Prosperity Brings Challenges to North Dakota’s Overmatched Charities

This article was updated on January 13, 2015. See our editor’s note.

Every day, dozens of people flow into this once-sleepy prairie town to search for work. Beckoned by the high wages that have come along with a boom in oil that is hydro-fractured, or “fracked,” from miles beneath the earth, they stream out of the town’s dusty train station or tumble out of buses with little more than a backpack, in search of a blue-collar bonanza.

But not everyone prospers in Williston—the epicenter of the Bakken oil patch, 19 counties awash in new riches. And charities, cash-strapped and sparse, struggle to keep up with rising need.

Despite the town’s unemployment rate of less than 1 percent, not everyone qualifies for the work. Many unsuccessful job seekers lack food or battle drug or mental-health problems. Some enter the burgeoning sex trade or are forced into it.

Luckier arrivals might make $20 an hour at fast-food outlets or much more toiling in the oil fields, but too often can’t afford the skyrocketing rents that have come along with the surging economy. They live in campers, grain bins, hay bales, pickup trucks, and storage units. Many older residents can no longer afford property taxes or to rent the land their trailers sit on.

There are no homeless shelters in this town, where the winter temperatures can plummet to minus-70 degrees.

A severe lack of charitable services means that sometimes the best nonprofits can do is send people seeking help back to where they came from.

“We call that ‘Greyhound therapy,’ " says Michael Carbone, executive director of the North Dakota Coalition for Homeless People, which has seen a nearly fourfold increase in the number of people seeking shelter and other services since 2010, the year the Bakken oil boom took hold.

Though he doesn’t condone such strategies, Mr. Carbone says, “when you have someone who came here and found it a nightmare, and there isn’t much else you can do for them, putting them on a bus could be the best thing.”

Survival Strategies

Over the past four years, the town’s population has tripled from its 2010 census count of 14,716. But Williston and the counties that surround it lack enough charities and philanthropy to cope with the new wave of human need that has followed the energy industry’s boom.

Residents of Williams County, where Williston is located, gave only 1.6 percent of their income, a total of $21-million, to charity in 2012, according to a new Chronicle study of people who itemize their tax returns. That’s much less than the 3 percent of income Americans overall give to charity.

North Dakota also has fewer foundations than any other state and the least amount of foundation assets ($331-million), according to 2011 data by the Foundation Center, a research organization that monitors philanthropy.

North Dakota’s culture, observers say, hamstrings charities’ ability to grow and proliferate: Residents cleave to a rugged, pull-up-the-bootstraps mentality, and its neediest citizens have traditionally relied on the state government for services, rather than philanthropy. To survive in the new climate, nonprofits have been forced to change their strategies.

“It’s amazing what is required these days of individual leaders,” says Jennifer Ford Reedy, president of the Bush Foundation, which makes grants in the region. “For years, they fretted about population decline and about bringing jobs to their communities. Now, they’re being flooded with people. All of the leadership muscles they built up now have to be used to solve completely different problems.”

Few Foundations

The glaring juxtaposition of new wealth and not enough philanthropy has state officials and local charity leaders pondering an unusual question: How do we build up a nonprofit community when the current one barely exists?

Kevin Dvorak, president of the North Dakota Community Foundation and others hope that a state law passed in 2012 that allows for a 40-percent tax credit for creating private charitable endowments, coupled with new money from the oil boom, will kick-start several new foundations, which could help charities ramp up to meet needs.

Analysts say that the Bakken oil boom could last as long as 30 years and result in $1-trillion in oil wealth, part of which will remain in the state in the form of taxes, wages, related economic development, and royalties for holders of mineral rights.

Converting some of that wealth to philanthropy, Mr. Dvorak says, presents a “wonderful opportunity.”

While western North Dakota organizations receive support from three Minnesota grant makers—the Bush, Northwest Area, and Otto Bremer foundations—its problems don’t register on the radar of wealthy national foundations.

“They’re not likely to get involved,” says Mr. Dvorak. “All you hear is ‘Unemployment is low’ and ‘There are $90,000-per-year jobs there.’ Large foundations aren’t likely to see the need here.”

Charities in the Bakken oil patch say individuals and corporations have yet to pick up the slack.
“We don’t have a rich history of giving here,” says Jessica Gilbertson, executive director of the North Dakota Association of Nonprofit Organizations.

North Dakota residents dig deep to respond to natural disasters, such as record flooding in the middle of the state in 2011, notes Ms. Gilberson, who used to work at the West Dakota chapter of the American Red Cross. But outside of regular giving to churches, she says, they donate little to charities.

Help From Oil Companies

Though oil companies have moved into the region en masse, they haven’t made a large charitable impact either, nonprofit leaders say. Much of their giving has gone to expand a museum in Bismarck 200 miles away or to universities on the other side of the state.

Companies are usually based out of state—and that’s where they often direct their philanthropy, says Ms. Gilbertson.

“Sometimes it’s hard to figure out who to talk to at these companies,” she adds. “Everybody’s asking them for money. Many want to remain anonymous when they do make gifts so they won’t be overwhelmed with requests.”

Oil-company representatives say they are trying to find ways to support the region where they are making money.

A group of six oil companies joined forces a couple of years ago in Williston to help it deal with education and other issues. Called Energy Outreach Williston, the group donated $600,000 to build a new playground, support day- care programs, and expand fire and rescue companies. It will give less than that this year.

“We’ve decided that we can bring more value if we’re doing more hands-on work,” says the group’s coordinator, Kelley Rankin, an employee of StatOil, a company owned by the government of Norway. The group recently helped the local Salvation Army package bales of donated clothes for resale.

Despite recognizing the need for more help, Energy Outreach Williston hasn’t considered starting a corporate foundation or joint philanthropic effort. People are often too busy to help.

“We struggle to find people who just have time to give,” Ms. Rankin says. “I wonder if we’d have the people available to make something like that thrive.”

Williston’s leaders argue that oil companies, which hire thousands of people at high wages and pay a lot into public coffers for the right to drill, shouldn’t be pushed to support charities.

“Most of us would say that oil companies pay their fair share in taxes"—11.5 percent, says Tom Rolfstad, Williston’s economic development chief.

The state has seen its budget increase by 30 percent because of oil. It has been able to build a new medical school, museum, and prison because of it and has put more than $1-billion away in a “legacy fund” that the state can tap in 2017 to help counties deal with the impact of the oil industry. The Bush Foundation has made grants to gather a far-ranging board to discuss how to use the fund, some of which could be used to aid charities.

‘Broken Individuals’

Meanwhile, more people are leasing their land’s mineral rights to mining companies—and growing wealthier. Some individuals who’ve made money from the boom now give more to their churches to support missionary work or to local charities that help troubled youths and veterans.

But many of those riches are going out of state. Outside investors own a major portion of Bakken royalty rights. Oil proceeds that have remained in the hands of North Dakotans are often split among numerous, sometimes far-flung relatives, presenting a challenge for charity fundraisers.

Some nonprofits say that they are now reaping more donations from individuals. But the lack of regular commitments from foundations makes it harder for them to grow.

For instance, the Salvation Army of Williston receives less than 1 percent of its gifts from foundations, in part because grant makers often place restrictions on how the religious charity can use grant money. Meanwhile, the group has been besieged by requests from people in need. “In 2010, we might have seen 25 people per week,” says Joshua Stansbury, who leads the charity. “Now we often see 25 per day.”

Nearly two out of three of those clients are “transient,” notes Mr. Stansbury. “Prior to 2010, we didn’t see these people. The workload has been too much. We have a lot of broken individuals here.”

Bus Ticket Home

Besides helping about two dozen people a month buy bus tickets home, the Salvation Army runs a food pantry, offers counseling, and helps homeless people who are living in their vehicles keep them gassed up in winter.

Even though the charity has a capital-improvement endowment, it is not at all large enough for the group to expand its facilities in an old bowling alley on Main Street.

“It would take us $3-million to get the building up to code, but we don’t have it,” Mr. Stansbury says. Fortunately, the charity recently received two donations of mineral-rights plots that are helping it make some improvements.

Though a homeless shelter is politically unpopular here, Mr. Stansbury has looked into buying warehouses to convert into one. In the overheated real-estate market, it would cost millions of dollars.

Even if such largesse suddenly became available, running a shelter might prove impossible, he says: “How could we afford to staff it?”

Editor’s Note: In this and other stories on How America Gives, we used ZIP-code data from the IRS to make comparisons between 2006 and 2012, the only years for which income and charitable donation data were available broken out by income and geography. However, to protect privacy, the IRS suppresses some ZIP-code data when there are fewer than 20 filers in a given income group. As a result, some figures are lower than what they’d otherwise be.

Since our original report, we’ve updated our interactive with county-level data for 2012, which do not have any data suppressed. Unfortunately, such data are not available for 2006.

Many of the figures used in this and other How America Gives stories are based on the original 2006 and 2012 ZIP-code data to make those year-over-year comparisons.

For the latest and most accurate 2012 data, see our interactive.