Minnesota nonprofits ride waves of tumult from Trump's spending freeze attempts
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The leaders of many nonprofit organizations in Minnesota and across the nation are white-knuckling through attempts by President Donald Trump’s administration to block federal funding.
In Minnesota, nonprofits get federal funding via three channels: directly to nonprofits as grants; as federal money given to the state that in turn re-grants it to nonprofits; or as program service revenue, including fees for providing services through federally run programs like Medicare and Medicaid.
Trump’s federal spending freeze was recently blocked by a judge, but the tumult leaves Minnesota’s nearly 9,000 nonprofits and tax-exempt entities that receive federal money wondering what’s next.
Nonoko Sato, executive director of the Minnesota Council of Nonprofits, spoke with Morning Edition host Cathy Wurzer about the implications and uncertainty around federal funding.
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When might the real budget squeeze occur if the Trump order prevails?
“Immediately. We are already seeing some nonprofit organizations — Head Start, for example, their funding [was] not accessible recently, and they have to close their doors temporarily because they couldn't pay their staff.
“Many nonprofit organizations that receive government funds operate on a reimbursement model, and so many of them may have already spent the money that was already approved, and now there's uncertainty whether or not they're even going to be able to get that money back.”
What advice are you giving nonprofit leaders?
“Many times it is really around things that they should be doing anyway. It's extremely hard already for many nonprofit organizations, and so we want to make sure that they are taking care of themselves [so] that they can be prepared to take care of others.
“In the meantime, I do think making sure that your organization is in order, checking your financials, working on your cash flow, making sure your board understands the potential impacts of the federal freeze. But for now, I really think, you know, people just really need to understand where they stand and when they might be impacted, so that they can be as prepared as possible.”
How do nonprofits fundraise in this uncertain climate?
“The biggest thing is that the federal government gives so much money and there is no way for either the state or philanthropy to really make up the difference. I think that there's a misunderstanding that perhaps, you know, philanthropy needs to step up and cover the losses that might be felt by the money that might not be coming into the federal government. That's just not possible.
“Now, with that said, there are things that I think philanthropy can be doing right now. For example, if they have already committed the funding, perhaps they can be giving that money as early as possible, just release it, even if the grant doesn't typically go out for the next couple of months. Other than that, you know, I think nonprofits being as transparent and honest as possible to their donors will be critical.”