in 2005. Average revenue increased 19.5 percent, while expenses rose 13.8 percent.
Arts & culture
Names, not numbers, made news in the arts and culture sector. The year saw an extraordinary turnover among the leading officers of the biggest institutions. Kathy Halbreich announced in March that she would leave the Walker Art Center after 16 years in the top job. Halbreich oversaw a $135 million project that doubled the size of the Walker in 2005. She left in November and Olga Viso of the Hirshhorn Museum and Sculpture Garden in Washington, D.C., comes on board in January.
William Griswold surprised the arts world in May when 18 months into his tenure at the Minneapolis Institute of Arts, he said he'd leave at year's end for a position in New York. Kaywin Feldman of Memphis takes over the venerable institution.
At the Minnesota Orchestra, President and CEO Anthony Woodcock left for Boston last February. Woodcock was replaced by another Brit, Michael Henson, who was introduced at the orchestra's annual meeting three weeks ago. He'll assume the administrative challenge at the end of January with a $90 million building project in his sights.
Teresa Eyring left the Twin Cities early in the year after stepping down as managing director at Children's Theatre Company. Eyring, who was critical in shaping the theater's expansion, took the top job at the Theater Communications Group in New York. Gabriella Calicchio of the Marin Theatre Company in Mill Valley, Calif., was hired in August.
And Patricia Mitchell, head of Los Angeles-based Literacy Network, was named president of the Ordway Center for the Performing Arts. She succeeded interim president Jeff Bakken, who had taken over when David Galligan resigned in 2006.
Revenue for the arts and culture group rose an average 10.5 percent while expenses rose 6.6 percent. Two nonprofits in that category -- Public Radio International and the Walker -- had expenses greater than revenue in 2006.
Staff writer Graydon Royce contributed to this report.