In the 30 months since the onset of the global pandemic caused by COVID-19, Minnesota nonprofits continue to experience significant disruptions in their operations and services, according to the Minnesota Council of Nonprofits’ (MCN) newly released 2022 Minnesota Nonprofit Economy Report COVID-19 Impact Update, Sixth Edition.
The latest of six COVID-19 impact assessments for Minnesota’s nonprofit sector from the Minnesota Council of Nonprofits (MCN), the newly released edition looks at levels of reported organizational disruption and financial distress, impacts on nonprofit employment, adjustments by government and philanthropy funders, and prospects and strategies for recovery.
A key theme in the new report reaffirms a growing trend felt by nonprofits since the onset of the pandemic (and reflected in previous reports): an increase in demand for services, expenses, and programming, while facing decreases in staffing levels and ability provide services. According to the latest report, 60 percent of respondents had an increase in demand for services in 2022 — this number increased from previous MCN impact reports — in a time when funding revenues remained relatively stagnant (grant funding from charitable foundations returned to pre-2020 grantmaking levels).
Completed in July 2022, and featuring responses from 273 Minnesota nonprofits, the report’s key findings include:
- Increased demand for services and decreasing resources lead to workforce challenges: Demand for nonprofit services increased during the ongoing COVID-19 pandemic. Nonprofits are trying to meet these needs while facing difficulty hiring and retaining staff due to the financial climate and competition from government and private sectors.
- Lasting impacts of COVID-19: Minnesota nonprofits supported the changing needs of their communities in response to COVID-19, demonstrating leadership and flexibility. While nonprofits across the state have shown tremendous resilience, the people behind this undertaking are experiencing high levels of burnout.
- Inflation and stagnated funding: Government relief funding played a pivotal role in the nonprofit sector’s ability to function. Forgivable Payroll Protection Program loans were the most commonly accessed form of relief by nonprofits. Philanthropic organizations also increased funding. As relief funding dries up and private giving responds to a plummeting stock market, organizations are facing decreased funding.
Despite losing 30,000 workers since 2019, the nonprofit sector has maintained its relative share of the state’s total workforce because other sectors experienced similar losses. Nonprofits still employ 14 percent of the workforce. At the same time, prolonged distress from the pandemic has weakened the financial sustainability of many nonprofits 30 months after its onset. Half of responding organizations ended Fiscal Year (FY) 2021 with a surplus, with only 24 percent anticipating doing the same in FY 2022 and nearly one third of organizations anticipate ending 2022 with an operating deficit.
While Minnesota continues to be home to one of the nation’s most resilient and innovative nonprofit sectors, many organizations are facing the question: How do we strategically continue to support our communities while caring for and retaining staff and remain financially viable?
To view the full report, download the PDF version at https://bit.ly/3WrzGQL.