Rural nonprofits struggle with sagging economy

The Beltrami County History Museum is operating in the red. The museum is housed in a beautifully restored 1912 Great Northern train depot. But the brick walls and high ceilings make it a beast to heat and cool, and those costs are skyrocketing.

The gas and electric bills were around $12,000 last year, and according to Historical Society Director Wanda Hoyum, next year looks even worse.

"Right now we have a utility bill of more than $9,500, so you can see by increments alone that by December, we're going to be well over that $12,000 mark." said Hoyum.

"I think it's slowly crashing. It's going to be simply the shutdown of programs... because there isn't enough money."

That's a lot of money for a facility that runs on $70,000 a year, and Hoyum doesn't know where the money will come from.

The museum used to get a lot of its funding from Beltrami County, but the county has cut its support in half. Other funding sources include paid memberships, but those are way down, too.

Hoyum says some people can't afford it anymore. Even visitors who pay to see the museum have dropped off.

"It certainly is a mushroom effect, a domino effect that's happening because of everything," said Hoyum. "It's the economy. It's the price of food. It's the price of gas. I think it is all connected."

It's not just history museums that are in trouble. Groups that provide help for struggling families are in crisis, too.

Ruth Sherman works with 40 nonprofits that do work in four counties from her office in Bemidji. It's a region with some of the highest poverty rates in the state. Sherman says rising prices mean more people are looking for help.

The local food shelf reports traffic is up at least 11 percent in just six months. Soup kitchen numbers are up dramatically, too. The homeless shelter in Bemidji has turned away hundreds of people, and now provides shelter primarily to women and children only.

The needs are clearly rising, Sherman says, but money to support those programs isn't. She says charitable giving is down dramatically.

Money from federal, state and local governments has been reduced or eliminated. Grants from foundations are becoming smaller with more strings attached.

Sherman says on top of all that, the rising price of gas is having a direct effect on the number of people willing to help out.

"I'm hearing reports from nonprofits that their volunteer rates are going down dramatically," said Sherman. "Their volunteers are returning to work because they can't afford not to. The volunteers they do have are requesting more and more mileage reimbursement, because it's so expensive to get there."

Rural nonprofits have always faced the costly challenge of providing services to a wide geographic area.

Ruth Sherman says with fewer dollars, groups are being forced to reduce those travel miles, and have even closed satellite offices. She says there have been cuts in nonprofit staff, and there's a growing trend toward reducing full-time positions to part time. That means many nonprofit workers are losing their health benefits.

Sherman says most rural nonprofits are already bare-bones operations. She says if bad economic conditions continue, some won't survive.

"I think it's slowly crashing," Sherman said. "It's going to be simply the shutdown of programs. Some of it is going to be the closure of agencies, because there isn't enough money to keep even the base of administration of those things together."

According to a report from a group called the National Committee for Responsive Philanthropy, rural nonprofits just don't get the same funding attention as urban agencies. That means rural groups are getting proportionately fewer dollars, according to Minnesota Council of Nonprofits Director Jon Pratt.

"At the national level there's been a lot of discussion on the philanthropic divide, that the rural organizations have fewer philanthropic sources," Pratt said. "There are fewer options for funding, and often there's greater competition."

Competition for state dollars is expected to increase. This year the Legislature cut support for nonprofit efforts and, with the state facing a potential budget deficit of $2 billion deficit, the money crunch for nonprofits will probably get worse.

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