New Bill Proposes First COVID Recovery Dollars Specifically for Minnesota Nonprofits

Monday, March 14, 2022

Minnesota nonprofits are the first line of community support and play a critical role in connecting people to supportive programs, funding, and services – however, nonprofits have yet to receive designated COVID relief dollars for recovery. A bill introduced February 28 by State Senator Carla Nelson (R-Olmstead), would change that, creating Minnesota’s first designated relief fund specifically for nonprofits.

The proposed one-time Minnesota Nonprofit Relief Fund utilizes $200 million dollars from the state’s budget surplus or remaining money from the federal American Rescue Plan to provide general operating grants of $50,000 - $150,000 to Minnesota nonprofits, focused on small, rural, human services, and culturally-specific organizations.

“Nonprofits are key to getting relief into our communities, preventing and solving some of the greatest barriers to our recovery,” said Senator Nelson. “During a time of increased demand for social services, an investment in nonprofits is needed to accelerate COVID recovery in our state. $200 million in relief grants will help Minnesotans from Winona to Worthington, and from Baudette to Blue Earth.”

Nonprofits are key to economic expansion in Minnesota. The nonprofit sector is the third largest sector of employers in the country, and employs 14 percent of Minnesota’s workforce. In addition to people they employ directly, nonprofits serve as economic multipliers by providing needed services like job training, mental health supports and early childhood programs.

To date, nonprofits have largely been left out of state and federal relief programs, while other industries had access to programs with dollars specific to meet their needs.

“The State has already sent hundreds of millions of dollars to for-profit companies, yet nonprofits, who maximize state dollars and who know their communities best, should not be left out of that discussion,” notes Senator Nelson.

Only 3.7 percent of all Paycheck Protection Program (PPP) loans went to nonprofits and less than half of eligible Minnesota nonprofits obtained a PPP loan.

Funding shortfalls paired with an increased demand for services, are making it difficult for nonprofits to continue operating at the level communities need to recover and rebuild from COVID-19.  

“We are drowning,” says Brittany Robb, executive director of Safe Haven Shelter & Resource Center in Duluth. “There simply aren't enough dollars to provide the services demanded of our agency and survivors are struggling to have their needs met.”

Says Suzanne Burks, executive director of the Phyllis Wheatley Community Center in Minneapolis, “With increased costs associated with security, safety, and hosting testing and vaccination clinics this year – it’s put a lot of extra pressure on our budget. We’ve had so many additional operating expenses, we’re struggling with things like our facility upkeep.”

At the same time, new data on the health of the nonprofit sector by the Minnesota Council of Nonprofits (MCN) shows growing challenges of workforce shortages and staff turnover.

Throughout the pandemic, Minnesota’s nonprofit sector lost 30,000 employees, and only 15 percent of nonprofits reported being able to use the Employee Retention Tax Credit. These persistent challenges severely impact the operational stability of nonprofits and their capacity to provide frontline services to communities.

Says Jerome Ferson, president of United Way of Olmsted County. “We’re hearing from nonprofits how overwhelmed their staff are. There’s more community need that nonprofits can serve, it is not a sustainable set of circumstances.”

That same data from MCN also shows 44 percent of nonprofits are still seeing an increase in demand for services as a result of the pandemic; the demand for nonprofit services has only gown, up from 36 percent in MCN’s May 2020 report.

“Relief funds are needed so that we can maintain and increase our capacity to provide safety-net services. So many new people, whose economic and family stability have been shaken by COVID-19, are turning to organizations like our for the first-time support related to food, mental health, and social support programs,” says Mary McKeown, president & CEO of Keystone Community Services, a twin cities nonprofit.

“An investment in Minnesota nonprofits will ensure that we have the funds needed to support more people and provide vital services to our community.”

Since the beginning of the pandemic, many nonprofits – who already operate on thinner margins than for-profit businesses – had to make significant cuts to budgets, hours, and programming to continue operating, even with the support of their philanthropic partners.

“The Relief Fund is crucial to the existence and functionality of our organization,” says Khadija Ali, co-founder of Pamoja Women in Rochester. “Pamoja Women has been providing resources and services to the community with limited budgets, but COVID-19 has required different services and outreach. There is only so much we can do to stretch the dollar. The relief funds can go a long way increasing our capacity to provide services that empower women and build communities.”

Advocacy for this fund is being led by Greater Twin Cities United Way, Metropolitan Alliance of Connected Communities, Minnesota Council of Nonprofits, Minnesota Council on Foundations, and United Ways of Minnesota. This coalition and bill author Senator Nelson are calling for $200 million based on new data from MCN’s latest COVID Impact Report detailing the continuing financial needs of nonprofits to serve Minnesota communities, new data from the IRS Masterfile of nonprofits, the ongoing lack of COVID relief funding for nonprofits, and the state’s positive budget forecast.

As of March 7, 96 Minnesota organizations have signed their support of the $200m Minnesota Nonprofit Relief Fund. 

“Our work is to support youth in finding safety, significance, and belonging,” says Pat Sukhum, CEO of Big Brothers Big Sisters Twin Cities. “When they find themselves in crisis, our program is often a backbone they can rely on. In a crisis, nonprofits need a backbone of additional support as well.”