Challenged by an unprecedented state revenue shortfall, combined with expected declines in foundation and corporate giving and rising community need resulting from the recession, nonprofit human service agencies are at a crossroad. Leaders asked, “How do we continue to meet the growing demand for services while the traditional revenue base for these services will likely decline? How can we move forward our advocacy of the many issues facing families with low-incomes in a climate of economic and fiscal downturn?” his was the backdrop for the inaugural United Front event that convened sector leaders–650 nonprofit agency board members and management staff, corporate leaders and foundation executives, on Friday, March 13, 2009.
The United Front 2010, co-presented by Greater Twin Cities United Way and the Minnesota Council of Nonprofits, and sponsored by the General Mills Foundation, created an opportunity for leaders to hear current information on community and economic trends and challenges to the sector by Lauren Segal, Greater Twin Cities United Way President and CEO, Tom Stinson, Minnesota State Economist, and Jon Pratt, Minnesota Council on Nonprofits Executive Director. A leadership panel of corporate (Jon Campbell, Wells Fargo Banks), foundation (Ellen Goldberg Luger, General Mills Foundation), county (Commissioner Mike Opat, Hennepin County), and city officials (Chris Coleman, Mayor, City of St. Paul), as well as a nonprofit executive (Suzanne Koepplinger, Minnesota Indian Women’s Resource Center), provided a cross-sector reflection of leadership challenges faced by nonprofit agencies. Participants met in one of 10 issue area meetings* to explore how they would continue to meet community needs while revenue streams change. Prior to the event, sector leaders met to strategize how best to facilitate this difficult conversation with their peers.
As economic times get tougher, more and more people are calling crisis lines such as United Way 2-1-1 for help. Food shelf and homeless shelter usage is up. Giving among Minnesota’s foundations is expected to be reduced by 4% in 2009 and possibly more in 2010. Minnesota’s $6.4 billion revenue shortfall and Governor Tim Pawlenty’s commitment to not raise taxes challenged the Legislature to produce a balanced budget that would cut revenue for programs and services. Would the Legislature approve the Governor’s budget with deep cuts in health care services and local government aid, or would they produce a balanced budget recommending a combination of cuts to programs and services and increases in taxes?
Enacting a budget, such as the latter, would require cross-over votes from Republicans to join the Democrats. In either scenario, there would have to be significant reductions in human service funding. One-time Federal stimulus funds would reduce the revenue shortfall by roughly $1 billion for a time, but there remains a structural state budget deficit now and into the future. Counties and cities face two sources of budget cuts: local government aid and human services funding that flow from the state through the counties to nonprofit agencies. Their budgets must balance with program and service cuts alone or with a combination of budget cuts and property tax increases, which is unlikely.
Minnesota’s unemployment rate of 8.1% (8.9% national unemployment rate), does not include those actively looking for work or of those who have given up looking for work. Minnesota State Economist, Dr. Tom Stinson reminded participants that “we have not yet hit bottom in the unemployment rate,” and “we expect a prolonged recession.” It is possible that Minnesota’s unemployment rate may reach 10% or higher. This statewide number does not reflect the much higher unemployment rates within geographic regions and communities of color.