04/13/2011 08:08 pm ET Updated Jun 13, 2011

Minnesota Sen. Scott Newman: Cut Off Grants For Nonprofits

As nonprofits everywhere face cuts in funding and declines in donations, Minnesota nonprofits could lose their main wellspring of money.

Republican State Sen. Scott Newman from Minnesota has proposed legislation that would likely stop almost all state grants from going to nonprofit organizations, according to MinnPost, a local nonprofit news source. The bill proposes that:

"No person, corporation, or entity doing business as a nonprofit entity shall receive public funding to provide goods or services if the same or similar goods or services can be provided by a state agency or a private for-profit business entity."

The repercussions could be far-reaching, a lawyer tells MinnPost:

"It's so terribly broad. You can certainly read it [that it] would close down every non-profit hospital in the state," volunteers Tom Johnson, an attorney with Gray Plant Mooty who represents nonprofits.

The news of the possible legislation is a curveball after the GOP-controlled Minnesota House approved a budget bill last week that benefits nonprofits. Amid cuts to one-third of state government, the bill includes a pilot program that would pay nonprofit agencies that save the state money or create new revenue, the Star Tribune reports.

Minnesota's nonprofits face slumping donations at the same time that budget cuts have required organizations to find alternative, affordable ways of providing services, according to the Star Tribune.