MINNEAPOLIS (WCCO) – The non-profit Minneapolis Community Action has shut its doors after a state audit found leaders of the organization used more than $800,000 in taxpayer money for luxury trips, spa visits and even a car loan.

State investigators have seized records from the organization and  Republicans have filed an ethics complaint against State Sen. Jeff Hayden who served on the group’s board. The allegations are raising questions not just about the oversight of this organization but the oversight of all taxpayer dollars that outside groups receive.

David Schultz teaches non-profit law at Hamline University and has looked into the amount of money that the state and federal governments have funneled into Minnesota non-profits.

“We’re giving billions of dollars away yearly from the state with very little oversight to many non-profits,” he said.

A 2007 study by the state auditor found that 1.900 non-profits–including hospitals–received $4.7 billion, Schultz said. A 2010 study put that figure at $3 billion.

Hayden, Rep. Keith Ellison and Minneapolis council member Barb Johnson have resigned from the Minneapolis Community Action board, saying that they didn’t know what was going on.

But Schultz said that this is a problem of what he called “bad governance.”

“In the state of Minnesota, if you serve as a board of directors member,” Schultz said, “you are legally responsible to show up to minutes, to do your homework, to care, to read the minutes.

“To say you were on the organization’s board but didn’t know what was going on–you can’t say that. The law will hold you personally responsible.”

Schultz talked about the need for state oversight on WCCO Sunday Morning with Esme Murphy.

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