If you’re reading the same news outlets as me, you’ve probably seen a continuing drumbeat of recent headlines about the topic of “nonprofit fraud.” In my conversations with United Way’s partners and supporters, it’s an increasingly common topic of discussion.
Often, when I’m asked about this topic, it’s framed around a simple question: “As an organization that funds and partners with nonprofits, how can United Way trust its nonprofit partners to be accountable to their commitments?”
This is an important question, and one that deserves a more nuanced answer than the current public conversation offers.
I’d like to share some more information about the ways that Greater Twin Cities United Way ensures our investments are being used effectively, and to provide some added context informed by what we’re seeing and hearing from our nonprofit partners.
Whenever a funder’s dollars are misused – whether government funds or private philanthropy – we are often talking about not just an individual bad actor, but also a wider systemic failure that made the bad acts possible. The soundness of an organization’s grantmaking process matters.
Last year, Greater Twin Cities United Way issued grants to 231 nonprofit organizations. As any nonprofit who has partnered with us can attest, our application process is incredibly thorough. We require organizations to submit detailed financial information, as well as a full breakdown of their leadership and governance structures. We review all of this information closely. With our team’s collective decades of experience in grantmaking, we know what a financially healthy and effectively governed nonprofit looks like – and what circumstances might be cause for concern. This approach aligns with widely recognized nonprofit accountability standards.
We take any concerns seriously; even if they don’t point to any intentional wrongdoing, we know they indicate the kinds of conditions in which bad behavior is able to flourish. If we can’t have confidence in the way an organization is governed, we won’t choose to fund them.
Once we have entered into a funding partnership, we recognize the need for continuing attentiveness through the entire lifecycle of our partnership. Funded partners participate in site-visits and cohort activities, speak with our program officers frequently in both formal and informal check-ins, and – for our larger grants – submit regular reports. Our program officers work to foster open, two-way communication with our grant partners. And we continue to pay attention to what we’re seeing and hearing.
In a context where our partners are expected to show up with transparency, any efforts to misuse United Way funds or misdirect our team will likely surface quickly. Should such concerns arise, we do not hesitate to hold future payments until the organization can address those concerns. In my three years at United Way, I can recall two organizations for whom this process resulted in a termination of our grant agreement.
Across our state, individual donors and institutional funders pay attention to United Way’s funding decisions. When we choose to invest in a nonprofit, others see that as an endorsement of the organization’s effectiveness and credibility. I’m so proud of the work our team is doing every day to live up to this reputation – selecting and managing our grant partnerships to do right by the generous intent of our donors.
Of course, no system is perfect. Nonprofits, including United Way, must continually earn trust through strong practices, transparency and accountability. We’re all human beings, doing our best with the resources we’re fortunate enough to have at our disposal. Our team continues to find ways to improve the accountability and effectiveness of our grantmaking process. But ultimately, I’m proud to oversee a process that honors the trust our donors and allies have placed in United Way – while maintaining a needed source of stability for the community organizations we support.
It’s been personally frustrating to see this complex and nuanced conversation distilled down to a simplified narrative about “nonprofit fraud” – because that’s not really the problem our state is facing.
Despite a handful of bad actors who chose to organize their criminal dealings under a nonprofit structure, most alleged misuse of public dollars stems from government programs that contract with both for-profit and nonprofit organizations to provide services like childcare and mental health support.
In these instances where allegations of fraud have come to light, as analysis by our colleagues at the Minnesota Council of Nonprofits shows, the overwhelming majority stems from for-profit entities, not nonprofits. In fact, nonprofits who contract with our state government are subject to more regulation and oversight than for-profit entities providing the exact same services.
To put it bluntly: If someone intended to defraud our state’s health care programs, they would face fewer hurdles doing so through an LLC than a registered nonprofit.
This is not meant to diminish the impact of these cases. Misuse of public funds is theft, and it comes at the expense of the communities we serve. Yet in order to prevent the problem, we need to diagnose it accurately. An overly narrow focus on “nonprofit fraud” overlooks the majority of bad actors, who aren’t even nonprofits – all while making it harder and more expensive for legitimate community organizations to do the work we need.
Of course, we welcome the state as an important partner to provide oversight and ensure that our public dollars are being used responsibly. But for legitimate nonprofit organizations who are already meeting their obligations with the limited resources they have, added oversight comes at a cost.
That’s what often gets missed in these conversations: Legitimate nonprofits are paying the price for a narrative that doesn’t match reality. Nonprofits receiving state and federal funds have found themselves subject to new levels of scrutiny – more frequent site visits, more stringent reporting requirements. In many cases, this increased scrutiny has been applied to nonprofits receiving grants that have not been linked to any allegations of wrongdoing.
And for many nonprofits, the financial strain is even more urgent. Delays to state payments – which are typically paid as reimbursements for work that’s already been completed – have significantly disrupted the cash flows of nonprofits providing essential services. For example, I’ve spoken with local nonprofits who have had to secure new lines of credit just to pay their staff while these critical income streams sit in limbo.
Some of our partners have faced even more urgent and concerning challenges. Our program officers have heard from multiple early education partners about the presence of unauthorized visitors (often with cameras) seeking access to classrooms and other restricted spaces. Over the last 18 months, nonprofits serving immigrants have faced similar forms of harassment and intimidation. Our partners have had to bolster their security to ensure that they can continue providing a safe environment for the children and families they serve.
And despite the generosity of Minnesota’s private philanthropic community, the perception of widespread misconduct in our sector has diminished the enthusiasm of some donors, at a time when their support is needed more than ever. We need to rebuild trust in our nonprofit sector.
At the Capitol this session, lawmakers approved new policies that can restore Minnesotans’ confidence in the stewardship of their tax dollars. The newly established statewide Office of Inspector General will ensure greater transparency and accountability across all of our state agencies and departments. At the same time, United Way has supported and advised our state agencies on multiple other behind-the-scenes process improvements that will help renew our state’s aging systems. All of these are reasons to be optimistic.
But we all have a role to play as individuals and neighbors as well. As I mentioned at the start, this all comes down fundamentally to a question of trust. As individual community members who want to support good work, how do we know who we can trust?
Resources like United Way’s list of nonprofit partners can be one starting point for identifying vetted, trustworthy organizations. But you don’t have to take our word for it. There are no shortcuts to trust; it’s something we build and maintain with each other on an ongoing basis. And the only way to get started is to show up.
You can do this right now. Find an organization in your neighborhood and get connected with them. Attend an event. Volunteer for a program. Get to know the people who are doing the work. When an organization is truly making an impact, you can see it first-hand.
As this conversation continues throughout 2026 and beyond, I – and other members of United Way’s leadership team – look forward to sharing more about the ways that we cultivate trust and accountability within our network of nonprofit partners.
