Minnesota Nonprofi t Sector Study An Analysis of the Minnesota Nonprofi t Sector: Challenges and Opportunities MARCH 2010 PREPARED BY Author Corey Wahlund Contributors Dr. Richard Rathge Ramona Danielson PREPARED FOR 2 Minnesota Nonprofit Sector Study Foreword The charitable nonprofit sector in Minnesota is a sizeable collection of diverse organizations that are both growing and greatly influencing the lives of people within the state through their support of numerous activities, programs, and initiatives. However, the extent and investment of these activities is relatively unknown. The purpose of this project is to raise awareness of the impact of the nonprofit sector in the state of Minnesota, to investigate where scarce resources are being dedicated throughout the charitable sphere, and to determine if that investment is effectively and efficiently delivered. Moreover, by informing nonprofit organizations, through the use of data, we hope to inspire action. Specifically, this action involves leaders taking positive steps toward making a difference in both Minnesota’s nonprofit community and in the lives of its residents. This project also serves to guide future efforts aimed at nonprofit sector performance improvement and to help the nonprofit sector achieve the greatest possible societal impact within the state. This study was based around the nonprofit sector study, An Analysis of the Impact of the Nonprofit Sector in North Dakota: Challenges and Opportunities, released in March 2009. This study is a vast change in analysis from the former study, as the former study utilized factor analysis primarily while this study primarily uses financial analysis, and factor analysis is used in order to further define and understand the differences between the unique properties existing in each public charity category and private foundation. ACKNOWLEDGMENTS This report is a study of Minnesota’s nonprofit sector commissioned by the Dakota Medical Foundation. The study is centered largely on data that were obtained from the tax returns filed by nonprofit organizations. It involved collecting and analyzing quantitative data via IRS tax Form 990/990-PF (Return of Organization Exempt from Income Tax/Return of Private Foundation) obtained from the IRS Business Master File from the National Center for Charitable Statistics at the Urban Institute. The study focuses on the most recent reported data which in most cases are from 2007 and 2008, however, the years range from 1997 to 2009. Report Author Corey Wahlund Contributors Dr. Richard Rathge Ramona Danielson March 2010 Minnesota Nonprofit Sector Study 3 Table of Contents Foreword ............................................................................................................................................. 3 Acknowledgments .................................................................................................................................. 3 Executive Summary ........................................................................................................................ 6-11 Project Purpose and Background ........................................................................................................... 6 Findings .............................................................................................................................................. 7-11 Public Charities ............................................................................................................................. 7-9 Private Foundations .................................................................................................................... 9-10 Recommendations ......................................................................................................................... 11 Introduction .................................................................................................................................. 12-16 Project Purpose and Background ......................................................................................................... 12 Methodology ................................................................................................................................... 12-13 Financial Ratios ................................................................................................................................ 13-15 Public Charities ......................................................................................................................... 13-14 Private Foundations .................................................................................................................. 14-15 Factor Analysis ................................................................................................................................. 15-16 Public Charities ......................................................................................................................... 15-16 Private Foundations ....................................................................................................................... 16 Overview of the Nonprofit Sector in Minnesota ............................................................................ 17-19 Public Nonprofits in Minnesota ..................................................................................................... 20-72 Financial Characteristics of Sample of Minnesota’s Public Charities ................................................... 25 Overview and Results of Financial Ratios Used to Assess Public Nonprofits .................................. 26-31 Survivability Ratios .................................................................................................................... 26-28 Results ............................................................................................................................................... 27-28 Efficiency Ratios ........................................................................................................................ 28-30 Results ............................................................................................................................................... 29-30 Mission Ratios ........................................................................................................................... 30-31 Results .................................................................................................................................................... 31 Financial Analysis of Sample of Minnesota’s Public Charities by Type of Organization ................. 32-68 Type of Organization = Arts ...................................................................................................... 32-36 Survivability: Arts Public Charities ..................................................................................................... 33-34 Efficiency: Arts Public Charities ......................................................................................................... 34-35 Mission: Arts Public Charities ............................................................................................................ 35-36 Type of Organization = Education ............................................................................................. 37-41 Survivability: Education Public Charities ........................................................................................... 38-39 Efficiency: Education Public Charities ............................................................................................... 39-40 Mission: Education Public Charities ................................................................................................... 40-41 Type of Organization = Environment and Animal ..................................................................... 42-47 Survivability: Environment and Animal Public Charities .................................................................... 43-44 Efficiency: Environment and Animal Public Charities ............................................................................. 45 Mission: Environment and Animal Public Charities .......................................................................... 45-47 4 Minnesota Nonprofit Sector Study Type of Organization = Health and Medical ............................................................................. 48-53 Survivability: Health and Medical Public Charities ........................................................................... 49-50 Efficiency: Health and Medical Public Charities .................................................................................... 51 Mission: Health and Medical Public Charities .................................................................................. 52-53 Type of Organization = Human Services ................................................................................... 54-59 Survivability: Human Services Public Charities .................................................................................. 55-56 Efficiency: Human Services Public Charities ........................................................................................... 57 Mission: Human Services Public Charities ......................................................................................... 58-59 Type of Organization = Public and Societal Benefit .................................................................. 60-64 Survivability: Public and Societal Benefit Public Charities