According to Nonoko Sato, president and chief executive officer of the Minnesota Council of Nonprofits, many nonprofits are attempting to work themselves out of a job.

“We want to eradicate hunger, we want to make sure that everyone is housed, we want to make sure that everyone is fed,” said Sato, who noted that Minnesota’s nonprofits make up 14% of the state’s economy, employing around 375,000 people.

For many of these nonprofits, their work relies on funding from various sources, including government agencies. On Jan. 27, the White House Office of Management and Budget sent out an internal memo stating “Federal agencies must temporarily pause all activities related to obligation or disbursement of all Federal financial assistance,” creating a potential funding freeze. 

A memo released the next day stated this would only affect “programs, projects, and activities implicated by the President’s Executive Orders, such as ending DEI, the green new deal, and funding nongovernmental organizations that undermine the national interest.” Per this later memo, “any program that provides direct benefits to Americans is explicitly excluded,” including SNAP and Medicaid. The original memo was later rescinded, though the legal battle over a federal funding freeze, compounded by lawsuits, including a suit filed by 22 different states (including Minnesota) and the District of Columbia, remains ongoing. 

While Sato doesn’t remember when and how she heard about a potential funding freeze, she does remember the “scramble” to get out accurate information to Minnesota nonprofits, especially those that rely on federal funding. After the freeze was temporarily averted, the Minnesota Council of Nonprofits put up a notice online saying the pause in the freeze “will likely be short-lived as the Administration comes back with further action that may have a similar effect.”

Many times, government grant funding relies on reimbursement, where nonprofits spend funds and are later reimbursed by government agencies. This is true of Open Arms, a nonprofit that delivers tailored meals to people who are critically or chronically ill. 

“We are paid per meal,” said Leah Hébert Welles, chief executive officer of Open Arms. “We bill the next month for the meals that we provided the previous month,” said Hébert Welles.

Open Arms receives federal funding through the Ryan White CARE Act and the Older Americans Act, which fund meals for Minnesotans who are HIV positive and Minnesotans above the age of 60, respectively. The majority of clients, Welles says, are food insecure as well as ill. 

The Central Minnesota Dementia Community Action Network (D-CAN MN) also works on reimbursement, which can be denied for various reasons by the federal government as the funder. 

“If we spend money for three months (and) the money is there, the contract is there, but then somebody says, ‘Well, right now we have maybe an executive order or something that we can’t reimburse that money,’ now we’ve just spent that money,” said Tami Kolbinger, interim clinic director and care navigator/educator for D-CAN MN. “Most of the contracts have clauses for an out. Even though we have a contract, there is a clause in there that states the funding can be removed or revoked for numerous reasons.” 

Cristina Rodriguez, another care navigator/educator at D-CAN MN, estimated it can take anywhere from  four to eight or sometimes 12 weeks before reimbursement funds arrive. 

In conversation with MinnPost, Sato said it was difficult to hear negative assumptions about nonprofit organizations getting “handouts” from government sources. The reality is, she said, is it is a difficult process to apply for funding, and then, once it’s received, to report the use of funds, “to the point that, sometimes, government funding is really inaccessible for many organizations, especially if they’re under-resourced, even if they qualify for funding.” 

Cutting this money may still be on the table for this administration. Consequently, Minnesota nonprofits are thinking ahead, reaching out to non-governmental funders and considering where expenses can be cut. 

“We are seeking a more diversified grant pool rather than, as the adage goes, having your eggs in one basket,” said Kolbinger. 

At HACER MN, an organization that provides services, including public health information, to Minnesota’s Latino community, staff members have already been asked to work at lower hourly rates temporarily in order to keep operating. If their work ceases, Rodolfo Gutierrez, the organization’s executive director said people won’t have anybody to trust, and they are going to be witnessing the worsening of health.

Communities in Greater Minnesota, who may already be underserved, could be in even greater jeopardy of losing resources. A support group Rodriguez runs in Wadena County, she says, is the only one that she’s aware of in that county for people living with dementia and their caregivers. 

“It is heart wrenching to learn that the services that we provide that are so needed in our community could be affected in this way because dementia has no boundary when it comes to your sex, when it comes to your race, when it comes to your religion, when it comes to anything,” Rodriguez said. “It is disheartening to feel that the government is not taking care of individuals who need to be taken care of at this moment, regardless of our political views.” 

“I am concerned that funding for people who are HIV positive doesn’t line up with the reported values of the administration,” said Hébert Welles of Open Arms’ federal funding. “But there’s a tremendous amount of uncertainty and we’ve been told by our lobbyists – we’ve been told by national coalitions, we’ve been told by anybody that we have asked advice from – to prepare for the worst.” 

On Feb. 11, Hébert Welles posted a letter on OpenArmsMN.org with an update – they had been informed of cuts to Ryan White funding beginning in April, as the result of a $20 million deficit at the state level. She also said a federal grant which allows Open Arms to purchase local ingredients for meals remains frozen.

Deanna Pistono

Deanna Pistono is MinnPost’s Race & Health Equity fellow. Follow her on Twitter @deannapistono or email her at [email protected].

The post Uncertainty over federal funds has some Minnesota nonprofits on edge appeared first on MinnPost.

This post was shared from MinnPost.