Minnesota Nonprofit Economy Report
December 2010
Nonprofit organizations in Minnesota are a steady source of economic growth in every region of the state, as well as a key partner in delivering public sector services. The Minnesota Nonprofit Economy Report is an annual study by the Minnesota Council of Nonprofits that analyzes public data on nonprofit employers, employment, wages and finances to describe the role nonprofit organizations play in the state’s economy.
Executive Summary
Nonprofit organizations play an important role in Minnesota’s communities – providing vital services, employing local residents and improving the quality of life. The current economic downturn has highlighted the value of these contributions, but it is also placing considerable strain on the state’s nonprofit infrastructure.
The Minnesota Nonprofit Economy Report is an annual study by the Minnesota Council of Nonprofits (MCN) that analyzes public data on nonprofit employers, employment, wages and finances to describe the role nonprofit organizations play in the state’s economy. MCN also produces the Nonprofit Current Conditions Report, which surveys member organizations to assess financial and programmatic changes being made during the year. Together, these reports provide a unique and detailed look at the health of Minnesota’s
nonprofit sector.
Nonprofit sector employment still growing
Nonprofits in Minnesota have shown a great deal of resiliency in the face of a recession and prolonged economic slowdown. Between 2001(the end of the last recession) and 2007 (the beginning of the recent recession), the size of the nonprofit workforce in Minnesota grew an average of three percent per year. When the recession started in late 2007, that growth slowed slightly, but did not stop. Between 2007 and 2009, nonprofit employment in the state continued to increase an average of two percent per year. During the same period of time, for-profit employment in the state declined an average of three percent per year.
Growth in nonprofit employment during the recession has been broadly distributed. Every region of the state experienced an increase in its nonprofit workforce, although the increase in Northeast Minnesota was minimal. Likewise, nearly all major nonprofit industries have experienced growth in employment since 2007. This likely reflects the widespread need for nonprofit services during these difficult economic times, since the strongest percentage increases have been among social assistance organizations, like food shelves and job counseling.
Recession begins to impact nonprofit finances
Although many nonprofits appear to be maintaining employment levels during these difficult times, other data suggests this may be coming at a cost to the financial health of the sector. As of September 2010, financial data was available for just over 1,500 Minnesota nonprofits that had filed a Form 990 with the IRS for both the 2007 and 2009 fiscal years (for the majority of nonprofits, 2008 was still the most recent fiscal year available).
Among these organizations, revenues had fallen slightly between 2007 and 2009, while expenditures had increased an average of eight percent per year. As a result, 34 percent of these organizations reported an operating deficit in 2007, and that percentage increased to 48 percent in 2009. [It should be noted that standard accounting practices of counting multi-year commitments in the first year may overstate income in that year and understate income in subsequent years, significant in a recession when there are fewer multi-year commitments] nevertheless, assets have also fallen an average of two percent per year.
The nonprofit sector has been rising to the occasion – continuing to provide vital services and enriching Minnesota’s communities even in the face of economic turmoil. While nonprofits can weather a downturn by experiencing deficits for one or two years, like other sectors nonprofits need the economy to recover if they are to continue to maintain current levels of employment and services.
Past Reports
- 2010 Minnesota Nonprofit Economy Report
- 2009 Minnesota Nonprofit Economy Report
- 2008 Minnesota Nonprofit Economy Report
- 2007 Minnesota Nonprofit Economy Report
- 2006 Minnesota Nonprofit Economy Report
- 2005 Minnesota Nonprofit Economy Report
- 2004 Minnesota Nonprofit Economy Report
- 2003 Minnesota Nonprofit Economy Report
- 2002 Minnesota Nonprofit Economy Report
