Almost all Minnesota nonprofits need workers, forcing some organizations to scale back services

Four out of five Minnesota nonprofits say they're grappling with job vacancies and are reporting more workforce shortages than peers nationwide, according to a new national survey.

The survey, conducted by the National Council of Nonprofits, found that nearly 81% of Minnesota nonprofits had job openings, compared with nearly 75% of nonprofits nationally.

Nearly two-thirds of Minnesota nonprofits surveyed have more job vacancies now than before the pandemic broke out in 2020.

While the survey is limited to a small pool of respondents — only about 70 of the tens of thousands of nonprofits statewide responded — the results reflect what officials with the Minnesota Council of Nonprofits have heard from local organizations about rising costs, decreasing revenue and widespread staff shortages.

While some business sectors have also struggled with worker shortages, job vacancies are forcing nonprofits to scale back programs and services — affecting needy Minnesotans ranging from those looking for housing assistance to parents scrambling to find child care.

"If they're short-staffed and a restaurant closes early or isn't open on Tuesdays, that's an inconvenience ... whereas if a homeless shelter has reduced hours or has to scale back on facilities, that's about basic needs," said Kari Aanestad, associate director of the Minnesota Council of Nonprofits. "That's a threat to a vision of Minnesota being a place where everyone can thrive."

The nonprofit sector hasn't recovered from the massive layoffs and furloughs of 2020 when the pandemic began, and it may be permanently reshaped by the crisis.

According to state employment data, Minnesota's nonprofit sector had nearly 3% fewer employees in 2022 than in 2019 — a larger decline than in the state's overall workforce.

Besides layoffs and furloughs caused by COVID-related revenue losses, more nonprofit workers have been leaving voluntarily, part of the "Great Resignation" of employees who burned out and switched to careers with better pay and hours. As with the private sector, nonprofits also are seeing more retirements.

High vacancy rates

In Minneapolis, Volunteers of America is seeing more early retirements and employees leaving for better pay, resulting in 62 openings — a vacancy rate of more than 10%. One employee pointed out that manager salaries at a McDonald's rival the nonprofit's starting pay, CEO Julie Manworren said.

"We're now competing with the gas stations, the fast food places, the dollar stores — places that perhaps don't have the level of stress, or meaning, that our positions have," Manworren said. "We're laser-focused on keeping pace with the market."

Like many nonprofits that are turning to new ways to attract and retain employees — from boosting salaries to better benefits — Manworren said Volunteers of America is also trying to increase salaries and offer hybrid work schedules when possible. The organization added a recruiter position this year to help draw applicants.

The staffing shortages have forced Volunteers of America to cut some services and close a home in Mora, Minn., for people with disabilities. Residents were moved to a different home, but Manworren said she'd like to reopen the facility to meet the demand for services — as soon as she can find the staff for it.

More than a third of the Minnesota nonprofits with openings that responded to the national survey said their vacancy rate was upwards of 20% — a higher rate than nonprofits nationwide. The survey questioned 1,600 nonprofits nationwide, a fraction of the more than 1 million nonprofits nationwide.

But Aanestad said it was unclear whether many of those openings are the result of new positions added to meet a growing need for services, or existing positions open due to turnover.

"There's a story we don't necessarily know just from the numbers, but it definitely echoes what we've found," she said.

'Doing the best they can'

In the Minnesota Council of Nonprofits' survey of nearly 200 nonprofits released last month, meeting wage expectations was the top reason organizations cited for struggling to retain or draw workers. Almost 70% of nonprofits reported that their expenses had risen in the last year, while a third reported declining funding.

"It can feel easier to blame nonprofits for these challenges [than businesses]. I sometimes hear people say, 'Nonprofits just need to fundraise more,'" Aanestad said. "But the reality is that most, if not all, are doing the best they can with this impossible puzzle."

In the national survey, most Minnesota nonprofits surveyed said they're increasing salaries, while more than half are offering remote work options.

Aanestad said it's unclear why Minnesota nonprofits are facing higher job vacancies than nonprofits in other states, but that it could be a reflection of higher burnout following the 2020 police murder of George Floyd in Minneapolis, which spurred global fallout.

Nonprofits were also on the frontlines of responding to both the pandemic and civil unrest in 2020, having to make sure Minnesotans without food or access to groceries had the help they needed.

Since then, extra federal aid and foundation grants offered early in the pandemic have waned and donors have scaled back their generosity. In fact, according to the national survey, more than two-thirds of Minnesota nonprofits said they anticipate donations will decline or remain flat this year.

Minnesota's nonprofits, which employ 14% of the state's workforce, may face tougher times ahead.

"Nonprofit organizations may be facing financial cliffs that were feared the last three years that haven't come true yet," Aanestad said. "We're expecting 14 percent of Minnesota's workforce to solve or at least address complex social challenges and some of the hardest parts of the human condition. Nonprofits alone can't do that work."