Issuance of grants restriction under certain conditions

A bill for an act

relating to grants management; restricting issuance of grants under certain

conditions; amending Minnesota Statutes 2024, section 16B.981, subdivision 2,

by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 16B.981, subdivision 2, is amended to read:

Subd. 2.

Financial information required; determination of ability to perform.

For

grants of $50,000 or more and subject to sections
16B.97
and
16B.98
, before an agency

awards a competitive, legislatively named, single-source, or sole-source grant, the agency

must complete a preaward risk assessment to assess the risk that a potential grantee cannot

or would not perform the required duties. In making this assessment, the agency must review

the following information as applicable:

(1) the potential grantee's history of performing duties similar to those required by the

grant, whether the grant requires the potential grantee to perform services at a significantly

increased scale, and whether the grant will require significant changes to the operation of

the potential grantee's organization;

(2) for a potential grantee that is a nonprofit organization, the potential grantee's most

recent Form 990 or Form 990-EZ filed with the Internal Revenue Service. If the potential

grantee has not been in existence long enough or is not required to file Form 990 or Form

990-EZ, the potential grantee must demonstrate to the agency's satisfaction that the potential

grantee is exempt and must instead submit the potential grantee's most recent board-reviewed

financial statements and documentation of internal controls or, if there is no such board, by

the applicant's managing group;

(3) for a potential grantee that is a for-profit business, the potential grantee's most recent

federal and state tax returns, current financial statements, certification that the business is

not under bankruptcy proceedings, and disclosure of any liens on its assets. If a business

has not been in business long enough to have a tax return, the grantee must demonstrate to

the agency's satisfaction that the grantee has appropriate internal financial controls;

(4) evidence of good standing with the secretary of state under chapter 317A, or other

applicable law
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, including but not limited to evidence of current registration as a charitable

organization with the attorney general under section 309.52, unless exempt from registration
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;

(5) if the potential grantee is
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a charitable organization
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required to complete an audit

under section
309.53
, subdivision 3, the potential grantee's most recent audit report performed

by an independent third party in accordance with generally accepted accounting principles;

and

(6) certification, provided by the potential grantee, that none of its current principals

have been convicted of a felony financial crime in the last ten years. For this section, a

principal is defined as a public official, a board member, or staff with the authority to access

funds provided by this agency or determine how those funds are used.

Sec. 2.

Minnesota Statutes 2024, section 16B.981, is amended by adding a subdivision to

read:

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Subd. 7.

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Conditions under which an agency is prohibited from awarding

grant.

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Notwithstanding subdivisions 4 and 5, an agency is prohibited from awarding a grant

to a potential grantee that is unable to provide the information required in subdivision 2, as

applicable, until the potential grantee is able to provide all required information.

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