Minnesota nonprofits grapple with sudden staffing shortages in the 'Great Resignation'

The "Great Resignation" has arrived at Kristine Martin's nonprofit in northeast Minneapolis.

In the last three weeks, five senior leaders have quit their jobs at East Side Neighborhood Services, some of whom are leaving for private businesses that can offer more pay, better hours and a change of pace from the demanding, relentless work of being on the front lines of serving people in need.

"It's happened so fast," said Martin, executive director of the organization, adding that employees are burned out and want "to do something that will pay more" and for which they "don't have to give [their] soul and heart."

Minnesota nonprofits are grappling more than ever with urgent staffing shortages and a challenging hiring climate as they vie for the same tight labor pool as the for-profit and government sectors. The battle for workers existed before the COVID-19 pandemic but has only been amplified by the crisis, leaving charities in deeper financial straits and less able to match lucrative pay and benefits elsewhere.

In a new report this month, the Minnesota Council of Nonprofits found that organizations are having a difficult time recruiting and retaining workers just in the last six months. Half of about 300 nonprofits surveyed said they've struggled to hire new employees, while 40% are dealing with significant staff turnover. The council's job board has 1,600 postings — nearly double from the start of 2021 and more than the numbers in January 2020, just before the COVID outbreak.

Minnesota's nonprofit sector has shrunk by 7% since the start of 2020, a slightly steeper decline than in the state's total workforce. Nearly 30,000 nonprofit employees who worked before the pandemic haven't returned. Some of that loss is due to furloughs and layoffs last year, which affected about a third of the sector. But this summer, nonprofits started noticing people choosing to leave in what's been dubbed the "Great Resignation."

"We've had more turnover this year than ever ... the collective exhaustion was quite clear to us," said Mary McKeown, president of Keystone Community Services in St. Paul. "Some people left because it was just too much."

It has left her scrambling to find a maintenance worker and perplexed by the lack of applications. Without an office manager, case managers have stepped up to answer phones. When the nonprofit was short of teachers, a manager filled in for classroom duty.

"We're just using all hands on deck," McKeown said.

At Washburn Center for Children, which provides counseling and therapy services in Minneapolis, CEO Tom Steinmetz has improved benefits and pay and added hiring and retention bonuses. But he still doesn't have enough therapists to meet the overwhelming demand for mental health care, leaving children and families waiting longer for help.

"We're facing the most intense mental health workforce crisis that I've seen in my 25 years in the field," he said. "It's more challenging and difficult than ever to recruit and retain qualified therapists."

There are fewer college graduates entering the mental health field and more people leaving it for private practices or exiting altogether because of the stress, he said. Reimbursement rates from insurance aren't keeping pace with actual costs, he said, so community mental health centers are limited in what they can pay in wages.

Many health and human service nonprofits get government contracts and grants to operate, but those contracts often cap compensation for expenses or other line items. Without an influx in funding, organizations say that can't afford to pay more to their workers.

"This is becoming an emergency situation," said Mary Gaasch of Hammer Residences, a Wayzata-based nonprofit that provides housing and services for people with disabilities and has dipped from 500 employees to 380 during the pandemic. "My 17-year-old gets paid more per hour to work at Chipotle than our direct support professionals do."

'This isn't easy work'

Nonprofits long have been known for paying little — at least until recently. In 2017, Minnesota nonprofit wages matched government wages for the first time. In 2019, nonprofit workers in the state, a record 391,000 employees, surpassed the public sector for the first time in both numbers and share (14%) of the state's workforce.

But nonprofits hit hard by COVID now can't keep pace with what the public and for-profit sectors can offer.

In Minneapolis, a fifth of the staff at the Bridge for Youth, an emergency homeless shelter, left this summer for corporate jobs, graduate school or similar work with Hennepin County after the county approved a $20 minimum hourly wage.

Executive Director Lisa Mears is looking to move the Bridge's minimum wage from $17 to $20 an hour. But nonprofits like hers are mostly funded by government contracts, which have generally remained flat. So she needs to ramp up fundraising to afford higher wages.

"All of a sudden the ground shifted beneath us," Mears said of the turnover.

Nonoko Sato, executive director of the Minnesota Council of Nonprofits, said more state funding is needed to sustain nonprofits long-term and that foundations must grant more money for general operations rather than restricting it for specific programs.

"We are a resilient and smart sector and we'll be able to — with support of donors and philanthropy — continue to meet the needs of the community," Sato said.

In a bid to compete with the private sector, some nonprofits have beefed up benefits, giving unlimited vacation time, paid parental leave or even pet insurance. During the pandemic, some nonprofits closed for collective paid time off to battle burnout.

At East Side Neighborhood Services, which has a food shelf and provides childcare, employment programs and other services, Martin is giving bonuses to daycare workers and looking to add extra paid time off after raising the minimum wage to $15 an hour.

In a May report by the state Nonprofits Council, 72% of nonprofits surveyed said they support offering a $15 minimum wage.

Boosting wages

At Minneapolis-based Loaves & Fishes, the largest free meal program in Minnesota, Executive Director Cathy Maes has raised the minimum hourly wage from $15 to $17. Instead of the 20 or 30 applicants per job that she used to get pre-pandemic, however, she's now lucky to get two or three. The nonprofit, which is on pace to dish out 4 million meals this year — triple the number in 2019 — has only five more employees than pre-pandemic and fewer volunteers.

"I just think the private sector is throwing more at hiring people," said Maes. "We're just looking at a smaller pool and they're able to throw really great incentives, and that's just not what we can do."

When she interviewed a candidate for a truck driver position and he asked if she could reimburse him for college education, she looked dumbfounded.

"No one has ever asked me that," she said.

The man instead took a job with UPS, which offers tuition assistance, and Maes hired two landscapers as temporary drivers until spring. She's now looking to her volunteer ranks in hopes of hiring people already passionate about the nonprofit's mission.

"It's the heart that we can sell," she said. "But with the cost of living, that's not always enough for everybody."