Small culturally specific nonprofits across Minnesota will soon be able to apply for funding from a $4 million grant program approved with bipartisan support last month by the Legislature.

The Nonprofit Infrastructure Grant Program has given out 70 grants since launching in 2017, totaling $3.5 million to small organizations led by people of color who work with underserved communities. Lawmakers this session not only approved program funding for the next two years, they doubled the annual allocation to $2 million.

Dozens of nonprofits statewide will use the grants to hire staffers or consultants, invest in technology or expand initiatives. Kate Barr, CEO of Propel Nonprofits in Minneapolis, which administers the grants with funding from the Minnesota Department of Employment and Economic Development (DEED), said many more organizations will be served.

"It's a proven program," she said. "Some organizational leaders have said it's a game changer for them."

Nonprofits led by and serving communities of color, with annual budgets of less than $1 million, will be able to start applying for the new grants as early as August. Nearly 20% of past grants have gone to nonprofits outside the Twin Cities.

During the COVID-19 pandemic, Minnesotans turned to nonprofits more than ever for services such as food assistance and housing aid. As a result, Barr said, investing in small nonprofits pays off, helping Minnesotans — especially people of color.

The program drew scrutiny from legislators in light of a Legislative Auditor's report this year that showed lax oversight of grants to nonprofits by state agencies. The massive Feeding Our Future fraud scandal — which involved federal funding, not state aid — also cast skepticism on the nonprofit sector.

"It was really heavy on legislators' minds," said ThaoMee Xiong, executive and network director of the Coalition of Asian American Leaders, a St. Paul nonprofit that proposed the Nonprofit Infrastructure Grant Program in 2017 and supported it this year. "It's understandable, but also unfair to paint a broad brush of scrutinizing all nonprofits."

Propel employees work with applicants and grantees throughout the process to ensure they provide the proper paperwork and are good stewards of state money.

"Funding small cultural nonprofits is really important because they usually have access and trust of the communities most distrustful of government," Xiong said, referring to immigrants and refugees. "It's about building our nonprofit infrastructure to be able to serve the growing diversity within our community and across the state."

The program lowers the barriers that small nonprofits face in applying for state grants, she added, and addresses disparities in philanthropy. Foundations often underfund small, grassroots cultural organizations, she said, citing a report by Asian Americans/Pacific Islanders in Philanthropy that found that, for every $100 that Twin Cities foundations give to nonprofits, only 42 cents goes to support Asian American/Pacific Islander communities.

Advocates had sought $6 million for the program. Demand typically outstrips funding, Barr said, with about 20% of past applicants getting grants averaging $40,000 each.

The St. Cloud-based Jugaad Leadership Program received $22,000 last year from the program, which paid for a fundraising consultant and weekly training to help bolster fundraising. It was the first state grant Jugaad has received since it was formed three years ago to train and mentor leaders of color.

"It brought us to the next step in growing our programs, services and even our staff," said Eunice Adjei, Jugaad's executive director. "It's been a gift."

In St. Paul, Foster Advocates received $40,000 last year to fund operations at the organization, which works with people in the foster care system and advocates for policy changes.

"Folks talk about support for small businesses, but they often don't recognize that there are also small nonprofits that are just as important in our employment landscape," said Hoang Murphy co-executive director of Foster Advocates. "This is a way to scale [up] really great organizations doing really important work."