Based on a report from the Minnesota Council of Nonprofits, more Minnesota nonprofits are facing financial crisis than any year since 2020. Eighty percent of nonprofit leaders noted concern about the viability of their budgets for the next 12 months. On Give to the Max Day, Minnesotans showed up to support our sector — in droves. More than $37 million was raised on our state’s giving holiday.
Still, the truth remains that nonprofits are citing a decline in giving and volunteerism, and an increase in demand for services. A less visible but significant issue was not named in recent research. Many nonprofit organizations must front the cost to deliver services, for reimbursement payment that may come five to six months later.
Our state’s nonprofits are the backbone of our social safety net, delivering essential health, social and community services that improve the quality of life for people across our state. Many of these critical services are linked to cash reimbursement systems by counties, state and federal pass-through agencies.
When payment comes many months after the service delivery expense is incurred, it creates immense financial strain for nonprofits that are already lean and challenged to find adequate cash flow. This is an unfair burden we would never place on for-profit businesses.
The viability of our nonprofit sector is a crisis that should concern all Minnesotans. Nonprofits make up a significant portion of our state’s economy and employment base — around one in seven jobs in Minnesota are in the nonprofit sector. Our state depends on mission-driven nonprofits.
Minnesota is one of the most philanthropic states and boasts high volunteerism. This looming crisis is a wake-up call for all of us to increase our charitable giving and dedicate more time to the causes that are important to us. Critically though, we must address the payment model that expects nonprofits to shoulder the financial risks of delivering services our communities need.
The state of Minnesota is one of the top funders of the nonprofit sector, and this partnership is crucial.
But we have an opportunity to manage it more strategically, with an understanding of the unique challenges nonprofits face. We need our state leaders to convene with nonprofit executives, foundations and other stakeholders to find solutions that avert this looming crisis of fiscal stability.
The well-being of Minnesota’s nonprofits is inextricably linked to the well-being of our state as a whole.
When these organizations struggle, it is our communities that suffer. Now is the time for bold action to shore up this vital sector and ensure it can continue serving the people of Minnesota for years to come.
Eric J. Jolly, Ph.D., is the president and CEO of the Saint Paul & Minnesota Foundation. Armando Camacho is the president and CEO of the Amherst H. Wilder Foundation.
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