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HF2537 (Legislative Session 94 (2025-2026))

Fiscal safeguards for state grants to nonprofit organizations increased, and report required.

Related bill: SF981

AI Generated Summary

Purpose of the Bill

The bill aims to enhance the financial oversight and accountability of state grants given to nonprofit organizations in Minnesota. It seeks to establish stricter requirements and auditing conditions for these organizations to ensure proper use of state funds.

Main Provisions

  • Eligibility Criteria: Nonprofit organizations must meet specified conditions to qualify for state grants. These include submitting IRS Form 990 for the past two years, adhering to compensation limits for officers or employees, and ensuring no governing board member is a state employee or elected official.

  • Additional Criteria for Certain Organizations: Organizations receiving more than 50% of their revenue from state funds must provide certified financial audits for the last two fiscal years. Officers and board members must not have criminal records involving financial misconduct.

  • Reporting Obligations: Grant recipients must regularly report detailed financials and outcomes related to their grant use. The reporting includes how funds were spent and the success of initiatives funded by the grants.

  • Legislative Notification: If a nonprofit is deemed ineligible after a grant is awarded by law, or if there are concerns of fraud or abuse, the commissioner must inform relevant legislative bodies.

  • Audit Clause: Grant agreements over $500,000 must include an audit clause allowing examination of financial practices by the granting agency and legislative or state auditors.

Significant Changes to Existing Law

  • Enhanced audit provisions are introduced, mandating that even in the absence of an audit clause, auditing authority is implied.
  • New reporting requirements for grant recipients and fiscal agents increase transparency.
  • Additional layers of eligibility and scrutiny are applied to organizations heavily reliant on state funding.

Relevant Terms

nonprofit organizations, state grants, financial audit, IRS Form 990, compensation limits, governing board, state funds, financial misconduct, reporting requirements, audit clause, financial oversight, transparency, legislative notification.

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
March 19, 2025HouseFloorActionIntroduction and first reading, referred toState Government Finance and Policy

Citations

 
[
  {
    "analysis": {
      "added": [
        "Clarification that audit authority is implied if not expressly included in the grant agreement."
      ],
      "removed": [
        ""
      ],
      "summary": "This bill amends Minnesota Statutes 2024, section 16B.98, subdivision 8, concerning audit requirements for grant agreements.",
      "modified": [
        "Expanded the period during which the books and records of a grantee are subject to audit."
      ]
    },
    "citation": "16B.98",
    "subdivision": "subdivision 8"
  }
]

Sponsors