FRSO's Finances

We estimate FRSO is spending $375k a year, and with the limited data we have, we project FRSO’s annual revenue to be ~$255k a year, coming primarily from dues. This puts them at a yearly deficit of $120k, or $10k a month.

This means that at current rates they face insolvency by August 2026. Additional hits to revenue - losing members or members withholding dues - would accelerate that.

Each percentage point of revenue loss increases monthly burn rate:

The rest of this document explains our analysis.

Note that this is from estimates. Our analysis could be completely wrong - FRSO does not provide transparency into it’s finances. It’s possible FRSO’s membership has increased dramatically in 2025, and revenue along with it. It’s possible that FRSO has inreased spending to match a hypothetical increase in membership so the conclusions still hold. It’s possible FRSO is doing much worse. This analysis is based on public records that don’t give us any insight into FRSO’s 2025 numbers. Assumptions are noted where they are made.

Annual Revenue: $255,000 (Estimated Baseline) #

Source: 2024 Form 990, Part I, Line 12 and Schedule A

• 2024 total revenue: $264,004
• Primary component: $255,191 in contributions (96.7%)
• Conservative baseline: $255,000/year for ongoing operations

Why $255k is the baseline:

• We use 2024’s actual contribution revenue as the starting point
• This assumes 2025 revenue matches 2024 levels. It could be more, it could be less. We don’t have access to information to narrow it down, so we’re assuming levels similar to 2024.
• This is optimistic because FRSO recieved a $50k grant in 2024. Dues are consistent income, it’s unclear if this grant is. If we don’t include the grant, FRSO made $205k in 2024 from donations. On the other hand, this may be compensated for by growth in membership, meaning growth in dues.

Annual Expenses: $375,000 (2025 Full Year) #

2024 Form 990 shows only $143,645 in expenses because:

• Building purchased October 2024 (only 3 months of occupancy)
• Staff ramped throughout 2024 (not full year of 4 staff)
• First operational year (various startup costs)

2025 represents first full year of operations. Expenses breakdown:

Staff Compensation: ~$180,000 #

• Source: 2023 Form 990, Part I, Line 12
• Shows ~$45k in salaries and benefits for one employee
• Full year estimate: 4 staff × ~$45k = $180,000

Mortgage Payment: ~$98,000 #

Deriving the Interest Rate #

The mortgage interest rate was not disclosed in public documents, so we derived it from available data:

Data points:

1. Original loan: $395,000 (Oct 3, 2024, from mortgage document)
2. Balance at year-end: $393,672 (from 2024 Form 990, Part X, Line 23)
3. Principal paid: $395,000 - $393,672 = $1,328 over ~2-3 months
4. Internal memo (March 14, 2025): “less than a quarter of what we’re paying monthly is going to the principal”

Calculation:

• $1,328 principal over 2 months = $664/month to principal
• If $664 represents 20% of payment (conservative “less than 25%”):
  • Total monthly payment = $664 ÷ 0.20 = $3,320/month
• Over 2 months:
  • Total paid: $3,320 × 2 = $6,640
  • Principal portion: $1,328
  • Interest portion: $6,640 - $1,328 = $5,312
• Interest rate calculation:
  • $5,312 interest on ~$394,000 (average balance) over 2 months
  • 2-month rate: $5,312 ÷ $394,000 = 1.35%
  • Annual rate: 1.35% × 6 = ~8.1%

This 8% rate is consistent with:

• 2024 commercial rates for non-traditional borrowers
• The memo’s complaint about interest consuming most payments

Current Mortgage Calculation #

• Original loan (Oct 2024): $395,000
• After 2-3 months payments: $393,672
• After $130k campaign paydown (Spring 2025): $263,672 remaining.
  • Paid off ~1.6 years worth of loan payments early
  • Reduces total interest paid over the life of the load by approximately $18k.
  • Monthly payment remains unchanged: Commercial mortgages typically do not automatically re-amortize after large principal payments unless explicitly refinanced. Language FRSO uses to describe the effects of the 2025 Spring Fundraiser imply reducing the principal on the loan, but nothing about reducing monthly payments:
    • March 2025 internal memo: “Paying off the building means reducing monthly interest payments (right now, less than a quarter of what we’re paying monthly is going to the principal– the rest is vacuumed up towards interest).”
    • June 2025 Public Announcement: “The $130,000 raised has dealt a real blow to the mortgage, so we are that much closer to paying off the Lucy Parsons Center building.”
    • Had the loan been re-amortized, the monthly payment would have dropped from $8,167 to ~$5,575 (a $2,592/month or $31,104/year savings), which would have been prominently featured in their announcement.
• Interest rate: ~8%
• Monthly payment: $8,167 (unchanged from original loan)
• Annual payment: ~$98,000/year ($8,167/month)
• Expected payoff: ~April 2028 (was originally October 2029 before paydown)

Why didn’t the monthly payment change?

Commercial mortgages typically do not automatically re-amortize after large principal payments unless explicitly refinanced. The $130k paydown reduced the remaining balance and will pay off the loan ~1.6 years early, but the monthly payment remains $8,167.

Evidence the loan was not re-amortized:

• March 2025 internal memo describes “reducing monthly interest payments” as a future benefit, not something already achieved: “Paying off the building means reducing monthly interest payments (right now, less than a quarter of what we’re paying monthly is going to the principal– the rest is vacuumed up towards interest).”

• June 2025 public announcement uses language indicating principal reduction, not payment restructuring: “The $130,000 raised has dealt a real blow to the mortgage, so we are that much closer to paying off the Lucy Parsons Center building.”

• Had the loan been re-amortized, the monthly payment would have dropped from $8,167 to ~$5,575—a savings of $2,592/month or $31,104/year. This would have been prominently featured in their public announcement as a major victory for cash flow.

The $130k fundraiser did not reduce FRSO’s monthly burn rate. This represents an unusual financial decision for an organization operating at a deficit (see the burn rate calculation below). The $130k raised could have covered 13 months of operating deficits, providing runway to address structural revenue problems or cut expenses. Instead, by applying it to the mortgage principal without re-amortization, FRSO reduced their long-term interest costs (~$18k over the remaining loan term) but left their monthly cash flow deficit completely unaddressed. The March 2025 memo frames this as “securing our future” and “digging moats and building walls around our base,” but from a financial management perspective, paying down long-term debt while burning through operating reserves is typically advised against.

FRSO has experienced exceptional revenue growth in recent years—from approximately $100k in 2023 to $255k in 2024 (a 155% increase). This growth may explain leadership’s confidence in prioritizing mortgage paydown over cash reserves. However, FRSO increased operating expenses even faster than revenue grew—from ~$144k in 2024 to ~$375k projected for 2025 (a 160% increase, or +$231k). This means their financial sustainability depends on continued exceptional growth. Even with 2024’s impressive 155% revenue increase, they increased expenses by 160%, outpacing income growth. To break even in 2025, they need at least a 47% revenue increase (to reach $375k). While possible given recent trends, this requires sustained growth at rates that may not be sustainable long-term. If revenue growth slows to more typical nonprofit rates (10-20% annually), or if revenue plateaus at or below 2024 levels while expenses remain at $375k/year, they face potential insolvency within the timeline calculated below.

Property Tax: ~$16,000 #

• Sources:
  • Minneapolis Department of Revenue Property Tax History Data for average commerical real estate interest rate
  • Purchase price from mortgage document.
• Purchase price: $525,000
• Minnesota commercial rate: ~3.2%
• Calculation: $525,000 × 3.2% = $15,907

Insurance: ~$8,000 #

• Typical commercial property insurance for this price is $5-10k. Using $8k as a middle ground estimate.

Utilities/Maintenance: ~$15,000 #

• Source: 2024 Form 990, Part IX, Line 16
• Building size: 7,500 sq ft
• Includes: utilities, HVAC, snow removal, repairs
• Estimate: $1,250/month

Operating Expenses: ~$57,000 #

• Source: 2024 Form 990, Part IX (various lines)
• Scaled from 2024 partial-year actuals:
  • Office expenses, IT, travel, conferences
  • Advertising, professional fees, other
• Full year projection: ~$57,000

Total: ~$375,000 #

Monthly Burn Rate Calculation #

Annual Revenue: $255,000 Annual Expenses: $375,000 Annual Deficit: -$120,000

Monthly Burn Rate: $120,000 ÷ 12 = $10,000/month

Current Reserves: $103,000 (Best Case Estimate) #

• Starting reserves (Jan 1, 2025): $203,250
  • Source: 2024 Form 990, Part X, Line 32
• Monthly burn: $10,000
• Months elapsed (Jan-Oct 2025): 10 months
• Cash burned: $100,000
• Current estimate: $203,250 - $100,000 = $103,250

Important: This assumes:

• Revenue matched 2024 levels throughout 2025
• No unexpected expenses or emergencies

Baseline Runway Calculation #

Runway = Current Reserves ÷ Monthly Burn Rate Runway = $103,000 ÷ $10,000 per month Runway = 10.3 months (through August 2026)

Key Assumptions & Caveats #

This analysis uses best case assumptions:

1. Revenue baseline of $255k (may be $205k if NPT grant lost)
2. Current reserves of $103k (may be $78k or $38k if depleted)
3. Expenses of $375k (may be higher with emergencies)
4. No additional financial shocks or donor losses

If any assumption is incorrect, insolvency arrives sooner than projected.