Minnesota foundations boosted giving in 2020 to respond to COVID-19, racial injustice

Most Minnesota foundations boosted the amount of money they gave in 2020 and expect to continue to do so in 2021 in response to the COVID-19 pandemic and racial injustice.

The rising generosity, according to a new report released Tuesday, comes as nonprofits are also facing increasing expenses. During the pandemic, food shelves and food banks have seen double or triple the number of Minnesotans in need, many for the first time.

"The philanthropic community has stepped up," said Susie Brown, executive director of the Minnesota Council on Foundations, which released the report surveying foundations. "The effects of the events in 2020 are going to be lasting, and it's going to take a while for nonprofits and the community to recover."

When the pandemic hit Minnesota, the Minnesota Council on Foundation and the St. Paul & Minnesota Foundation teamed up to raise more than $11 million for its disaster recovery fund, all of which was doled out by August. Other foundations also launched special COVID-19 funds.

Then after the death of George Floyd, foundations rallied to raise millions of dollars to rebuild businesses destroyed in civil unrest and invest in addressing racial inequities and reform philanthropy.

"This year is bigger and worse in many ways … Philanthropy responds to crises and moments of need regularly. And this is not regular," Brown said. "They really have … responded and continue to do so, which is what is needed here in Minnesota."

Nationally, there's a push for foundations to give more than the typical annual distribution of 5% of their money.

In September, the Minnesota Council of Nonprofits surveyed 200 nonprofits and found that most changed or cut programs, budgets, hours and facilities to adjust for growing expenses as revenue evaporated when programs or events were canceled in the pandemic.

Most nonprofits say they've increased fundraising and halted hiring or pay raises, with about 40% of nonprofit employees filing unemployment claims between March and September due to furloughs, layoffs or reduced hours. Now, nonprofits are bracing for a worse 2021, anticipating the extra support from foundations, individuals and government won't last. More than half of the state's nonprofits received forgivable Paycheck Protection Program loans from the federal CARES Act, but the federal aid expires at the end of this month.

In the Minnesota Council on Foundations' survey of 84 foundations in July, most plan to give more in 2021 to Black- and Indigenous-led organizations as well as other entities led by people of color.

But funders aren't just responding with more money. Many are also shifting how they operate, increasing flexibility of how grants are used, relaxing requirements and boosting general operating grants that aren't limited to use on specific programs.

Also on Tuesday, the council released a new analysis of statewide charitable giving trends. That study based on 2018 federal tax forms and data, found that individuals gave $5 billion that year, up from $4.1 billion in 2012. Foundations and corporations were also more generous, distributing $2.2 billion, up from $1.7 billion in 2012.

"We're a very generous state in Minnesota," Brown said. "And it's terrific to see how much giving comes from both individuals and the foundations."

Education and human services remain the top areas for foundations to fund. In fact, the amount of money that went toward education, human services, religion and health more than doubled between 2012 and 2018 while arts and culture funding stayed flat and public affairs funding for civic events or initiatives declined.

Minnesota environmental organizations are seeing a massive surge in donations, increasing from $43 million in 2012 to $134 million in 2018 as climate change and high-profile local issues such as northern Minnesota mining proposals draw interest.

The report also noted how corporate foundations have shifted funding priorities in recent years. For instance, last year, the Target Foundation announced more focus on equity grants in the Twin Cities, cutting longtime support to some arts and social services ­organizations.

About half of Minnesota foundations send money outside the state, but that could be because the Twin Cities is home to many Fortune 500 companies — from Wells Fargo to General Mills — that have their own foundations giving grants across the country and globe. About 40% of foundations' money stays in the Twin Cities while 8% goes to outstate Minnesota, according to the council.

The council also found increased giving in Minnesota by foundations based outside the state, with $336 million in 2018 streaming in from large foundations and funders elsewhere.

Kelly Smith • 612-673-4141