Blaine nonprofit disguised wages as 'grants' to staff stadiums: AG Ellison
Gov. Walz, AG Ellison testify on fraud before House Oversight Committee
Minnesota Gov. Tim Walz and Attorney General Keith Ellison testified before the House Oversight Committee to answer questions about alleged misuse of federal funds intended for social services and Medicaid programs.
(FOX 9) - A Blaine-based nonprofit that sent parents to work stadium concession stands in exchange for "grants" has been ordered to shut down after an investigation found it was operating as a staffing agency, not a charity.
MN Fundraising Initiative shut down
What we know:
Minnesota Attorney General Keith Ellison announced on Wednesday that MN Fundraising Initiative, or MNFI, misclassified hundreds of workers as "volunteers" while paying them "grants" for staffing concession stands at places like Target Field, US Bank Stadium, Allianz Field and other major venues across the Twin Cities.
Dig deeper:
According to the announcement, an investigation found MNFI recruited parents looking to offset their children’s school or activity costs, then paid them based on hours worked, not financial need.
Instead of open grant-making, MNFI only awarded "grants" to its own members and barred them from "volunteering" for similar groups.
MNFI’s arrangement allowed for-profit vendors like Minnesota Sportservice, Levy Premium Foodservice and Aramark Sports and Entertainment Services to get low-cost labor, avoid payroll obligations and claim tax deductions for "charitable" donations to MNFI.
A settlement outlines that the Attorney General’s Office found that MNFI paid more than $1.1 million in "grants" to current or former board members, with one board member alone receiving over $237,000.
Settlement and worker impact
Why you should care:
The Attorney General’s Office said in the announcement that MNFI’s actions hurt workers, law-abiding employers and taxpayers.
Misclassified workers lost out on minimum wage, overtime and basic protections, while MNFI and its for-profit partners avoided paying into unemployment insurance, worker’s compensation, and taxes, the investigation found.
Under the settlement agreement, MNFI is required to end operations in Minnesota and dissolve as a nonprofit operating in the state.
What they're saying:
"MNFI was a sham charity that took advantage of parents who wanted to afford their children’s activities by luring them into ‘volunteering’ their labor in exchange for future ‘grants,’ which is a clear violation of Minnesota law. MNFI and the for-profit operators it contracted with also suppressed the wages and opportunities of legitimate, unionized employees at the venues they staffed, robbed volunteers of basic worker protections, and passed on those costs to taxpayers," Minnesota Attorney General Keith Ellison said in a statement accompanying the announcement. "Charities can’t do an end-run around employment law by abusing their nonprofit status to save on labor costs. Workers who are misclassified do not receive some of the most basic protections under the law, and that loss of protection hurts us all."
The Source: Information provided by the Minnesota Attorney General’s Office.