Top takeaway: The proposed ban is misguided in it’s attempt to curb fraud and could be harmful to nonprofits. MCN opposes the ban and we need your help; sign on letter opposing the ban.
Earlier this month, Governor Walz announced a number of policy proposals in an effort to curb fraud, including banning legislatively named grants. While we appreciate the intention to curb misuse of state dollars, a ban on legislatively named grants is misguided and could have harmful impacts to nonprofits. MCN opposes this ban; let’s talk about it.
Legislatively named grants are an important tool of the State’s grant and contract ecosystem. A ban would not address fraud because there has been no evidence of fraud in state grants, either in legislatively named or competitive appropriations. While MCN appreciates solutions aimed at preventing fraud, we believe we must center efforts in processes where fraud has taken root.
Instead, a ban would limit access to funding for organizations that are trusted and recognizable assets to the community, but that lack the institutional power of more resourced organizations. Moving all grants to a competitive process is not equitable for smaller, culturally-specific, and rural organizations. It would be a waste of taxpayer money to enact a competitive process particularly when there is only one organization that is equipped to carry out a grant or contract request from the state.
How legislatively named grants operate
All state grant contracts, both competitive or legislatively named (also called direct grants), require a binding contract that includes a clear scope of work, budget, deliverables, reporting requirements, and performance expectations. Funding is tied to carrying out a defined project or service.
Legislatively named grants are not handouts; they are restricted dollars for contracted services that the state deems necessary; both competitive and direct state grant contracts make up less than 5% of all state direct services funding.
MCN supports legislatively named grants in some circumstances, as the current process for competitive grants is not always equitable for smaller, culturally-specific, and rural organizations. Direct grants provide a way to partner with the State without having to navigate larger, more well-resourced organizations.
There is already a thorough vetting and reporting process embedded within state contracts and legislatively named grants.
Why this ban is misguided
There have been no public instances of fraud in legislatively named grants. While MCN appreciates solutions aimed at preventing fraud, we believe we must center efforts in processes fraud has taken root.
It is important to consider the unintended consequences of negatively impacting smaller, rural-based and culturally specific organizations, and ultimately the Minnesotans they serve.
Competitive grant processes are typically lengthy and involve many people. If the legislature’s intent is for a grant to go to a specific organization, or if there is only one organization in the state that could perform the grant, it’s a waste of taxpayer money to employ a competitive process.
In times of urgency—when speed of services is critical—being able to work directly with organizations that have the built-in trust and programming needed to execute the grant is crucial to get services to those in need.
Take action: sign on letter
Join MCN and sign a letter opposing the proposal to ban legislatively named grants in Minnesota. View the full letter.