Minnesota Council of Nonprofits2009 Annual Report

INFORMPROMOTECONNECT

STRENGTHEN

Pictured: Rinal Ray, MCN’s tax exemption education campaign organizer; Jeannie Fox, deputy public policy director; and Jon Pratt,executive director, joined nonprofit colleagues from across the nation in Washington D.C. in July of 2009 for a meeting withMichele Jolin, senior advisor to the President for Social Innovation and Civic Participation. While in D.C., the representatives fromMCN also met with several of the Minnesota Congressional Delegation to discuss the Serve America Act.

MCN’s mission is to inform, promote, connect and strengthen individual

nonprofits and the nonprofit sector.

Minnesota has one of the largest and most active nonprofit sectors in theU.S., but the recession year of 2009 demanded special care and attentionfrom every organization, including MCN. Economic pressure brought simulta-neous increase in demand for services while most revenue sources weredown, government payment were delayed and the state and local govern-ment budgets were huge question marks.

Some observers predicted both mass dissolutions and a merger wave among nonprofits – neither of whichoccurred. Still, we have to acknowledge that the year was extremely difficult, with dramatic increases indemand for food and housing assistance, emergency counseling, and a tough climate for arts and culture.Among the nonprofits we saw close their doors in 2009 were three longtime MCN members: Centro Legal,the Minnesota Senior Federation and East Metro OIC, with many (but not all) of their duties carried on byother organizations.

During the year MCN joined with other support organizations to provide special information and resources:• MCN and the Nonprofits Assistance Fund conducted seven trainings throughout the state on Recession

Year Financial Leadership.• MCN issued three Nonprofit Current Conditions reports to track the effects of the recession on nonprofits,

expanding on the annual Nonprofit Economy Report to provide a detailed, more timely, look at effects onorganizations and the people they serve, and how nonprofits were responding, such as applying stimulusfunds.

• Knowing that managers and boards of nonprofits were under immediate pressure to perform, theLeadership Conference held with the Humphrey Institute's Center for Nonprofit and Public Leadershipfocused on “A Balanced Approach.”

• MCN and the Minnesota Council on Foundations combined our annual conferences, acknowledging thefiscal stress, yet looking forward through the theme “Transforming Our Work.” In a sign of the times,MCN members voted to recognize the Carl and Eloise Pohlad Family Foundation with the 2009Minnesota Nonprofit Mission Award for Responsive Philanthropy, for establishing a $20 million EconomicCrisis Initiative, presented at the Joint Conference.

2009 was also a year for MCN to look ahead, and to somehow not be have our vision for the future so col-ored by the recession that we lost sight of the nonprofit sector's true potential. The strategic plan for the nextfive years that the MCN board adopted strikes a balance – concluding that the world economy (as well asthe Minnesota economy) will take years to reorganize, and also charting some important new directions forMCN to deepen its work.

Moving our goals forward will necessarily involve broad sections of the sector's leadership, and strong part-nerships with all parts of Minnesota's economy. We are humbled that despite a horrendous recessionMinnesota's nonprofit organizations have continued their participation and membership – MCN continues tobe the largest state association of nonprofits in the U.S. MCN's board and staff will be working hard tobuild on this base, strengthening nonprofit organizations to accomplish their missions for a healthy, coopera-tive and just society.

Craig LuedemannChairBoard of Directors

From the executive directorand board chair

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Jon PrattExecutive Director

“MCN keeps me informed about important policy developments regarding the sector in Minnesota and at the national level. Thanks for all the great support you offer us all!”

Brigid Riley, Minnesota Organization on Adolescent Pregnancy, Prevention and ParentingMember of MCN since 1995

Pictured (clockwise from top): Nonprofit staff and supporters joined Marcia Avner, MCN’s public policy director, at Nonprofit Dayon the Hill in 2009; Representative Collin Peterson and MCN’s federal policy director Steve Francisco at Farmfest 2009; andMCN’s deputy public policy director Jeannie Fox prepares for the 2010 Census with Census volunteers.

Clarity on nonprofit property tax exemption sought

Securing the charitable property tax exemption was MCN's top legislative agenda item for 2009. Especiallyin the difficult economic climate, where organizations were seeing overall decreases in nonprofit revenueand increased demand for programs and services, tax exempt status is critical to Minnesota nonprofits.

In late 2007, hundreds of MCN members and other nonprofits across the state learned they could be subjectto revocation of their charitable property tax exemptions. In a case denying the tax exemption for a smallchild care center in Red Wing, Under the Rainbow, the Minnesota Supreme Court dramatically narrowed thecriteria for “organizations of purely public charity” set out in the Minnesota Constitution. The ruling madeMinnesota's definition of charitable activity for property tax exemption one of the most restrictive in thenation. In 2008, MCN succeeded in persuading the state legislature to pass a temporary moratorium, pro-hibiting any change in assessment practices until a bill could be addressed by the 2009 Legislature.

A new bill introduced to the 2009 Legislature and championed by MCN would allow donations to continueto support nonprofits' missions, not to pay taxes.

MCN's charitable property tax exemption campaign spearheaded support for a bill that would not expandnor contract the pool of currently exempt organizations. A core goal for the bill was that it must provide clari-ty and consistency for county assessors and nonprofit organizations. Nonprofits across the state were encour-aged to speak with their representatives about the new bill introduced by Senator Tarry Clark andRepresentative Paul Marquart. MCN circulated key messages and talking points to guide individual nonprofitstaff and concerned citizens in conversations about the importance of their organization's tax exemptions.MCN's Web site became the state's leading source of information on the issue.

During the legislative session MCN worked with nonprofit leaders, attorneys, county assessors, theDepartment of Revenue, legislative staff and legislators from all parts of the state. A partnership betweenMCN and LegalCORPS offered brief advice by pro bono attorneys to nonprofits needing information abouttheir property and/or sales tax exemption.

Governor Pawlenty signed HF1298 into law on May 16, 2009. It included all of the language sought byMCN. The new tax policy bill includes provisions to preserve charitable tax exemptions, including modifica-tions to the assessor deciding factors (called the North Star Test) to more accurately represent Minnesota'snonprofit sector. Organizations that qualify for tax exempt status as an institution of public charity must nowsatisfy six factors, unless the organization can provide adequate reason for not meeting all factors. The billalso provides that once an exemption is granted, it will remain in effect unless the organization’s circum-stances change.

This new legislation allows Minnesota's nonprofits to better predict whether they can reallocate funds as aproperty tax exempt organization to programs and services that serve our communities. In a year whereMCN reported increased need and decreased revenue, an exemption from property taxes allowed nonprof-its to focus their donations and funding programs and serve more members of our communities. More infor-mation about MCN's role in the charitable property tax exemption bill can be found at www.mncn.org.

Legislative action

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Pictured (clockwise from top): Over 1,800 nonprofit staff, board members and volunteers attended the 2009 Joint AnnualConference, Transforming Our Work, co-hosted by MCN and the Minnesota Council on Foundations; an attendee refers to the pro-gram; and speakers shared their expertise.

“My favorite thing about MCN is the opportunities to learn and share ideas with nonprofits across the state.”

Jenny Ebert, Habitat for Humanity of MinnesotaMember of MCN since 1990

• MCN continued to serve nonprofits statewide and expanded its regional focus with three chapters inGreater Minnesota. In 2009, the Twin Ports Area Nonprofit Coalition and Itasca Area NonprofitCouncil merged to form the Northeast Chapter. The South Central Chapter expanded to the west and isnow the South Central/Southwest Chapter. MCN also added a Central Chapter. Events, meetings withMCN's chapter coordinators and informal skill-building lunches gave nonprofits in Greater Minnesota bet-ter access to MCN's tools and resources in 2009.

• MCN partnered with the Minnesota Council of Foundations to host its largest annualconference to date. More than 1,800 nonprofit leaders met in St. Paul to address current challengesin all aspects of nonprofit management, governance, leadership, fundraising, marketing and communica-tions.

• MCN joined several other state nonprofits to promote GiveMN, an online resource to match Minnesotanonprofits with individual donors. GiveMN's Give to the Max Day on November 17, 2009 raised $14million for nonprofits in Minnesota.

• The Minnesota Budget Project, an initiative of the Minnesota Council of Nonprofits, expanded its pres-ence as an active voice for tax fairness and a balanced approach to state and federalbudgets. The Minnesota Budget Project team met with members of Congress, testified on behalf of thenonprofit sector and authored hundreds of blog posts and op-ed pieces about the changes to Minnesota'sbudget over the course of the year.

• MCN advocated to raise the audit threshold to $750,000. These actions allowed nonprofits toallocate more revenue to programs and services.

• MCN responded to the changing economic climate by publishing timely research about the nonprofit sec-tor. MCN released two Current Conditions reports throughout the year that included data collect-ed from hundreds of members about the effects of the recession on the state's sector. A partnership withthe Nonprofits Assistance Fund offered workshops that specifically addressed the recession.

• MCN’s own budget, relying on member dues, participant fees and philanthropic support, recorded asolid financial year despite the economic downturn in 2009 that challenged nonprofits and the com-munities they serve.

• MCN adopted a strategic plan for 2010 – 2014 with the understanding that MCN would play acentral role during the economic recession to help nonprofits move into a new operating environment.While several elements of the strategic plan address immediate economic conditions, the overall plan isdesigned to ensure that Minnesota’s nonprofits are well prepared for what comes next.

Successes in 2009

From the Minnesota Independent, Minnesota's nonprofits say health reform must include them, October 28, 2009

“The Minnesota Council of Nonprofits announced today that the organization will support the healthcare reform package moving through Congress, but only if it includes provisions for nonprofit agencies.

The group noted that one in ten employees in Minnesota work for a nonprofit and that Minnesota'scharitable organizations provide health insurance coverage for 98 percent of their employees.”

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Pictured (from top to bottom): Nonprofit staff worked together on a learning activity during an MCN event; and 28 nonprofit leaderswere accepted into MCN's Nonprofit Leadership Institute where they developed skills to make them better leaders in their organiza-tions, the nonprofit sector and their communities.

“MCN is one of the leading authorities in providing guidance to Minnesota nonprofits, as well asinfluencing public policy at a local, state and federal level. I have utilized their expertise to

improve my leadership skills and guide my nonprofit to a higher level of effectiveness.”

Deters Spader, No Barriers USA

• 2,000 nonprofit organizations were members ofMCN in 2009, along with 50 associate members(consultants and businesses serving nonprofits).

• 222 nonprofits joined the MCN network in 2009.

• 16 cost-saving partnerships with businesses wereavailable for MCN members to access discountedproducts and services for nonprofits, includingoffice supplies, banking and insurance.

• Three chapters in greater Minnesota served non-profits in Southwest/South Central, Central, andNortheast Minnesota.

• 62 trainings throughout the state provided timelyinformation to advance nonprofits' missions.

• 4,801 people participated in these trainings, many wererecipients of an unprecedented number of scholarships awarded to maintain access during the recession year.

• 12 network lunch series facilitated discussions between nonprofit staff and supporters.

• 134 blog posts were authored by Minnesota Budget Project staff to keep readers up-to-date on key state tax and budgetissues, the latest economic trends and the impact of federalbudget decisions on Minnesota.

• 700 people became a friend of MCN on Facebook and 2,625 people followed MCN’s Twitter account, @SmartNonprofits, both continue to steadily grow.

• Each month, MCN’s Web site received 250,000 visitors looking for policy updates, managementresources and job postings.

From the Minneapolis St. Paul Business Journal, Study: MN nonprofits getting less money, more demand, June 16, 2009

“Minnesota's nonprofits are hurting for funding while demand for their services is on the rise, accord-ing to a study released this week by the Minnesota Council of Nonprofits. The report, called the

Nonprofit Current Conditions Survey, is intended to show the impact of the economic recession on theMinnesota nonprofit community. It surveyed 571 organizations across Minnesota.”

MCN by the numbers

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Percentage of Membership by Budget Size

Under$100,000

26%

$100,00 –199,999

13%$200,000 –

399,00018%

$400,000 – 699,999

11%

$700,000 – 999,9997%

$1 – 1.9 million10%

$2 – 2.9million

$3 – 4.9million

$5 – 9.9million More than

10 million

Twin Cities Metro73%

Northeast MN

Northwest MN

Central MN

South Central/Southwest MN

SoutheastMN

Membership Summary by Region

4%

4%4%3%

5%4.5%

4.5%

5%

8%

This is an excerpt from MCN’s independent financial audit. For a full copy, visit www.mncn.org/aboutmncn.htm.

INDEPENDENT AUDITOR’S REPORTWe have audited the accompanying statement of financial position of Minnesota Council of Nonprofits (the Organization) as ofDecember 31, 2009, and the related statements of activities and changes in net assets, functional expenses and cash flows forthe year then ended. These financial statements are the responsibility of the Organization's management. Our responsibility isto express an opinion on these financial statements based on our audit. The prior year summarized comparative informationhas been derived from the Organization's 2008 financial statements, and in our report dated May 11, 2009, we expressed anunqualified opinion on those financial statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those stan-dards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for design-ing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effec-tiveness of the Organization's internal control over financial reporting. Accordingly, we do not express such an opinion. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assess-ing the accounting principles used and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofMinnesota Council of Nonprofits, as of December 31, 2009, and the results of its operations and its cash flows for the yearthen ended in conformity with accounting principles generally accepted in the United States of America.

Eide Bailly, LLPMay 18, 2010

STATEMENT OF FINANCIAL POSITIONDecember 31, 2009 and 2008

2009 2008ASSETSCash and cash equivalents $1,451,998 $1,567,416 Investments 11,628 9,217 Accounts receivable 33,003 27,250 Unconditional promises to give 303,750 695,225 Inventory 7,242 9,617 Prepaid expenses and other assets 33,862 64,865 Furniture, equipment and software,

net of accumulated depreciation 238,440 243,894Other assets – 48,125 TOTAL ASSETS $ 2,079,923 $ 2,665,609

LIABILITIESAccounts payable $118,426 $ 99,001 Accrued expenses 39,275 32,692 Deferred revenue 49,142 66,366 TOTAL LIABILITIES $ 206,843 $ 198,059

NET ASSETSUnrestricted 858,080 629,867Temporarily restricted 1,015,000 1,837,683 TOTAL NET ASSETS $ 1,873,080 $ 2,467,550

TOTAL LIABILITIES AND NET ASSETS $ 2,079,923 $ 2,665,609

STATEMENT OF FUNCTIONAL EXPENSESYear Ended December 31, 2009

STATEMENT OF ACTIVITIESFor the Years Ended December 31, 2009 and 2008

Financial position

Salaries, taxes and benefitsConsulting feesOffice rentOffice supplies

TelephonePostagePrinting and publishingDues and subscriptions

AdvertisingBank/merchant feesEquipmentSoftware

InsuranceStaff trainingBoard retreatWorkshop expenses

Leadership Institute expenseTravelMeeting expensesEvent translation

Annual conferenceMiscellaneousGrants and allocations

Total expensesbefore depreciation

DepreciationTOTAL EXPENSES

$ 1,343,339304,788109,755

14,113

11,72244,39182,37819,012

13,93515,20013,93841,710

–7,940

–167,440

38,95983,33622,871

8,516

128,0535,681

193,200

2,670,27724,641

$ 2,694,918

$ 200,90728,73516,415

1,616

1,0671,8001,846

568

––

1,7336,930

3,383385

3,619–

–2,4993,565

–

–571

–

275,6393,685

$ 279,324

$ 85,17027,481

6,959674

7491,9911,284

719

–1,689

7352,573

–163

––

–7,239

606–

–155

–

138,1871,562

$ 139,749

$ 1,629,416361,004133,129

16,403

13,53848,18285,50820,299

13,93516,88916,40651,213

3,3838,4883,619

167,440

38,95993,07427,042

8,516

128,0536,407

193,200

3,084,10329,888

$ 3,113,991

ProgramServices

Managementand General Fundraising Total

PUBLIC SUPPORT AND REVENUE

PUBLIC SUPPORTContributions and grantsNet assets released from restrictionsTotal public support

REVENUEMembership duesWorkshops and educationAnnual conferencePublicationsHonoraria and consulting incomeSponsorships and other marketingInvestment incomeMiscellaneous incomeTotal revenue

TOTAL PUBLIC SUPPORT AND REVENUE

EXPENSES

PROGRAM SERVICESEducationPublic policy and civic engagementMember servicesResearchAdvocacyTotal program services

SUPPORTING SERVICESManagement and generalFundraisingTotal supporting services

TOTAL EXPENSES

CHANGE IN NET ASSETS

NET ASSETS AT BEGINNING OF YEAR

NET ASSETS AT END OF YEAR

$ 75,6741,776,1831,851,857

556,624360,500316,450

18,09943,623

184,5279,0431,481

1,490,347

3,342,204

848,6101,065,066

341,221237,279202,742

2,694,918

279,324139,749419,073

3,113,991

228,213

629,867

$ 858,080

$ 953,500(1,776,183)

(822,683)

–––––––––

(822,683)

––––––

–––

–

(822,683)

1,837,683

$ 1,015,000

$ 1,029,174–

1,029,174

556,624360,500316,450

18,09943,623

184,5279,0431,481

1,490,347

2,519,521

848,6101,065,066

341,221237,279202,742

2,694,918

279,324139,749419,073

3,113,991

(594,470)

2,467,550

$ 1,873,080

2,174,774–

2,174,774

556,085374,891245,86641,54757,676

160,74129,171

2,1391,468,116

3,642,890

801,4541,428,700

366,855293,940132,264

3,023,213

251,010183,605434,615

3,457,828

185,062

2,282,488

2,467,550

UnrestrictedTemporarilyRestricted Total Total

2009 2008

Expenses

Contributionsand Grants

41%

MembershipDues 22%

Workshopsand Education

14%Annual

Conference13%

Publications 1%Honoraria/Consulting 2%

Sponsorships/Marketing 7%

Investments and Other <1%

Revenue Sources

Educational Programming

27%

Fundraising4%

Managementand General

9%Advocacy7%

Research8%

Member Services

11%Public Policy andCivic Engagement

34%

NOTES TO FINANCIAL STATEMENTSDecember 31, 2009

1) Nature of organization and summary of significant accountingpoliciesNature of OrganizationMinnesota Council of Nonprofits (the Organization or MCN) is incorporated underthe Minnesota Nonprofit Corporation Act. MCN offers educational, public policy,research and advocacy activities to help nonprofit organizations be more efficientand effective and to increase public understanding of the role and contributions ofMinnesota's nonprofit organizations.

MCN's program services are as follows:Education – Convenes workshops, conferences and meetings for nonprofit organi-zations on topics related to managing nonprofit organizations. Publishes directoriesand maintains a website (www.mncn.org) to provide additional information onissues faced by nonprofit organizations and their staff and board members.

Public Policy and Civic Engagement – Sponsors briefings on public policies whichaffect nonprofit organizations and the communities they serve; conducts skill-build-ing workshops for nonprofit staff, board members and volunteers to strengthen theirpublic policy work; undertakes nonpartisan voter participation efforts on behalf ofnonprofit clients and community members in Minnesota through MinnesotaParticipation Project and over five other states through the Nonprofit VoterEngagement Network; and provides up-to-date information during the legislativesession via newsletters and the Internet.

Member Services – Sponsors services to member nonprofit organizations tostrengthen the stability and effectiveness of these nonprofit organizations. Servicesinclude group purchasing and discounts on products like insurance and supplies aswell as events and newsletters planned and organized for members.

Research – Conducts nonpartisan research and prepares reports on the nonprofiteconomy and public role of nonprofit organizations. Analyzes public policies affect-ing the nonprofit sector, including the impact of budget and tax policies on low-income people.

Advocacy – Undertakes direct and grassroots lobbying campaigns that addressspecific legislative proposals affecting nonprofit organizations and the communitiesthey serve. MCN has elected to report its expenditures for lobbying in accordancewith Section 501(h) of the Internal Revenue Code.

Basis of AccountingThe financial statements of the Organization have been prepared on the accrualbasis of accounting and, accordingly, reflect all significant receivables, payablesand other liabilities.

Basis of PresentationThe financial statement presentation follows the recommendations of the FinancialAccounting Standards Board (FASB) Accounting Standards Codification (ASC) 958,Not-for-Profit Entities (includes previous Statement of Financial AccountingStandards, (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations).Under ASC 958, the Organization is required to report information regarding itsfinancial position and activities according to three classes of net assets: unrestrictednet assets, which represents the expendable resources that are available for opera-tions at management's discretion; temporarily restricted net assets, which representsresources restricted by donors as to purpose or by the passage of time; and perma-nently restricted net assets, which represents resources whose use by theOrganization is limited by donor-imposed stipulations that neither expire by pas-sage of time nor can be fulfilled or otherwise removed by actions of theOrganization. The Organization has no permanently restricted net assets.

Cash and Cash EquivalentsFor purposes of the statement of cash flows, the Organization considers all highlyliquid investments with a maturity of three months or less to be cash equivalents. Attimes, cash and cash equivalents may be in excess of FDIC limits.

InvestmentsThe Organization classifies its securities as available-for-sale and the available-for-sale securities are recorded at fair value. Fair value is determined at a specificpoint in time, based on quoted market prices. Realized and unrealized investmentgains or losses are determined by comparison of specific costs of acquisition to netproceeds received at the time of disposal or changes in the difference between fairvalue and cost respectively.

A decline in the market value of any available for sale security below cost that isdeemed other than temporary results in a charge to earnings and the establishmentof a new cost basis for the security. Premiums and discounts are amortized oraccreted over the life of the related security as an adjustment to the yield using theeffective interest method and prepayment assumptions. Dividend and interestincome are recognized when earned.

Gains and losses on sales of investment securities are recognized on the settlementdate, based on the amortized cost of the specific security. The financial statementimpact of settlement date accounting versus trade date is immaterial.

ReceivablesReceivables are stated at net realizable value. Unconditional promises to give arerecognized as revenues or gains in the period received and as assets, decreases ofliabilities, or expenses depending on the form of the benefits received. Conditionalpromises to give are recognized only when the conditions on which they dependare substantially met and the promises become unconditional.

The Organization uses the allowance method to account for uncollectible receiv-ables. This method provides allowances for doubtful receivables based on historicalexperience and management's evaluation of estimated losses that will be incurredin the collection of receivables. No allowance was deemed necessary for the yearended December 31, 2009.

InventoryInventory is stated at the lower of cost (first-in, first-out) or market.

EquipmentEquipment is carried at cost or, if donated, at the approximate fair value at thedate of donation. Equipment acquisitions in excess of $1,000 are capitalized andrecorded at cost. Depreciation of equipment is provided using the straight-linemethod over its estimated useful life.

Support RecognitionContributions received are recorded as unrestricted, temporarily restricted, or per-manently restricted support depending on the existence and/or nature of any donorrestrictions.

Support that is restricted by the donor is reported as an increase in unrestricted netassets if the restriction expires in the reporting period in which the support is recog-nized. All other donor-restricted support is reported as an increase in temporarily orpermanently restricted net assets, depending on the nature of the restriction. Whena restriction expires, that is, when a stipulated time restriction ends or purposerestriction is accomplished, temporarily restricted net assets are reported in thestatement of activities as net assets released from restrictions.

Donated Services and Supplies Non-cash donations are reflected as unrestricted support in the financial statementsat their estimated values on the date of donation.

Donated services are recognized as contributions in accordance with FASB ASC958, Not-for-Profit Entities (includes previous SFAS No. 116, Accounting forContributions Received and Contributions Made), if the services (a) create orenhance nonfinancial assets, or (b) require specialized skills and are performed bypeople with those skills and (c) would otherwise be purchased by the Organization.Volunteers also provided services throughout the year that are not recognized ascontributions in the financial statements since the criteria for ASC 958 is not met.

Functional Allocation of ExpensesThe costs of providing the various programs and activities have been summarizedon a functional basis. Accordingly, certain costs have been allocated among theprograms and supporting services benefited.

Use of EstimatesThe preparation of financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires management to makeestimates and assumptions that affect the reported amounts of assets and liabilities,and disclosure of contingent assets and liabilities, at the date of the financial state-ments and reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates.

Tax-exempt StatusThe Organization has been recognized by the Internal Revenue Service as a tax-exempt nonprofit organization under Section 501(c)(3) of the Internal RevenueCode. Accordingly, no provision for taxes is required. In addition, the Organizationqualifies for the charitable contribution deduction under Section 170(c) and as anorganization other than a private foundation under Section 509(a)(1) and170(b)(1)(A)(vi).

The Organization has adopted the provisions of FASB Accounting StandardsCodification Topic ASC 740-10 (previously Financial Interpretation No. 48,Accounting for Uncertainty in Income Taxes). The implementation of this standardhad no impact on the consolidated financial statements. As of both the date ofadoption, and as of December 31, 2009, the unrecognized tax benefit accrualwas zero.

The Organization will recognize future accrued interest and penalties related tounrecognized tax benefits in income tax expense if incurred. The Organization isno longer subject to Federal tax examinations by tax authorities for years before2006 and state examinations for years before 2006.

Comparative Financial InformationThe financial statements include certain prior year summarized comparative infor-mation in total but not by net asset class. Such information does not include suffi-cient detail to constitute a presentation in conformity with accounting principles gen-erally accepted in the United States of America. Accordingly, such informationshould be read in conjunction with the Organization's financial statements for theyear ended December 31, 2008, from which the summarized information wasderived.

Fair Value MeasurementsThe Organization has determined the fair value of certain assets and liabilities inaccordance with the provisions of FASB ASC 820-10-35, Fair Value Measurementsand Disclosure (previously SFAS No. 157, Fair Value Measurements), which pro-vides a framework for measuring fair value under generally accepted accountingprinciples.

ASC 820-10-35 defines fair value as the exchange price that would be receivedfor an asset or paid to transfer a liability (an exit price) in the principal or mostadvantageous market for the asset or liability in an orderly transaction betweenmarket participants on the measurement date. ASC 820-10-35 requires that valua-tion techniques maximize the use of observable inputs and minimize the use ofunobservable inputs. ASC 820-10-35 also establishes a fair value hierarchy, whichprioritizes the valuation inputs into three broad levels.

Level 1 inputs consist of quoted prices in active markets for identical assets or liabil-ities that the reporting entity has the ability to access at the measurement date.Level 2 inputs are inputs other than quoted prices included within Level 1 that areobservable for the related asset or liability. Level 3 inputs are unobservable inputsrelated to the asset or liability.

The investments held by the Organization as of December 31, 2009, consistedentirely of Level 1 inputs:

Quoted prices in active markets (Level 1)Mutual Fund $ 11,628

Account ReclassificationsCertain prior year balances have been reclassified for comparative purposes.

Subsequent EventsThe Organization has evaluated subsequent events through May 18, 2010, thedate which the financial statements were available to be issued.

2) InvestmentsInvestments consist of an equity fund recorded at market value of $11,628 atDecember 31, 2009. An unrealized gain of $2,411 was recognized during theyear ended December 31, 2009.

3) Unconditional Promises to Give Unconditional promises to give at December 31, 2009, are primarily restricted foruse in future years for specific programs.

4) Property and Equipment The following is a summary of property and equipment at December 31, 2009:

Capital equipment $ 439,018Less accumulated depreciation 200,578

238,4405) Line of CreditAs of December 31, 2009, the Organization had a $75,000 line of credit with abank available as needed, with an interest rate of 5.50 percent. The credit line issecured by all inventory, chattel paper, accounts, equipment, and general intangi-bles and expires on June 1, 2010. As of December 31, 2009, there was no out-standing balance on the line of credit.

6) LeasesThe Organization leases office space under an operating lease, which expiresSeptember 30, 2010. The agreement calls for monthly payments of $10,035 forthe first year, $10,360 for the second year, and $10,770 for the third year andincludes utilities, real estate taxes and insurance. Rent expense was $133,128 forthe year ended December 31, 2009.

The Organization also has several noncancelable operating equipment leases thatexpire various dates through 2012.

In 2007, the Organization began a noncancelable three-year lease for capitalizedinternet software.

Future minimum lease payments are as follows:Years ending in December 31,

2010 $ 166,5252011 4,1952012 1,748

$ 172,4687) GrantsIn 2009, grants expense included $190,360 to 501(c)(3) nonprofit organizationsin Colorado, Louisiana, Massachusetts, Michigan, Minnesota, Ohio andPennsylvania for the planning and implementation of statewide efforts to help othernonprofits engage their communities in the 2010 census; $1,840 to nonprofits innortheast Minnesota to continue the efforts of the Social Leader Action Networks;and $1,000 to the recipients of the 2009 Nonprofit Mission Awards.

8) Retirement Plan The Organization has a defined contribution retirement plan covering all eligibleemployees. The contribution is at the discretion of the board of directors. Employeesare eligible to participate in the plan after one month of service. Contributions tothe plan were $63,417 for the year ended December 31, 2009.

9) Restrictions on Net Assets Net assets were released by incurring expenses satisfying the restricted purposesspecified by donors for the year ending December 31, 2009, as follows:

Leadership Program $35,000Minnesota Budget Project 424,833Minnesota Participation Project 148,500National Voter Engagement Network 587,350Public Policy 360,000Regional Policy Networks 50,000Form 990 Workshops 58,500Charitable Tax Exemption Campaign 25,000Leadership Institute Scholarships 19,750Itasca Area Workshops 3,000Legal Handbook 22,500Census Education 15,000Current Conditions Report 5,000Financial Leadership Workshop 1,750General Operations 20,000

$ 1,776,183

Temporarily restricted net assets consisted of the following at December 31, 2009:

Minnesota Budget Project $230,500Minnesota Participation Project 35,000National Voter Engagement Network 430,500Public Policy 240,000Regional Policy Networks 25,000Leadership Institute Scholarships 24,000Web Site Relaunch 20,000General Operations: Future Years 10,000

$ 1,015,000

10) ContingenciesCertain grants from donors are subject to audit by the donor. Such audits couldresult in claims against the Organization for disallowed costs or noncompliancewith grantor restrictions. No provision has been made for any liabilities that mayarise from such audits since the amounts, if any, cannot be determined at this time.

MCN’s goals MCN adopted its 2010 – 2014 Strategic Plan with the following goals. The entire Strategic Plan is availablefor public view at www.mncn.org/aboutmcn.htm.

1. Strengthen the economic sustainability of individual nonprofits and the nonprofit sector.

2. Deepen relationships among member organizations to increase knowledge, effectiveness and capacity for collective action.

3. Build bridges between nonprofits and key institutions (business, local government, philanthropy, etc.) to increase partnership and cooperation.

4. Increase opportunities for cost saving programs, shard services and shared spaces.

5. Strengthen nonprofit community engagement.

Pictured (clockwise from top): Nonprofit staff network during the 2009 Joint Annual Conference; Jon Pratt, executive director, andTim Delaney, executive director of the National Council of Nonprofits, at the 2009 Joint Annual Conference; nonprofit staff shareinformation from sessions at the 2009 Technology and Communications Conference; Technology and Communications Conferenceattendees listen to the opening plenary.

MCN Staff

2009 MCN Board of Directors

Who we areMarcia Avner, Public Policy DirectorJodi Benenson, Research Intern *Katherine Blauvelt, Policy Analyst *Shelly Chamberlain, Manager of Operations and Human

Resources Michaela Charleston, Nonprofit Services AssistantColin Cureton, Public Policy Intern +Robynne Curlee, Nonprofit Voter Engagement Network

CoordinatorAyantu Daka, Administrative Associate *Ruth Duran Deffley, Membership and Chapters ManagerHeather Dodgers, Communication Intern *Christine Durand, Communications and Marketing DirectorJeannie Fox, Deputy Public Policy DirectorSteve Francisco, Federal Policy DirectorLeah Gardner, Minnesota Budget Project Outreach

CoordinatorNicole Garst, Program Coordinator *Stephanie Haddad, Program DirectorAlexa Horwart, Communications Intern *Julia Jackson, Minnesota Budget Project Intern +Steve Jenkins, Information and Database SpecialistBecky Johnson, AccountantJamie Joslin, Minnesota Grants Directory Intern *

AmyJo Lennartson, South Central Chapter RegionalCoordinator

Staci Lieffring, Minnesota Participation Project OrganizingIntern

Nan Madden, Minnesota Budget Project DirectorShannon McCarville, Program CoordinatorJeff Narabrook, Public Policy AssistantLeslie Nitabach, Development ManagerAnn Potthoff, Office Assistant *Jon Pratt, Executive DirectorRinal Ray, Project CoordinatorSondra Reis, Associate DirectorBridgette Rongitsch, Nonprofit Voter Engagement Network

DirectorScott Russell, Policy AnalystSean Skibbie, Legislative Intern *Jenna Strank, Communications InternMary Streufert, Northeast Chapter Regional Coordinator Christina Wessel, Minnesota Budget Project Deputy DirectorBao Vang, Leadership Program Coordinator Cindy Yang, Operations Assistant

* Work completed in 2009+ Work completed in 2010

Steve Boland, Greater Frogtown Community CorporationSusie Brown, Vice Chair, Child Care WORKSNancy Cross, Brainerd Community ActionPete Dross, Treasurer, Center for Victims of TortureSaeed Fahia, Confederation of Somali Community in

MinnesotaCandice Harshner, Program for the Aid to Victims of Sexual

Assault Qamar IbrahimLaura Johansson, Joyce Bilingual PreschoolNancy Kleeman, Jewish Community ActionCraig Luedemann, Chair, YouthCAREJim McCorkell, Admission PossibleDavid Marty, Reif Arts Council

Stephen Nagle, West Central Minnesota Communities Action,Inc.

Pham Thi Hoa, CAPICharles Oakes, West Central Industries Keith Parker, Twin Cities Public TelevisionKarri Plowman, Vice Chair, Central Corridor Partnership and

East Metro PartnershipLeonard Price, Minnesota Conservation CorpsEthan Roberts, Jewish Community Relations Council of

Minnesota and the DakotasMarsha Shotley, Blue Cross and Blue Shield of Minnesota

FoundationMichael Thorsteinson, Secretary, Three Rivers Community

Action

Susie Brown, Vice Chair, Child Care WORKSPete Dross, Treasurer, Center for Victims of TortureCandice Harshner, Program for the Aid to Victims of Sexual

AssaultQamar IbrahimLaura Johansson, Joyce Bilingual PreschoolNancy Kleeman, Jewish Community ActionJeanne Edevold Larson, Northern Dental Access CenterCraig Luedemann, Chair, YouthCAREJoan Macik, Heartland Community Action AgencyDavid Marty, Reif Arts CouncilStephen Nagle, West Central Minnesota Communities Action,

Inc.Pham Thi Hoa, Secretary, CAPI

Keith Parker, Vice Chair, Twin Cities Public TelevisionKarri Plowman, Central Corridor Partnership and East Metro

PartnershipKathy Potter, Access of the Red River ValleyLeonard Price, Minnesota Conservation CorpsEthan Roberts, Jewish Community Relations Council of

Minnesota and the DakotasShannon Robinson, Twin Rivers Center for the ArtsAlvine Siaka, African Health Action CorporationMarsha Shotley, Blue Cross and Blue Shield of Minnesota

FoundationSusan Strandberg, Three Rivers Community ActionMihailo Temali, Neighborhood Development CenterJoshua Winters, Minnesota Public Interest Research Group

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2010 MCN Board of Directors

Foundation and Corporate Donors to MCN

Organizational and Individual Donors to MCN

Donors and Supporters of the Nonprofit Voter Engagement Network (NVEN)

Donors and Supporters of the Minnesota Budget Project

Thank youADC FoundationThe Blandin FoundationBlue Cross and Blue Shield of Minnesota

FoundationOtto Bremer FoundationPatrick and Aimee Butler Family

FoundationCargill FoundationCentral Minnesota Community

FoundationDuluth Superior Area Community

FoundationEcolab Foundation

Elmer L. & Eleanor J. AndersenFoundation

F.R. Bigelow FoundationThe Ford FoundationGeneral Mills FoundationGreater Twin Cities United WayHorace Hagedorn FoundationInitiative FoundationJohn S. and James L. Knight FoundationThe Joyce FoundationThe McKnight FoundationThe Minneapolis FoundationNorthland Foundation

Northwest Area FoundationThe Jay & Rose Phillips Family

FoundationCarl and Eloise Pohlad Family

FoundationThe Saint Paul FoundationThe Seattle FoundationSouthwest Initiative FoundationStoneman Family Foundation Target FoundationTravelers FoundationWest Central Initiative FoundationXcel Energy Foundation

Admission PossibleAnne BarthelSusie BrownDan BurlingNancy CrossSue DavidsonPete DrossMorris Goodwin

Pham Thi HoaLaura JohanssonNancy KleemanCraig LuedemannDavid MartyJim McCorkellMutual of AmericaStephen Nagle

Keith ParkerLeonard PriceJennifer ReedyEthan RobertsSally StevensMichael ThorsteinsonJoan WellsTwin Cities Media Alliance

Carnegie Corporation of New YorkMoira Cunningham and Lew PepperThe Ford FoundationFocus Project, Inc. The George Gund Foundation

Horace Hagedorn FoundationKatie McGrath and J.J. AbramsRockefeller Brothers FundThe Rosenthal Family FoundationSolidago Foundation

Surdna FoundationThreshold FoundationTides Foundation

Anonymous (4)Sue AbderholdenAFSCME Council 5Amherst H. Wilder FoundationMichael AndersonMarcia AvnerJohn BerglundThe Blandin Foundation (match)Katherine BlauveltAmy BrughRachel CallananOffice for Social Justice - Catholic

CharitiesMary CecconiYvonne Cheung HoMichael Dahl

Herbert DavisRuth Duran DeffleyMartha DelaneyDeVaan AssociatesJoseph and Genie DixonJoanne DorsherChristine DurandLinda EngbergBonnie EspositoJudy FarmerJeannie FoxSteve and Bonnie FranciscoIris FreemanJane GilleyGoodwill/Easter Seals MinnesotaChip Halbach

Gretchen HalversonHammer Residences, Inc.Candice HarshnerVernae HasbargenAnne HenryHunger Solutions MinnesotaShirley Hunt AlexanderKris JacobsJewish Community Relations Council of

Minnesota and the DakotasJOBS NOW CoalitionMatt KaneGeri KatzElaine KeefeJay KiedrowskiJoel and Laurie Kramer

Donors and Supporters of the Minnesota Budget Project (continued from previous page)

Thank you to the many volunteers who gave their ideas and energy to MCN’s mission in 2009through their work in the following committees

Annual Conference CommitteeNortheast Chapter Advisory CommitteeSouthwest/South Central Chapter Advisory CommitteeCommunicator’s Series Planning CommitteePublic Policy CabinetTechnology and Communications Conference CommitteeNonprofit Mission Awards Finalist Selection Committee

15

Steve LarsonTina LieblingDwaine LindbergDiane LoefflerJulian LoscalzoEd Lotterman and Victoria TirrelLutheran Social Service of MinnesotaNan MaddenMichael and Linda MaddenJeffry MagnusonGene Mammenga and Charlotte Ann

BrookerSteven MarcheseMark McAfeeJames McRaeKatherine MeerseBarbara MilonMinnesota AFL-CIOMinnesota Association of Professional

EmployeesMinnesota Community Action

Partnership

Minnesota Inter-County AssociationBill Moore and Mary WagnerGwen MyersNational Association of Social Workers

– Minnesota ChapterLeslie NitabachChris NoonanVictoria OshiroDru OsterudDon OstromConnie PerpichGloria PhillipsJon PrattCharlie QuimbySondra ReisEthan RobertsLeigh RosenbergScott RussellJodi SandfortDeborah SchlickJoan SchneiderPatricia Siebert

Anneliese SimonsGinger SiscoRobert SkillingsLonni SkrentnerDane SmithSheri SmithWy SpanoMary StreufertTom TriplettSam WalsethJeanne WalzLaura WangMonica WeberJennifer WeddellPatricia WelterChristina WesselMichelle WosterRalph Yehle

“MCN is amazing! It provides me, a newcomer to the nonprofit world, with valuable insights, tools and education to make me better at what I do.”

Helen Young, Minnesota Association for Volunteer Administration (MAVA)Member of MCN since 2002

www.mncn.org