Minnesota nonprofits say grant search has gotten tougher

It's crunch time for Rick Terzick. The director of the Cochran House men's homeless shelter in Hastings faces a May 31 deadline to come up with a long-term funding solution, or it may have to close.

The 32-bed shelter faced a similar dilemma late last year. A short-term agreement with Dakota County allowed it to keep operating through the spring.

Terzick said part of the reason they fell into this reoccurring financial crisis is the lack of available grant dollars.

"About three or four years ago, we just saw kind of a shutdown of that pool of money," said Terzick.

Up until then, grants were a key revenue source, along with county assistance and private insurance, said Terzick, but they stopped pursuing grants because they were being denied.

"We were getting a good response back," said Terzick, "Saying 'great grant [proposal], but too many people have applied.'"

Securing grants has never been easy. But Terzick and other nonprofit leaders in Minnesota say underscoring the fierce competition is a shift in what foundations are seeking, which are more specialized, innovative programs that might ask a nonprofit to expand its core function.

He said going that route would sometimes benefit the shelter, especially when it eased pressure on their overall budget. But Terzick says they eventually had to decide whether to transform their operation, or stay true to their mission.

"Do we create a program for that?" Terzick said. "I don't necessarily want to do that, I want to do what I currently have."

At Prepare and Prosper in St. Paul, the office is humming with rows of volunteers consulting with clients as a busy tax season nears its end.

This nonprofit provides tax preparation services and financial guidance for low and moderate income households. Two-thirds of the group's revenue comes from grants.

"There's no question I've been in situations where I've had to identify, in a crisis-oriented way, dollars to plug in holes," said CEO Tracy Fischman.

Fischman said she has to weigh whether to stay focused on what they're currently doing or develop new services.

"There are these kind of intersecting challenges," said Fischman. "Sometimes it's around 'Hey, we want you to do this specialized program' and from our perspective it might be very valuable, but you can't use this funding to pay for staff time."

A 2017 report issued by the industry group Grantmakers for Effective Organizations found foundations are taking a more strategic approach in how they award grants. Published every three years, the survey gets feedback from foundation executives across the United States.

The most recent analysis found that grants that come with no restrictions, which had jumped in 2014, fell back to their standard level of 20-percent of foundation giving.

Charlotte Johnson, a trustee with the Otto Bremer Trust, one of the region's largest philanthropic foundations, said her organization is limited in changing its approach. But Johnson said in the foundation world, there's a lot of pressure to address some of society's most complex problems.

"The needs are certainly not going away," said Johnson. "Sometimes it's easier if you have a narrower focus than say 'we're gonna try to solve all the problems in the world. Therefore, let's pick one or two or three that we think can really make a dent and see how that goes.'"

The Greater Twin Cities United Way, saw a drop in revenue last year. United Way officials say it's the result of the changing behavior of donors, who are more specific about where they want their contributions to go, and may be drawn to websites like GoFundMe.

To get a leg up, industry observers say it's crucial for smaller nonprofits to put as much energy as they can into showing how effective they are in the current environment.