Top takeaway: Push back on harmful misconceptions vilifying nonprofits, including:
Misconception #1: Nonprofits don’t impact me.
- Nonprofits are America’s invisible backbone, delivering critical services efficiently, driving economic growth, and strengthening communities.
- Nonprofits impact the lives of every Minnesotan by providing essential community services ranging from birth centers to cemeteries, and everything in between:
- Our sector cares for and protects Minnesota’s natural resources.
- We operate daycare centers and manage youth recreation leagues.
- We organize community-based blood drives and vaccine clinics for people and pets.
- We lead local chambers of commerce.
- We operate museums, theaters, zoos, science centers, places of worship, and community spaces that provide entertainment and summer learning programs for young minds.
- These examples just scratch the surface. Chances are strong that at some point in your life, you have benefitted from the service of a nonprofit.
- People interact with nonprofits as an opportunity to give back to their communities. Whether through religious organizations or recreational sports leagues, people connect and support their neighbors through nonprofits.
- Minnesota is home to almost 38,000 registered nonprofits that are a critical part of the state’s economy:
- Minnesota nonprofits employ 376,000 people – 13.4% of the state’s workforce – and provide essential and meaningful job opportunities across all corners of the state.
- Nonprofits fuel Minnesota’s economy, generating more than $100 billion to the state economy every year.
- Nonprofit professionals are our neighbors, friends, and family members. They’re often leaders, coaches, and mentors in our community.
Misconception #2: State funding to nonprofits is a handout with minimal rules or accountability.
- Nonprofits provide critical support government does not.
- Government grants to nonprofits are not free funding but rather restricted dollars for contracted services where there are gaps in pursuit of broader shared goals.
- Government funding of services through nonprofits is some of the best money that it invests because it leverages volunteers, community expertise, philanthropic dollars, and community energy, participation, and customization.
- Nonprofit employees are equal in size to all government workers in Minnesota and partner with state and local government to provide essential services without ballooning in size.
- To qualify for government grants, nonprofits must adhere to strict reporting requirements that track how funds were used and resulting outcomes. This occurs during the grant application and grant reporting processes.
For example: If someone is receiving job training services and support, the nonprofit might need to track whether the person secures stable employment and, if so, how long it took to do so. - Social service nonprofits provide a critical safety net to help our neighbors during difficult – and often unforeseen – times.
For example: They provide housing options for youth who are aging out of foster care and at risk of homelessness, which can have devastating and long-term effects on young adults. - Without nonprofit safety net services, the state often must incur additional expense.
- Community nonprofit work is not charity. Nonprofits provide quality services carried out by knowledgeable, trained professionals to fill gaps in our social and governmental infrastructure.
Misconception #3: What’s wrong with government efforts to cut grants and save money?
- Saving money is a good thing – and nonprofit professionals are savvy savers who are well-versed in working smartly within limited budgets.
- Nonprofits take the money entrusted to them – whether by governments, foundations, or community donors – very seriously. Nonprofits want to make the biggest impact possible with the resources available.
- It’s concerning that the cuts currently underway are being done broadly and hastily without studying potential ripple effects. These cuts will directly impact our local community and economy by:
- Abruptly cutting off neighbors receiving life-altering services, like health care or home meal delivery, from a nonprofit.
- Cancelling contracts with Minnesota farmers for crops and livestock used for food stability programs.
- Laying off nonprofit employees who are our neighbors and community members. This is particularly challenging in areas of the state where job opportunities are already limited.
- Eliminating federal employees that were grant administrators – and sometimes the only contact – between the government and a local nonprofit, causing confusion and funding and communication delays.
- These broad, system-wide cuts may ultimately cost more money in the long run if gaps worsen. Future solutions will be needed to backtrack changes.
Misconception #4: Nonprofits are more vulnerable to fraud than other sectors.
- Nonprofits are mostly small, very local, well managed, and their support is built on trust.
- The Association of Certified Fraud Examiners regularly finds that fraud is both less prevalent and costly in the nonprofit sector than it is in for-profit or government environments.
- The nonprofit sector is heavily regulated and subject to higher scrutiny and reporting requirements because of its tax exemptions.
- We are required to have governing boards of directors, file and make public annual 990 tax returns, and (for groups over a certain budget size) complete an independent financial audit while making it available to the public for at least three years. Nonprofits rely on the public’s trust to accomplish our charitable missions.
- All nonprofits, regardless of years of operation, must follow federal IRS reporting requirements to maintain their tax-exempt status.
- In addition to federal requirements, Minnesota nonprofits also need to follow state regulations from the Minnesota Attorney General’s Office and the Minnesota Secretary of State. This is true whether you’re a 500-employee nonprofit in Minneapolis or a five-employee nonprofit on the Iron Range.
- Nonprofits use several tools, like annual reports and grant reports, to be transparent with our financials.
- Minnesota nonprofits are required to have a board of directors with at least three members. This board holds nonprofits accountable by carefully reviewing financial records, advising on operations, and setting employee compensation plans.
- Board members are knowledgeable local community leaders – like business owners, educators, faith leaders, lawyers, and accountants – that contribute their expertise to a nonprofit’s management and strategic direction.
- Most current grant programs have existing reporting requirements to ensure dollars are being spent correctly and efficiently.
- Nonprofits have long served as valuable partners to the state and federal government. We are uniquely positioned to efficiently deliver services in a culturally relevant, locally focused way, which would be overly challenging or resource-intensive for other organizations or government agencies to replicate.