MCN has published new research on how Minnesota nonprofits are navigating this current moment. The 2026 Current Conditions of Minnesota’s Nonprofit Sector reports on how nonprofits are handling federal and state policy changes, interruptions to funding, and the impacts of increased expenses, based on responses from 235 Minnesota nonprofits in July 2026.
New this year – to help nonprofits navigate these current conditions, MCN has compiled action steps and resources for each Key Point.
Key Point #1: Federal Policy Decisions Cut Services and Increase Nonprofit Demand
86 percent of respondents reported their organization was negatively or very negatively impacted by federal policy decisions. Impacts include:
- H.R. 1, which will limit funding to SNAP and Medicaid;
- The loss of federal grants;
- The harsh emotional toll and the increased demand for services that resulted from Operation Metro Surge.
Key Point #2: Decreased Funding at All Levels Reduces Nonprofit Resources
This year resulted in an overall decrease in funding for Minnesota nonprofits, leading to fewer resources, increased competition, and lower staff morale.
- Government funding: 49 percent reported a decrease in funding from the government. This is the highest percentage of reported decrease in funding out of all the funding sources.
- Philanthropy or corporations: 48 percent percent of respondents reported that funding from philanthropy or corporations has decreased over the last year.
- Individual donations: Donations from individuals were a mixed bag this year. Approximately 1/3 of nonprofits identified an increase in individual donations, especially in response to Operation Metro Surge. About 1/3 reported individual donations remaining the same, and about 1/3 reported individual donations decreasing.
Key Point #3: Increased Expenses from Tariffs, Inflation, and Operational Services Reduce Nonprofit Reach
Over the past 12 months, a record 92 percent of survey respondents reported an increase in expenses. Factors impacting increased expenses include:
- Inflation: Inflation continues to impact the cost of goods for nonprofits. The Federal Reserve Bank of Minnesota reported that the rate of inflation was a 2.6 percent increase in 2025 and a 3.9 percent increase in 2026.
- Tariffs: The addition of tariffs on imported goods is also impacting expenses for nonprofits, which includes raw materials for construction, furniture and textiles, clothing, and more.
- Increased operating costs: Prices increased for required operating costs like general liability insurance, property insurance, and health care premiums for employees.
Key Point #4: Weaponization of Fraud Narratives and Oversight Overcorrections Create Significant Administrative Challenges and Slow Services
Fifty-one percent of respondents reported that decisions made by the Minnesota state government had a negative or very negative impact on their organization. These negative impacts include:
- Administrative challenges with state agencies when applying for or receiving state funding/grants.
- An overcorrection to fraud. While some legislative efforts were commonsense and targeted, MCN’s research concludes that the state government took some sweeping actions that were neither grounded in evidence nor proportional to the problem they sought to solve. Read MCN’s report on fraud here.
- Dramatic administrative burdens specifically for nonprofits providing services reimbursed by Medicaid.
Action Steps and Resources:
Key Point #1: Federal Policy Decisions Cut Services and Increase Nonprofit Demand
- Stay informed with regular updates by subscribing to MCN’s Nonprofit Advocate e-newsletter
- Join MCN’s public policy cabinet by contacting Bailey Sutter ([email protected])
- Deepen your skills and involvement in advocacy through MCN’s Advocacy Academy training series, toolkits on how to talk to your legislators, and more
- Join MCN as a member and benefit from our participation in the National Council of Nonprofits’ network, advocacy, and legal defense work
Key Point #2: Decreased Funding at All Levels Reduce Nonprofit Resources
- Access resources to support fundraising efforts, such as MCN’s MN Grants Directory, upcoming workshops, subscribing to biweekly grants alert e-newsletter, free resources from GiveMN, and resources and trainings by the MN Gift Planning Association.
- Learn more and get involved in Donor Advised Fund reforms by subscribing to The Philanthropy Project.
Key Point #3: Increased Expenses from Tariffs, Inflation, and Operational Services Reduce Nonprofit Reach
- Access tools to support strategic and financial modeling, such as Propel Nonprofits’ Scenario Budget Planning Template.
- Explore cost savings opportunities through MCN’s membership benefits (such as health insurance through BenefitsMN and organizational insurance through Bremer a company of Gallagher).
- Access training and tools to strengthen executive leadership and board governance partnership for strategic planning and decision-making.
Key Point #4: Weaponization of Fraud Narratives and Oversight Overcorrections Create Significant Administrative Challenges and Slow Services
- Combat the narrative with MCN’s talking points.
- If you’ve been impacted by changes to grantmaking or payment processes by the State of Minnesota, share your story with us: https://minnesotanonprofits.org/state-grant-oversight-feedback
- Join our MN State Grants and Contracts Coalition .
- Bolster your internal policies and compliance with government oversight requirements through compliance tools, legal guidance, webinars, and free legal assistance through the MN Nonprofit Legal Services Initiative (a partnership between MCN and LegalCORPS).
About the report
This report shares results from a survey the Minnesota Council of Nonprofits (MCN) conducted in July of 2026 (235 responses), to gauge current conditions for Minnesota nonprofits. This survey builds from a special report series MCN developed in 2020 in response to the COVID-19 pandemic that tracked nonprofit well-being over time throughout the pandemic, international movements for racial justice following the murder of George Floyd by Minneapolis police, economic challenges, and other events.
Given the ongoing instability of external factors impacting nonprofits, MCN has continued this critical nonprofit research; 2026 is the eleventh issue.
View past reports, as well as MCN’s annual and longitudinal Minnesota Nonprofit Economy Reports, here.