Rep. Betty McCollum

Rep. Betty McCollum introduced a bill on Wednesday that would direct the federal government to study the nonprofit sector. H.R. 5533 would create the United States Council on Nonprofit Organizations and Community Solutions. In Minnesota, one out of every nine employees works for a nonprofit, for a total of around 290,000 jobs, according to the Minnesota Council of Nonprofits.

“As powerful and productive as nonprofit organizations are, their needs are not being addressed by Congress or the Administration. That must change,” McCollum said in a statement. “This legislation is the beginning of a new, positive conversation about the nonprofit sector in Washington and across the country. If Congress can work with leaders in the nonprofit and foundation communities we can build a stronger nonprofit sector, craft smarter federal policy, and create more vibrant communities in every state.”

McCollum notes that 5 percent of Gross Domestic Product is generated by nonprofits and 10 percent of the nation’s workforce is employed by nonprofits, comparable to the manufacturing sector, yet the federal government does not monitor or evaluate the nonprofit sector.

The group said it would support health reform “on the condition that small nonprofit employers receive the same treatment as small businesses.” With the lead of Rep. Betty McCollum, Reps. Keith Ellison, James Oberstar and Tim Walz are urging Congress to include nonprofits in health care reform bills.

“Like other employers, charitable organizations continue to see double-digit premium increases, which is obviously unsustainable,” Jon Pratt, executive director of MCN, said in a statement.

The group noted that one in ten employees in Minnesota work for a nonprofit and that Minnesota’s charitable organizations provide health insurance coverage for 98 percent of their employees compared to 43 percent of small businesses nationally.

“Our standard of care in Minnesota is at the top nationally – to keep it there we need comprehensive reform that will make health care affordable for small employers, including nonprofits,” said Steve Francisco, MCN federal policy director. “Federal health care reform must be affordable and sustainable.”

Not surprisingly given the recession, the spike in service needs was particularly steep for job training programs, mental health services and food and housing assistance, with organizations working in each of these areas reporting increases of greater than 70 percent. At the same time, many nonprofit organizations are cutting staff to deal with the downturn in revenues. Roughly 30 percent of the organizations surveyed reported reducing full-time staff, while 20 percent indicated that they’d cut part-time staff.

The Minnesota Council of Nonprofit’s report was released just as Gov. Tim Pawlenty is set to announce his plans for closing the state’s $2.7 billion deficit. It notes that roughly one third of nonprofit groups in the state rely on government funds as their largest source of revenue and that they are almost certain to be adversely affected by Pawlenty’s budget cuts.

“Government has traditionally been a reliable partner in the delivery of services,” notes the report, which was written by Jon Pratt, executive director of the Minnesota Council of Nonprofits, and Ruth Duran Deffley, the organization’s membership and chapter coordinator. “This partnership is now under great stress.”

The report also points out that roughly three quarters of Minnesota’s 7,500 nonprofit organizations have annual budgets of less than $3 million. Most of these smaller groups have little financial cushion to soften the blow in difficult times. Roughly a quarter of these organizations have no cash reserves, while 75 percent don’t have access to a line of credit.