Minnesota foundations' giving remains high after pandemic and racial justice boost in 2020

Minnesota foundations expect to maintain high levels of charitable giving this year after grants skyrocketed in 2020 sparked by the pandemic and racial reckoning.

A new survey by the Minnesota Council on Foundations shows that foundations gave 5% more money in 2021 after 2020's unprecedented year of generosity. Foundations expect that trendline to nearly flatten this year, but giving is still projected to remain at higher rates than before the pandemic, up 22% from 2019 — suggesting that it permanently altered philanthropy.

"It's clear that this is not a one-time surge of generosity in the wake of deep challenges in the community, it's part of an ongoing trend," said R.T. Rybak, CEO of the Minneapolis Foundation, which gave $106 million in its last fiscal year, up from $82 million three years ago. "We have every reason to believe that this year will be somewhere in that same range."

While the new statewide data is based off survey responses from 43 foundations, Council on Foundations Executive Director Susie Brown said it's not a surprising trend. What's clear, she added, is that foundations aren't returning to the "normal" of pre-pandemic days.

"Some of those things foundations started in 2020 seem to be continuing in a really positive way," Brown said.

In 2020, especially after the murder of George Floyd by Minneapolis police, foundations boosted racial justice work and grants to nonprofits led by communities of color and that continued in 2021.

About half of foundations surveyed said they also boosted their general operating grants in 2021 — which many nonprofits prefer over grants restricted to funding a specific program.

"Our giving has become much more in partnership with community instead of dictating a specific strategy," Rybak said.

He added that the Minneapolis Foundation was seeing these trends before 2020, giving more money to organizations led by Black and Indigenous people and other people of color (BIPOC) and giving more in total. Six years ago, the foundation gave $40 million, he said. The boost is driven in part by more giving via donor-advised funds, he said, as well as the foundation distributing grants multiple times a year instead of once a year.

Jeremy Wells at the St. Paul & Minnesota Foundation said the trend nationally isn't that foundations are giving up a higher percentage of their money but rather are collecting more money from donors and investment assets. As a result, his St. Paul-based foundation gave more money — more than $100 million — in 2021 and it will probably be at the same level in 2022.

"This year it's hard to say ... it all depends on the generosity of donors," he said.

Some foundations that decreased giving in 2021 told the Minnesota Council on Foundations they had made an exception in 2020 to meet immediate crises but planned to return to granting the typical annual distribution of 5% of their money.

Many Minnesota nonprofits say the demand for services isn't decreasing and they still need help from foundations, individual donors and government agencies. In a Minnesota Council of Nonprofits survey released last December, nearly half of nonprofit respondents said they were seeing increased demands for services and about half said they will be in financial distress within the next year or sooner. Many are also grappling with staffing shortages and rising costs due to inflation and supply chain issues.

A coalition of nonprofits, led by the Minnesota Council of Nonprofits, is lobbying the Legislature to create a $200 million one-time nonprofit relief fund.

2019 giving trends

In the newly-released report, the Minnesota Council on Foundations also analyzed data reported to the IRS. But because the federal agency is facing a backlog of data during the pandemic, reports are incomplete and delayed.

The five Minnesota-based foundations that gave the most in 2019 were the Wells Fargo Foundation, Margaret A. Cargill Philanthropies, the Minneapolis Foundation, the St. Paul & Minnesota Foundation and the McKnight Foundation.

Overall, foundations decreased the amount of money they gave to education, arts, human services and religion. However, education and human services were still the top two areas foundations funded. In 2019, foundations increased money devoted to health, public affairs and the environment/animals, with grants toward environmental and animal issues up 14% from 2018, reflecting a broader increase in donations to environmental topics.