Charities scramble to meet demands as revenues dry up

Minnesota’s nonprofit groups are facing increased demand for services and reductions in funding during the ongoing recession, according to a new report by the Minnesota Council of Nonprofits. The survey of 571 charities found that 57 percent reported a decrease in revenues so far in 2009, while an almost equal number (56 percent) indicated demand for services had increased.

Not surprisingly given the recession, the spike in service needs was particularly steep for job training programs, mental health services and food and housing assistance, with organizations working in each of these areas reporting increases of greater than 70 percent. At the same time, many nonprofit organizations are cutting staff to deal with the downturn in revenues. Roughly 30 percent of the organizations surveyed reported reducing full-time staff, while 20 percent indicated that they’d cut part-time staff.

The Minnesota Council of Nonprofit’s report was released just as Gov. Tim Pawlenty is set to announce his plans for closing the state’s $2.7 billion deficit. It notes that roughly one third of nonprofit groups in the state rely on government funds as their largest source of revenue and that they are almost certain to be adversely affected by Pawlenty’s budget cuts.

“Government has traditionally been a reliable partner in the delivery of services,” notes the report, which was written by Jon Pratt, executive director of the Minnesota Council of Nonprofits, and Ruth Duran Deffley, the organization’s membership and chapter coordinator. “This partnership is now under great stress.”

The report also points out that roughly three quarters of Minnesota’s 7,500 nonprofit organizations have annual budgets of less than $3 million. Most of these smaller groups have little financial cushion to soften the blow in difficult times. Roughly a quarter of these organizations have no cash reserves, while 75 percent don’t have access to a line of credit.