A late-filed bill by legislative Republicans would put new scrutiny on nonprofit organizations that receive state grants, especially for those that get more than half their funding from the state.
The bill (SF 4359 and its House companion HF4682) would require all non profits receiving state grants for services, including but not limited to feeding, child care and violence intervention, to be in existence for at least two years and produce federal tax reports for those years, cap the salary of chief officers at the governor’s pay level – currently $132,096 – and not have state employees or state and local elected officials on their boards.
Those receiving at least half their money from the state would also have to submit to third-party financial auditing for two years before receiving money and not have board members who have been convicted of theft, fraud and embezzlement. In addition, the state Department of Administration would have to do background checks on officers and board members before money is received.d
The legislation’s prime sponsor, Sen. Michelle Benson, R-Ham Lake, said that she considers many nonprofits as “de facto agents of the state” who solicit grants to deliver services.
“While they want to do good charitable work, they become funnels for taxpayer dollars,” Benson told the Senate State Government Committee Wednesday. “They spring up in one year and then the next year come in and ask for funds.”
Legislators need to do a better job of asking for their federal tax filings, known as the IRS Form 990, and looking into their history, Benson said. “If you are coming to the state for a majority of your funding, then we should absolutely have increased transparency and accountability.”
Benson said there needs to be a better way for the Legislature to hold grant recipients accountable for spending money the way it was intended. She cited the recent history of the organization Feeding our Future, which is being investigated by the federal government for misusing money intended to help feed children during the pandemic.
When the Minnesota Department of Education tried to stop the funding after officials became suspicious, a state judge ordered them to continue the flow of funds because they didn’t have the legal authority to stop it. Benson said her bill would have given them clear authority because their Form 990s were not up to date.
[image_caption]State Sen. Mary Kiffmeyer[/image_caption]
The Minnesota Council of Nonprofits opposed Benson’s bill, saying the way to keep out bad actors is to better fund the Charities Division of the state attorney general. “At a time when needs are rising, future funding is uncertain, and we face severe volunteer and worker shortages, this is certainly not the time to add additional barriers for nonprofits,” wrote Marie Ellis, the public policy director for the council. “Our sector has partnered with state government to provide vital services and support communities in every corner of this state, and notably with fewer resources and more uncertainty during the extreme challenges of the past two years.”
Attorney General Keith Ellison asked for and received $550,000 for a new registration data base for the charities division that regulates nonprofits. He has not requested additional funds for the division this session.
The state Department of Administration, which would be given new oversight duties under the bill, also spoke against the measure, saying the state allows each state agency to administer their own grants. There is no central collection of data and the background checks required in the bill would require additional staffing.
Current law also requires agencies to inform the Office of Legislative Auditor of any signs of theft or embezzlement.
“We recommend working with existing statutory language and to ensure that state agencies are effectively resourced with audit staff for this purpose,” said Stacy Christensen, an assistant commissioner in charge of grant management at the department.
Gov. Tim Walz said he was in favor of increased accountability but said using nonprofit agencies to provide services is often faster.
[image_credit]REUTERS/Nick Pfosi[/image_credit][image_caption]Gov. Tim Walz[/image_caption]
“I think it is smart to get those safeguards in there, to do all we can,” Walz said. “But I think we need to be very careful about painting with a broad brush. Yes on the increased scrutiny but I think we need to be careful that it’s not a chilling effect on those that are doing a good job.”
(Correction: This story was corrected to show that several provisions of the bill, including the salary cap on executives, would apply to all recipients of state grants, not just those that receive more than half of their budgets.)
I hate to say it but his is way way way past due. Non-profits paid by the counties need much more scrutiny and regulation as well. However… if Republicans want scrutiny and oversight they need to pay for it, the reason it’s non-existent now is the departments don’t have the staff and resources to enforce the contracts and grants and do the audits, you can’t cut budgets for decades and expect these departments to function as needed. Republicans have been complaining about the anti-business big government for years… you can’t have it both ways.
Whoever was overseeing Feeding our Future needs to be removed from anything to do with taxpayer dollars. Fraud is running out of control with “non profits” but politicians just keep giving them our money.
Like the NRA and churches -non-profits all, and non-tax payers too.
That is your take on.massive fraud in grants?
Nope, I’d have a more nuanced take on the issue. Just pointing out the ignorance of many commenters here about non-profits and their breadth and roles in society. Here’s a news flash for ya, even though Faux news tells you all non-profits are bad, they’re not. Some like the NRA are far more criminal than others, and that status ought to be revoked, it does seem odd to me the government allows a terrorist organization non-profit status, but that’s society these days.
Non profits are not inherently bad; but there needs to be oversight and a way to gauge how effective they are(which is tough for social services and it may be in small ways). When the story first came out over Feeding Our Future wanting to sue for more money, it sounded odd, we have food banks, free meals served and EBT food support, why a large non profit to fill that role which adds to the cost? It takes money from legit non profits. This is over due.
Never ever question the slush funds of State government that pay for non-profits. It might cost the DFL voters.
That $130,000 cap on non-profit administrators — could that be applied retroactively to the U’s coaches and administrators? The U is a non-profit, right? Just asking.
Start with non revenue sports great idea. E
I suppose …. if you want the least desirable coaches, in a competitive market, leading to the least successful teams. Or, get ALL of the other national universitys to adopt the same/similar cap on their coach’s salaries.
Why should the state care about attracting athletic coaches over attracting, say, chemistry professors?
Well …. we could have a chemistry professor give a lecture or presentation (what he/she does) and see how many people show up and we could have a head football coach do what he does (coach a football game) and see how many people show up. Or, we could consider what a home football game brings in in income (tickets, concessions, parking, TV contract, etc.) and compare that to what a chemistry professor brings in in income. Or, we could compare the enthusiasm, PR, discussion, emotion, media attention, etc. to of the two U employees. Or we could compare how many students are attracted to the U because of those people … a head football coach and program compared to a chemistry professor. Hope that answers your question.
Using your logic, we should just close the chemistry department altogether and focus on athletics. I hate to think what would happen to the classics department.
FYI, the University is supposed to have an educational mission. Athletics are just an add-on that could – dare I say it? – be eliminated without hurting academics.
The GOP isn’t even interested in keeping an eye on the massive corruption within their own party. I doubt they have ideas that would be effective. They are only interested in waste if it suits their political ambitions.
An easy target for unscrupulous politicians . Enough said.
I think it would be good for progressive Dems ( of which I am one ) to support much more oversight of non-profits. The more that we can show that state grant money has been spent correctly and productively the more it enhances our credibility to advocate for an entire array of programs carried out by non-profits.
The Republican comments here really illustrate an almost constitutional inability to govern or problem solve. Even when Republicans stumble across a legitimate issue they’re so focused on weaponizing it into some kind of attack on liberals or Democrats that they’ll never produce any coherent response, policy, or solution. So instead of producing any effective or even elementary oversight or management this will just become another focus of Republican attacks on the whole idea of even having programs that help people, because you know… Jesus didn’t believe in helping people. Of course this always ends up being an exercise in futility because once it devolves into attacks they won’t find Democrats to work with and entire project collapses into yet another partisan failure.
Sure, there is significant waste and fraud among a significant number of non-profit programs, and with some basic audits and compliance oversight most of that could be eliminated. But it will never happen because Republicans will weaponize the issue into an jumble of attacks on the whole notion of collecting taxes and using the revenue to help people. Non-profit spending will just become another example of big govment to be eliminated rather than managed properly. And so it goes. You watch now and I’ll bet the big solution Republicans produce will budget cuts of some kind.
Does this logic apply to charter schools? Would Republicans be willing to apply this thinking to the private schools that might receive tuition payments in the form of vouchers paid for by taxpayers?