2023 Legislative Session Wrap Up: Update on MCF’s Sector Priorities

This session, MCF worked closely with the Minnesota Council of Nonprofits to prioritize an investment in state agencies and their capacity to improve state grantmaking and support accountability and equity. This focus, in part, was a result of a recent Office of the Legislative Auditor report that suggested state agencies could benefit from more capacity and consistency in their state grantmaking efforts, and was also influenced by the recent Feeding our Future scandal. As a result of this advocacy, the Minnesota legislature did the following:

• Provided additional, ongoing funding for the Office of Grants Management to increase grant oversight and invest in equity in grantmaking. The mission of the Office of Grants Management is to standardize, streamline, and improve state grantmaking practices, as well as to increase public information about state grant opportunities. This new funding will result in the creation of six new positions, increasing the capacity of the Office of Grants Management from 1 person to 7. Three of these new positions will focus on equity in state grantmaking.
• Funded a feasibility study for a statewide grants management system. Currently, state agencies use a variety of platforms, tools, and strategies to manage their grantmaking. This study will assess if and how state agencies could all use the same grantmaking platform, which would help streamline and standardize the grantmaking experience for grantees and the grant review, documentation, and reporting process for state agencies. 
• Allowed state agencies to take appropriate administrative fees to cover the cost of state grantmaking. This would allow state agencies to retain up to a specific percentage of grant funds to cover their costs for grant administration, unless the legislature specifies a different percentage. State agencies can now retain up to 5% of grant funds for legislatively named and formula grants, and up to 10% for grants awarded using a competitive process, for grants administration and oversight. This is also an important win for intermediaries that are often hampered by small administrative cost allowances when serving as intermediaries for state grantmaking.
• Standardized financial review requirements for state grantees. MCF was closely engaged in developing this language. The language meets the state’s interest of increased and standardized financial review of potential grantees, while making it efficient for state agencies to administer and potential grantees to manage. These new requirements only apply to state grants of $50,000 and higher, and they do not apply to subgrants administered by intermediaries. These requirements apply not only to nonprofit grantees, but also to businesses receiving business subsidies. This language also provides a clear appeal process for potential grantees and allows state agencies to offer technical assistance and support when appropriate.
• Changed the value of itemized deductions of high income earners. In the final week of session, a tax provision related to the value of itemized deductions for high income earners was introduced and quickly included in the final tax deal as a way to raise revenue for other tax priorities, such as the child tax credit. MCF intervened and raised concerns about how this change may impact the charitable giving tax deduction for those that itemize in Minnesota. While we were not able to get the provision adjusted in the final days of session, we commit to deepening our understanding of this issue and considering if a proposed fix is needed for next year.

In total, there were many positive changes this legislative session that strengthen our state’s grants management capabilities and capacities, while working toward a more consistent and equitable experience for grantees and intermediaries. MCF was pleased to be able to advocate on behalf of Minnesota grantmakers on these issues.

For more information, please contact Katina Mortensen at kmortensen@mcf.org