Small Minneapolis nonprofits awash in donations post-protests are scaling up

Allison Sharkey doubted she could raise $50,000 to help Lake Street businesses when the COVID-19 pandemic hit.

Then $7 million came in.

The rioting that erupted after Minneapolis police killed George Floyd damaged hundreds of businesses along the bustling city corridor. But an extraordinary wave of generosity is following the destruction.

Now Sharkey, who heads the Lake Street Council, has both the blessing and challenge that the unprecedented surge of cash has brought for a tiny nonprofit with a staff of four that's used to an annual budget of around $500,000.

"Our everyday work is very different," Sharkey said. "We've essentially had to learn how to become a disaster-relief organization because there is not a Red Cross equivalent for business corridors."

Minneapolis has been the epicenter of global outrage over Floyd's death, propelling small nonprofits that work on criminal justice or help destroyed businesses into the spotlight. Millions of dollars from across the country have flooded in.

The Minnesota Freedom Fund received $30 million from donors wanting to help jailed protesters, but it has faced criticism for not spending it fast enough. In St. Paul, the Midway United Fund collected more than $700,000 to rebuild Midway and Union Park storefronts.

In north Minneapolis, Felicia Perry is the one-person staff at the West Broadway Business and Area Coalition, which has pulled in more than $2 million for businesses hit by COVID-19 and the rioting that followed the protests. Just after starting her job in February, Perry had to pivot to respond to the pandemic, raising about $5,000 for businesses. Then North Side businesses were destroyed and, seemingly overnight, tens of thousands of dollars rolled in.

"That's a lot of responsibility that comes with it, too," said Perry, who advocates for small businesses and holds networking events such as a monthly luncheon. "People donate their money and want it to go out right away."

She's urging the community to be patient with the process as she looks to hire staff — from a finance manager to an attorney. She's also hoping people keep giving to help them reach their $5 million goal.

"I know I have years of work ahead," said Perry, who lives near W. Broadway.

Some donors may not know what happens to money after they give to a nonprofit or that nonprofits are legally obligated to spend donations on work related to their mission. Expectations are higher than ever for clarity and transparency about how decisions are made and funds are used, said Kate Barr, president of Propel Nonprofits, which helps nonprofits with finances and obtaining loans. She said she's urging nonprofits to be clearer in communicating with the community. Her organization is helping both the Lake Street Council and West Broadway Business and Area Coalition. "I think they're doing a good job navigating it," she added.

There's a double standard in the scrutiny of nonprofits inundated with donations after Floyd's death, said Sarah Clyne, executive director of the Northside Funders Group, which partnered with West Broadway on its fund. After a hurricane, no one questions millions of dollars donated to disaster relief groups, she added.

Quick distribution of funds is slowed by this need for precision. "We can't randomly say, 'Here's some money,' because there would also be backlash against that," she said.

"This call for accountability in this moment is also anti-Blackness at play," she asserted.

She hopes donors support organizations long after this crisis subsides and give directly for general operating expenses. Donations not specified for a program or initiative, called an "unrestricted gift," are rare in philanthropy.

At the Lake Street Council, Sharkey asked some corporate and large donors if the nonprofit could use some of their donation for operating expenses; they agreed. The council, which is like a mini Chamber of Commerce, hired five staff members on contract to reach out to businesses and coordinate volunteering. Pro bono advisers are assisting with accounting, media relations and legal advice, and some construction crews even offered free labor.

"Going from a small organization to essentially being a funder or small foundation for a few months ... is pretty new to us," Sharkey said.

The Lake Street Council and West Broadway Coalition also recently got grants from the Greater Twin Cities United Way, the Minneapolis Foundation and the St. Paul & Minnesota Foundation, which distributed $2.5 million from a rebuilding fund for small businesses owned by people of color.

Sharkey, who lives near Lake Street, is working long shifts to respond to the massive influx of donations — and all the work is conducted from her living room since the nonprofit's office was destroyed in the riots. She and her staff had already been working from home since the COVID-19 pandemic hit.

By Thursday, Sharkey hopes to distribute the first grants to some 200 businesses, with an average grant of $10,000. Most of the $7 million will go out this year, but some money will be set aside for businesses burned to the ground that need time to determine what insurance covers and how to rebuild.

"There's a real urgency to get the support, but we have to balance that with having a fair and equitable process," she said.

Henry Jiménez is one of about a dozen people on an oversight committee to review grant applications, and he said people shouldn't be surprised that a small nonprofit can handle the big role of doling out $7 million. Nonprofits can act more quickly than government and have close ties with the community, said Jiménez, executive director of the Latino Economic Development Center.

"I can assure you this may be one of the models [nationally] to make sure funds are distributed in equitable ways," Jiménez said. "It's also an opportunity to show the world what we can do. These small business owners and immigrant-owned businesses are seeing the attention they've deserved."

But it's not just about cutting a business a check, Jiménez said. They will need technical assistance for many years and millions of dollars more to fully rebuild all that was damaged in just a few days in south and north Minneapolis, he added.

"We're pretty lucky that [the fund has] been so successful," Sharkey said. "There will be needs for the next five to 10 years."

Kelly Smith • 612-673-4141