Update May 16, 2023
After a month of tenacious and detailed advocacy, we are very happy to report that the Minnesota legislature’s State & Local government conference report replaced the original amendment language providing additional financial oversight on nonprofit grantees with language that MCN and partners negotiated, AND included investments MCN has been advocating for all year.
As detailed in the April 20, 2023 post below, in April both the House and Senate amended their omnibus bills to include increased financial oversight on the state’s grants to nonprofits. The versions had substantial differences, and some of the provisions were very problematic. MCN was able to successfully work with legislators, state agencies, and partners to create new language that would meet the state’s goal of increasing financial review of potential grantees, while making it efficient for state agencies to administer, and reasonable for potential grantees to manage.
Highlights of the language that increases financial oversight on state grants to nonprofits:
- There is an exemption for grants under $50,000 – oversight for those grants will not change under this bill.
- It does NOT include a very problematic requirement from previous versions that the agency must be a party to agreements between a grantee and subgrantees.
- It DOES require for-profit businesses to go through similar oversight when receiving state grants.
- This language DOES specify the reasons an agency could not award a grant, rather than very broad discretion written into some versions.
- This version has more nuance and clarity regarding grants to organizations if any of their principals has been convicted of a financial crime.
- This version DOES include a section that would allow the state agency to provide technical assistance, or funding for technical assistance, to the grantee, if the grantor identifies an area of significant concern and imposes additional requirements in the grant agreement.
- These pieces would take effect in the new year.
There are some terms in the language that are undefined and require nuanced thinking, and MCN will be working with the Office of Grants Management and state agency partners to clarify those pieces after session. It’s likely that MCN will be advocating for state grants reform again next session, so keep sharing your thoughts and experiences!
Additionally, the conference committee report includes the investments in the state’s grants management that MCN has been advocating for all session. These investments will allow the state to provide core support and more specific guidance to state agencies, producing grant decisions and outcomes that promote accountability and equity. (See our advocacy one-pager for more information on the items below)
- The bill would fund 6 additional staff at the Office of Grants Management, moving it to 7 FTE. Three of those positions will be specifically focused on equity in state grantmaking.
- The bill would fund a feasibility study and potentially a roadmap towards a grants management platform that all granting state agencies would use.
We expect both the House and Senate to pass the conference report, and the Governor to sign it.
MCN is thankful for our partners at nonprofits who provided detailed feedback on drafts of the language, partners at nonprofits who offered advocacy capacity to increase the volume of our advocacy, state agency partners who supported many of our proposed changes and worked with us to find solutions, nonpartisan staff at the legislature for lending their knowledge and expertise, and legislators shared our concerns on how the language would impact nonprofits, especially small, BIPOC-led and -serving, and rural nonprofits.
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Original post from April 20, 2023
The Minnesota Senate Finance committee and Minnesota House Ways & Means committee are adding an amendment to omnibus bills regarding financial review of grants to nonprofits. The two bodies’ versions are very different and have been amended for various bills, so there are multiple versions. The Minnesota Council of Nonprofits (MCN) is working closely with the Department of Administration and government relations staff at state agencies to get the language such that we can support it.
Appropriate oversight is very important to the nonprofit community, as we rely on the trust of our communities (and legislators) to further our missions. Our goal, and the goal of nonprofits, is to use resources to the greatest good. MCN is concerned that pieces of the amendment would create barriers for nonprofits in serving communities, and Minnesotans would feel the impact.
Overall, MCN welcomes the amendment as a way to build that trust, adding to law what is often already agency practice. Provisions with which we are engaging include:
- We are working to include an exemption for grants under $25,000, which is current practice. Many of those small awards are critical to the work of nonprofits, particularly rural-based and BIPOC-led and -serving nonprofits (both of which are more likely to be small). There needs to be a balance between the work of oversight and the potential risk.
- We are advocating strongly for a version that does not include a requirement that the agency must be a party to agreements between a grantee and subgrantees. State agencies often grants funds to intermediaries because the agency itself does not have the capacity or relationships to administer the grant funds. Requiring the agency to be a party to subgrantee agreements would put a significant burden on the agencies (increasing administrative costs), and the likely impact would be fewer programs administered through intermediaries, and fewer programs that award small dollar amounts to nonprofits. This requirement would disincentivize intermediary funding as a strategy for reaching communities.
- We support language that would require for-profit businesses to go through similar oversight when receiving state grants.
- We support language that specifies the reasons an agency could not award a grant (“an appreciable risk that a grantee…cannot or would not perform the required duties under the grant agreement…”), rather than very broad discretion written into some versions.
- We are working toward more nuance and clarity for a provision that could bar any nonprofit from state grants if any of their principals (undefined) has been convicted of a financial crime (undefined).
- We are encouraging language that would allow the grantor to provide technical assistance, or funding for technical assistance, to the grantee, if the grantor identifies an area of significant concern and imposes additional requirements in the grant agreement. We support this language as a tool for state agencies to work with nonprofits that are the best fit for their needs.
For questions, please contact Marie Ellis, MCN’s public policy director.