In May 2023 the Legislature wrote a St. Cloud nonprofit's name into the state jobs budget: $500,000 a year to the Central Minnesota Community Empowerment Organization. In December 2023, by the Attorney General's own account, his office was already investigating it. In May 2024 the Legislature restated the grant, word for word. In January 2025 the office settled with the nonprofit over what it alleged were insiders setting their own pay by invoice. In June 2025 the Legislature restated the grant again, word for word.
Nobody had to do anything wrong for that to happen. That's the problem. The law named the group, the law attached no condition, and the law got carried forward like furniture.
One plain disclosure before the facts. I ran against Keith Ellison in the August primary and lost. Weigh what follows with that in mind. Everything below comes from records you can open yourself, and they're listed at the bottom.
How a name gets into the law
Most state grant money goes out the normal way. An agency posts the program, organizations apply, somebody scores the applications. A named grant skips all of that. The Legislature writes the organization's name and a dollar amount into the budget bill, and the agency's job is to pay it.
There are a lot of them. A machine read of every session law from 2021 through 2026 found 1,122 lines naming a private or tribal organization next to money, covering 473 different organizations. I ran 502 organizations, those 473 plus 29 more with ties to current legislators, against every public enforcement and compliance record I could reach.
Here's what a named line looks like. This is the CMCEO paragraph, the one restated twice:
"(rrr) $500,000 each year is for a grant to the Central Minnesota Community Empowerment Organization for providing services to relieve economic disparities in the African immigrant community through workforce recruitment, development, job creation, assistance of smaller organizations to increase capacity, and outreach. Of this amount, up to five percent is for administration and monitoring of the program. This is a onetime appropriation."
Read it twice. There's a purpose and an admin cap. There's no requirement that the group be registered with the Attorney General, no requirement that its tax exemption be current, no report, no audit, and nothing that pauses the money if a watchdog finds a problem.
The state's own auditor saw this coming nineteen years ago. In January 2007 the Office of the Legislative Auditor wrote that some agency staff attributed weaker oversight of named grantees "in part to the fact that these grantees are guaranteed funding regardless of their performance." Those staff felt that "the agency has no leverage to require a certain level of performance or reporting because the grantees are guaranteed funding in law."
Guaranteed funding in law. That's the whole story in four words.
Four names, four paper trails
In every one, a public agency put something on paper. None of this needed a detective.
The St. Cloud nonprofit
The Attorney General's Assurance of Discontinuance with CMCEO, a Ramsey County court filing the office announced January 10, 2025, lays out the office's allegations. These are allegations. CMCEO "neither admits nor denies" them.
The office says its investigation found that CMCEO "entered into conflicted transactions" with its incorporator, a former executive director and the incorporator's family "without formal board scrutiny or approval of the transactions." It says the two men's contracts "permitted them to determine their own compensation unilaterally through invoices to CMCEO, without specifying the hours they were expected to work or the amount of total compensation to be paid on a monthly or annual basis." It says CMCEO hired three of the incorporator's relatives as contractors in 2021, his spouse and his daughters, and "CMCEO's board did not conduct a formal review or approval of these contracts." It says "No treasurer is listed on CMCEO's recent tax returns." It says the group's own policy required two signatures on checks over $1,000, but "no check produced by CMCEO complies with this requirement," including large checks written to the incorporator and the former executive director. And it says "CMCEO failed to register with the AGO until after the AGO's investigation commenced, in December 2023".
What did the settlement cost CMCEO? I read the whole thing. It names no dollar amount for any of those payments. It has no restitution, no civil penalty and no repayment term. It requires governance fixes and a compliance report a year out.
Now look at what CMCEO told the IRS. On all four returns it filed for 2021 through 2024, it answered "No" to all three questions about business deals with officers and directors, their family members, and companies they control. It filed no Schedule L, the schedule where a nonprofit reports insider deals. The return it filed in October 2025, nine months after the settlement, lists the former executive director the settlement names as a director with the title "BOARD CHAIR", and lists nobody with the title treasurer.
So the tax return said no, the Attorney General's office alleged yes, and the Legislature said $500,000 a year, both times.
The firefighters' fund
The Minnesota Firefighter Initiative, MnFIRE, runs the Hometown Heroes program for firefighters with cancer and other critical illnesses. That's a good cause, and I'll say so up front. The Legislature named MnFIRE for $4,000,000 a year in the 2021, 2023 and 2025 budgets. That's $24 million across three budgets.
In August 2023 the Legislative Auditor published a special review. It found "MnFIRE's procurements did not comply with legal requirements we reviewed". It found Public Safety had made "payments of unallowable grant expenses." And it found that "for over 70 percent of the expenses in our sample, we were unable to verify that MnFIRE paid its vendors the amounts it requested from DPS." The auditor noted "MnFIRE has no paid employees", and that its 2020 revenue of $257,527 was "just 6 percent of the amount MnFIRE would receive annually". It found Public Safety "distributed $1 million to MnFIRE without entering into a formal contract". And it estimated the training the program exists to deliver reached "no more than 12 percent of the state's firefighters in Fiscal Year 2022".
The auditor's recommendation was plain: "DPS should conduct a full audit of MnFIRE's requests for payment for expenses it charged to the Hometown Heroes grant." Commissioner Bob Jacobson's response promised exactly that, "Contracting with a third-party audit firm to conduct a full audit of MNFIRE's requests for payment".
Credit where it's due. Public Safety did it. The state's vendor-evaluation record shows a $55,000 contract with an outside firm, The Compliance Shot, for an independent audit of the Hometown Heroes grant, starting September 1, 2023, with a final audit report delivered to the department on June 21, 2024.
Here's what I couldn't find. That report, or anything it said. Not on the department's site, not with the auditor, not in the Legislative Reference Library, not in the press.
Eleven months after that report landed, the Legislature passed the 2025 public safety budget. MnFIRE's paragraph reads, word for word, the way it read in 2023: "$4,000,000 each year from the general fund is for grants to the Minnesota Firefighter Initiative to fund the hometown heroes assistance program established in Minnesota Statutes, section 299A.477." No condition. No reference to the audit.
The auditor said audit it. Public Safety audited it. The Legislature reached for the photocopier.
The center that dissolved the day after its money lapsed
In 2023 the Legislature named the Center for Economic Inclusion for $3,000,000, "available until June 30, 2025", and wrote in a reporting duty: "By January 15, 2026, the Center for Economic Inclusion shall submit a report on the use of grant funds, including any loans made".
Here's the Secretary of State's filing history for the center. An involuntary dissolution in March 2019, reinstated. Another in January 2022, reinstated. Then on November 15, 2024, an "Intent to Dissolve". Another involuntary dissolution on January 7, 2025, reinstated January 24. Then on July 1, 2025, a "Dissolution". That's the day after the money stopped being available.
In between, in the bill it sent the governor June 12, 2025, the Legislature restated the center's paragraph unchanged, 209 days after the intent to dissolve was on file with the state.
The report due January 15, 2026? The Legislative Reference Library's entry reads "No items received for this mandate." The IRS revoked the center's exemption effective May 15, 2026. The Attorney General's charity search returns nothing for it by name or by its tax ID, while the same search returns Second Harvest Heartland, so the search works.
Did the state pay the $3 million? I couldn't find a public record that answers that.
Ka Joog
Ka Joog is a Minneapolis youth nonprofit that, as KSTP put it, "even won awards for its work with Somali children." The IRS automatically revoked its exemption effective May 15, 2024. Seven days later, on May 22, the Legislature sent the governor a bill with this line in it: "$400,000 the second year is for a grant to Ka Joog for Somali community and cultural festivals and events".
Now the fair part. The IRS didn't post that revocation until August 12, 2024, 82 days after the bill went to the governor. An automatic revocation hits organizations that skip three years of filings, and the IRS says it's "effective on the original filing due date of the third annual return or notice." So nobody at the Capitol could have looked it up that week. The last Ka Joog return in the IRS e-file index covers the year ending July 31, 2021.
That's the case for checking when the money goes out, not just when the bill passes.
The Legislature can fix a line when it wants to. In June 2025 it moved the $400,000 festival grant to the Minnesota Humanities Center. It can be done. It just took a year.
When the law says "payment" instead of "grant"
This next one isn't about any grantee doing anything. It's about one word.
In January 2026 the Legislative Auditor's audit of DHS behavioral-health grants reported Finding 12: "The Legislature did not establish a mechanism for oversight of payments made to certain legislatively named entities." In 2024 the Legislature appropriated $1.5 million to DHS for what the auditor called "a payment" to CLUES, and the auditor stressed it was "not a grant". The same law had $354,000 "for a payment to African Immigrant Community Services". Because of that word, the auditor found, DHS "did not enter into a grant agreement with these two entities". DHS's contract and legal compliance staff told the auditor "language in the law did not explicitly refer to these payments as grants; thus, DHS did not treat them as such." And so "DHS is not required to monitor how these entities spend the funds or assess whether these entities provide services for the purposes for which they received the funds."
Seven letters. That's what it took to switch off the oversight.
And in March 2025 the auditor found the jobs agency "paid at least $5 million to grantees with past-due progress reports, in violation of OGM policies", including "about $2.4 million to 3 ACP legislatively named grantees with past-due progress reports." OGM is the state's Office of Grants Management. Its policy already says to withhold payment when the report is late. The money went out anyway.
Named, and dissolved
The 2023 jobs budget gave "$3,000,000 each year" to Community Action Partnership of Hennepin County, and "Of this amount: (1) $1,500,000 each year is for grants to 21 Days of Peace for social equity building and community engagement activities". The Secretary of State's record for 21 Days of Peace shows an "Involuntary Dissolution" on January 25, 2023 and a reinstatement on June 29, 2023. The bill went to the governor May 23 and was signed May 24. So the organization named in the law was dissolved, on the state's own books, on the day the law was signed. It was dissolved again on January 8, 2025, and the record now reads inactive.
The line didn't ask. None of the lines in this piece ask whether the group still exists.
What I didn't find
Here's the part I'd rather not write, and the part you should trust most.
I went looking for fraud. I didn't find a hidden ring. The 502 organizations were screened against the federal SAM exclusion list, the state's Medicaid excluded-provider list, U.S. Attorney releases, the Attorney General's releases and the Hennepin County Attorney's. None appears as a charged or excluded party. Each of those screens caught the known case it should have caught, so a blank there means something.
I also ran it the other direction. I took 71 entities charged or sued in Minnesota's big fraud cases, Feeding Our Future, the housing-stabilization cases, the autism-services cases and the rest, and matched them against all 1,122 named lines. None was ever a named grantee.
And the named grantees look like everybody else. The insider-deal pattern, a big business deal with an insider on the nonprofit's own return, shows up in 5 of 249 named grantees that file a full Form 990, 2.0 percent. Across all 10,175 Minnesota Form 990 filers it's 122, or 1.2 percent. Five organizations is too few to call that a difference. Named grantees look like the state.
And a clean return proves nothing either way. CMCEO checked "No" on all three insider-business questions while the Attorney General's office alleges insiders were paying themselves by invoice.
DHS, for its part, is doing real volume. Its program-integrity page says "In 2025, DHS imposed 490 payment withholds, more than triple the number of payment withholds we imposed in 2024." It says "Since 2020, DHS has conducted over 3,500 investigations and referred over 1,150 cases to law enforcement", and "Since 2020, DHS has identified more than $56 million for recovery." That's an agency working the problem.
If the fraud were there, I'd have printed it. It isn't. What's there is a system that doesn't ask.
The other side's best case
When the governor proposed banning them this year, the Minnesota Council of Nonprofits and a long list of organizations wrote to the House State Government Finance and Policy Committee on April 9, 2026. They wrote: "For many organizations -- particularly those that are smaller, rural, or culturally specific -- competitive grant processes can present significant barriers. These processes are often lengthy, resource-intensive, and structured in ways that advantage larger institutions. Legislatively named grants provide a more direct pathway for trusted organizations to deliver services where they are most needed." They added that "there are certain circumstances where there may only be one qualified entity, especially in rural areas," and that a competitive round then "would be a waste of time and money". MnFIRE is one of the signers.
They're right about some of it. Competitive grants do favor organizations with a grant writer on staff. Some services really do have one provider. A neighborhood group that knows its block may be the best bet the state has.
They also wrote that the ban "is not grounded in evidence of harm" and that "Minnesota already has strong oversight and reporting requirements for state grants." That's the sentence the records don't support. The auditor's Finding 12 says the opposite for "payment" lines. Every fix below but the last leaves named grants in place. The same letter says: "Efforts to prevent fraud should be targeted and data-driven -- not broad measures that risk unintended consequences." Fair enough. The fixes below are targeted. They reach only the lines the Legislature itself chose to name, and they turn on public records that already exist: the IRS revocation list, the Secretary of State's filings, the Library's mandate log, the auditor's findings.
What we can do
Put one condition sentence on every named line. It doesn't need new words. The Legislature already wrote them, just not here. MnFIRE's own statute defines the group as one that "is tax exempt under section 501(c)(3) of the Internal Revenue Code." The state's grant-review law already tells agencies to look at "evidence of good standing with the secretary of state". OGM policy already says to withhold payment when a progress report is late. Put all three into a standard sentence on every named line, checked before each payment, not once at signing: a current exemption that isn't on the IRS revocation list, good standing with the Secretary of State, and no payment while a required report is overdue. Ka Joog shows why the check has to happen at payment time. The IRS posted that revocation after the bill went to the governor. The list is a download. Nothing in these lines makes anybody look at it.
Add the Attorney General's registry to that sentence, and close the gap that lets a named grantee skip it. Minnesota requires a charity to register once its "total contributions" pass $25,000. But the statute says "'Contributions' shall not include any funds obtained by a charitable organization through grants from any governmental agency." So a group living on a named state grant may never cross that line. If the state names you, the state should be able to find you in its own charity registry.
Kill the word "payment." The auditor asked the Legislature to decide whether "payment" recipients should be treated as grantees. Decide it. Every named dollar should be a grant under the same rules as every other grant.
Don't restate a line while a watchdog's finding is open. If the Legislative Auditor has an open finding, the Attorney General has an assurance in place, or the IRS has revoked the exemption, the line doesn't get carried forward until a committee hears why it should be. The law already has the machinery. Under current law, if an agency's risk review leads it to decline a named grant, the agency "must delay award of the grant until adjournment of the next regular or special legislative session for action from the legislature." Run restated lines through the same door.
Write the same withhold sentence for grants that the Legislature wrote for Medicaid. Medicaid law already told DHS that, absent good cause under the federal rules, it "shall withhold or reduce payments" when "there is a credible allegation of fraud for which an investigation is pending". In 2026 the Legislature restated that duty ("must temporarily withhold or reduce payments") and listed "court filings and other legal documents, including but not limited to police reports, complaints, indictments" as sources. Every other agency has had only a weaker version. Since 2025 an agency head "may withhold payments to a program participant", but only if "a preponderance of the evidence shows that the program participant has committed fraud". The same 2026 session lowered that trigger: now the agency head may withhold from a participant who "is the subject of a credible allegation of fraud under investigation". "May" is how you write a power nobody has to use. For named grants, make it "must," the way Medicaid has it.
Publish the MnFIRE audit. Public Safety paid for it and got it in June 2024. The Legislature voted $8 million more the next spring. Put the report on the department's website, or tell the Legislature in the next budget why not.
Then take the auditor's advice from 2007. The Legislature "should not mandate grant recipients in law but allow agencies to select recipients through a competitive process." Nineteen years. Of the five reform bills or bill pairs I traced since 2022, HF 72 passed the House 130 to 3 and stopped in Senate Elections, and the other four went nowhere. That includes this April's HF 4883 and SF 5088, which said "a mandate to direct funds to a specified or uniquely qualified person is not valid" starting in fiscal year 2028. What did pass were agency-side fixes, like the risk review and the 2026 withhold law. Useful. Not the sentence.
If the Legislature won't stop naming, it can at least stop naming blind.
The state keeps chasing cases and leaving the sentence that let them happen. Nobody in this story needed to be a villain. The name was the only condition. Change the sentence, and the money stops on its own.
First the facts. Then the fix.
Sources
The session laws were read at revisor.mn.gov on October 13, 2026: Laws 2023, chapter 53 (article 20, section 2, subdivision 2(xx) for the Center for Economic Inclusion, subdivision 3(rrr) for CMCEO, and subdivision 3(ss) for Community Action Partnership of Hennepin County and 21 Days of Peace; presented to the governor May 23, 2023, signed May 24, 2023); Laws 2024, chapter 120 (presented May 22, 2024; restates (rrr) and (xx) and contains the $400,000 Ka Joog festival line); Laws 2025, First Special Session, chapter 6 (presented June 12, 2025; restates (rrr) and (xx), and moves the festival grant to the Minnesota Humanities Center); Laws 2021, First Special Session, chapter 11, Laws 2023, chapter 52 and Laws 2025, chapter 35 (the three MnFIRE paragraphs; chapter 35 presented May 20, 2025); Laws 2024, chapter 125 and chapter 127 (the "payment to" lines); Laws 2026, chapter 121 (article 3, section 36, creating section 256B.064, subdivision 2c, signed May 27, 2026); and Laws 2026, chapter 122 (section 1, rewriting section 15.013, signed May 26, 2026). Minnesota Statutes sections 15.013, 16B.981, 256B.064, 299A.477, 309.50 and 309.52 were read in the posted 2025 edition the same day. The count of 1,122 named lines and 473 organizations comes from a machine read of all 386 session-law chapters from 2021 through 2026.
The CMCEO Assurance of Discontinuance (Ramsey County District Court; the posted copy's order page carries the date 01/06/2025) and the Attorney General's January 10, 2025 release were read in full from the office's site. CMCEO's Forms 990 for 2021 through 2024 were read as the IRS's own electronic-filing records. The Legislative Auditor's reports were read in full from auditor.leg.state.mn.us: Hometown Heroes Assistance Program (special review, August 2023), including the August 25, 2023 Public Safety response; Department of Employment and Economic Development: Grants Management (program evaluation, March 2025); Department of Human Services: Behavioral Health Administration Grants (performance audit, January 2026, Finding 12); and State Grants to Nonprofit Organizations (program evaluation, January 2007, page 54 of the PDF for the quoted recommendation and staff observations). The MnFIRE outside-audit contract is from the Office of State Procurement's vendor performance evaluation for SWIFT contract 235227, osp.admin.mn.gov, submission 97146.
The IRS automatic-revocation list was downloaded from apps.irs.gov on October 13, 2026 and searched by tax ID for the Center for Economic Inclusion and Ka Joog; the revocation and posting dates above are from that file. The IRS's explanation of automatic revocation is from irs.gov. Secretary of State filing histories were read for the Center for Economic Inclusion and 21 Days of Peace. The Attorney General's charity search was run on October 13, 2026 for the Center for Economic Inclusion, by name and by tax ID, and returned nothing; the same search for Second Harvest Heartland returned that charity. The Legislative Reference Library's mandate page for the center's report was read on October 13, 2026.
KSTP's "DHS kept sending state money to Minnesota nonprofit after board chair charged with fraud", by Josh Skluzacek, published October 30, 2025, is the source of the quotation attributed to KSTP. DHS's figures are from its program-integrity page at mn.gov/dhs/program-integrity, read October 12, 2026. The Minnesota Council of Nonprofits letter of April 9, 2026 was read from the House committee's posted documents. Bill histories for SF 4359 (2022), SF 1990, HF 2949, SF 3267 and HF 72 (2025), and HF 4883 and SF 5088 (2026) were read at revisor.mn.gov on October 13, 2026, along with the text of HF 4883. The race facts are from MPR News's August 11, 2026 report, as cited in my October 8 piece.
What I searched, what I found, and what I could not establish. Scripts built the data; I read the records; the arithmetic is mine. The 502 organizations were matched by name and tax ID against the federal SAM exclusion list, a mirror of DHS's excluded-provider list, the HHS-OIG exclusion list, U.S. Attorney releases, 928 Attorney General releases, 487 Hennepin County Attorney releases and 93 Legislative Auditor reports. Each screen caught its known case (Feeding Our Future, an excluded autism provider, a Hennepin charge) except the HHS-OIG list, which carries no business entry for any of the known cases and so tells you nothing, and Ramsey County, whose 2025 archive returned an error. The U.S. Attorney screen covers only releases whose titles name a Minnesota place, program or one of the organizations. The cross-match of 71 charged or sued entities against the 1,122 named lines found its two planted test entries and nothing else. The federal court search did turn up one private False Claims Act suit naming two named grantees, the Science Museum of Minnesota and Minnesota Public Radio, among its defendants (D. Minn. No. 0:23-cv-03216); the United States declined to intervene in August 2024, the relator herself moved to drop both before the case ended (the court dismissed Minnesota Public Radio on April 22, 2025 and the Science Museum on May 16, 2025), and the case was dismissed in July 2025. That's a private party's allegation, not a charge, and the complaint isn't in the free copy of the docket I searched. I searched the Legislative Auditor's reports, the Legislative Reference Library and the web for the MnFIRE outside audit's findings and found only the procurement record of the contract. I found no record of what the jobs agency paid the Center for Economic Inclusion, and no public statement from the center on why it dissolved. Corrections: campaign@madgettformn.com.