Some nonprofits, hurt by the recession, are now expanding

Banyan Community, after a three-year fundraising campaign, is building a $6 million center that will allow it to serve at least 100 more low-income children in the Phillips neighborhood

Avenues for Homeless Youth has gone from bleeding money in 2007 to expanding into a new Brooklyn Park facility this year.

The Bridge for Youth, which in 2009 could not afford the staff to operate all the beds in its south Minneapolis facility, this year opened an additional center in Chanhassen.

The expansions are evidence of a turn in fortunes for successful small nonprofits that bit the bullet during the Great Recession and the lean years following when donations dipped.

Times are better for grass-roots non- profits in the Twin Cities, but it took several years — as commercial business sectors were building stadiums, office towers and luxury housing — to raise the capital for facilities improvements and expansions, said Kate Barr, a former community bank executive who is executive director of the Nonprofit Assistance Fund, a business-supported organization that works with small nonprofits on management and financial issues.

"The ones who rely mostly on individual donors have had some pretty solid recoveries," Barr said. "Many people have recovered since the recession, and some have been generous. That's a big part of capital campaigns, along with institutional philanthropy."

This year's Star Tribune Nonprofit 100, dominated by large health care concerns and private universities, saw revenue grow an average 5 percent in 2014, slower but more consistent growth from two years ago.

Overall revenue for this year's Star Tribune Nonprofit 100 rose 5 percent to $55.97 billion in 2014, up from $53.31 billion in the previous year.

Expenses rose by a like percentage to $50.01 billion. The overall revenue growth of the largest 100 was on par to the previous year's growth rate but down from two years prior, when it grew 6.6 percent.

Among the organizations on the Nonprofit 100, 71 showed revenue increases, and 84 had revenue in excess of their expenses.

These larger nonprofits tend to have the mass and strength to better ride economic cycles than smaller organizations, which during downturns are sometimes fighting for their survival.

Banyan, named after a fig tree whose branches grow downward into the ground forming a community of trunks around the original, raised $6.2 million in three years to build the new center.

"That's a short amount of time for such a small organization. I'm the founder, and it can never be fast enough," said Joani Essenburg, a teacher by profession who in 1998 started tutoring working-poor neighborhood children in her kitchen.

Essenburg, surrounded by a small staff and volunteers, has had a great story to sell. Virtually all the 120 low-income, minority kids Banyan serves graduate public, charter and private highs schools on time.

"We underpromise and overdeliver, and we've been in the black every year," Essenburg said. "We've done that for 17 years. I've built my own [management] skills with the help of a strong board."

The board anticipated issues in 2008-09 and drew up a contingency budget.

"I didn't like it," Essenburg said. "But the board doesn't let me jump ahead unless I can show them how we're going to do it. I run it like a business. We're still standing — in good condition."

The organization, which now has annual revenue of about $950,000, has been operating in a church building. The new center will be able to serve up to 250 youths and 150 families with preschool and education support, a gym, computer lab and even washing machines and a kitchen for families while parents work with their kids, or on their own educational or computer skills.

Avenues for Homeless Youth recruited Deb Loon to the north Minneapolis youth shelter and family services provider in 2008 to staunch financial bleeding.

"We stabilized in 2008 on an operating budget of $600,000," said Loon, the agency's executive director. "We started doing organic, incremental growth and expanding capacity in 2011 in response to need and our ability to raise the funds to do it."

This year, Avenues will have revenue of $2 million-plus, partly thanks to expansion to a 12-bedroom facility worth $950,000 that suburban Brooklyn Park gave to the nonprofit for $1 a year.

"Brooklyn Avenues is our most significant expansion to date," said Loon, whose organization each year shelters more than 250 kids separated from their families. "The community wanted us and helped us with this facility. We've already supported 81 youth from northwest Hennepin County. We do as much family strengthening as we can, and we also help young people get stable, finish high school, find jobs and permanent housing. We didn't have to raise the capital for the building, but we have to support it with revenue."

In south Minneapolis, then-executive director Dan Pfarr arrived at the Bridge for Youth in 2009. He had to cut the budget, even as demand for beds and services grew, in order to survive. Some beds were unoccupied some nights as a result of a 20 percent staff reduction.

This year, the Bridge expanded in cooperation with Westwood Community Church and a local foundation to the southwest-metro city of Chanhassen.

Pfarr, after six years at the Bridge, now runs 180 Degrees, a larger social services agency that has absorbed two smaller, financially weaker nonprofits.

"We own shelters, group homes, almost a $7 million budget, and we've had mergers with weaker service providers that were going out of business during or after the recession," Pfarr said. "I can see us going to $9 million or $11 million over the next five years."

Barr, the nonprofit consultant, said many small organizations "learned a lot about leadership, budgeting and planning over the last several years. Then when they came into a more positive economic situation, the capacity they developed helped them take off."

Neal St. Anthony • 612-673-7144

Patrick Kennedy • 612-673-7926