Double Billing on Violence Prevention Programs
Overlap Without Oversight: A Recipe for Confusion
County vs City vs Nonprofits
A year ago, Angela Conley, a DFL County Commissioner, told a Longfellow Neighborhood Association meeting that the county hires nonprofits to deliver human services that, in her view, nonprofits can do better than the county itself. At the time, it seemed like an odd admission. Whether it’s violence prevention, substance abuse support, or affordable housing, one could argue that the county should be more effective at providing these essential services, rather than outsourcing them to nonprofits to deliver essentially the same work.
Add to this chain of command the City of Minneapolis.
Two large bureaucracies—the City and Hennepin County—are spending millions of dollars with lightly regulated nonprofits on gang violence prevention and other programs, without sufficient mechanisms to measure outcomes. It’s a recipe for overbilling, as reported in the story “Minneapolis violence prevention groups put on notice, accused of double billing.”
According to the report, Ferome Brown, owner of Urban Youth Conversation, was sent a letter regarding their practices:
The letter, dated April 17 and sent via email, accuses Brown of submitting invoices "containing false claims" for contracted services by double billing both the city and Hennepin County multiple times for the same hours worked. The city writes that the issues "raise significant concerns" about the group’s billing practices and warns they may face contract termination if additional false claims are submitted in the future.
Brown was given 10 days to correct the “mix-up.” But the more audits that take place, the more “mix-ups” are likely to be uncovered. Fraud involving autism testing centers, child care providers, and medical transportation nonprofits is already keeping auditors busy. It would be valuable to see an analysis comparing the cost of using existing county employees to provide these services versus what is currently paid to nonprofits.
The real tragedy is that, if competently and effectively delivered, these services could genuinely help many residents in need. We’re grateful to the auditors working to uncover these issues. There may also be an opportunity to use artificial intelligence (AI) to review billing and invoices, identifying discrepancies and redundancies. One benefit of this approach is that it could reduce bias, focusing solely on who is committing fraud, regardless of religion, national origin, race, or political contributions.
The silence of legitimate nonprofits in response to these fraud incidents is regrettable. The many organizations that are doing valuable work, keeping accurate records, and delivering real results risk having their efforts cast into doubt because of a few “bad apples.”
A Third Way
The system we’re using in Minnesota is flawed—and there are alternative models worth considering. In a future newsletter, we’ll look at the results of the Guaranteed Basic Income Pilot that Minneapolis conducted from 2022 to 2024. While some may react negatively to the idea of giving money directly to those in need, the counterargument is that we are already doing so—through a much more inefficient network of nonprofit organizations and bureaucracy.
As we listen to candidates make their case to remain in office—or to replace an incumbent—we should ask: how focused are they on the future of Minneapolis? Are they willing to break from orthodoxy and embrace reforms that could move the city forward, such as incentives to attract businesses, a transportation system that is efficient and cost-effective, and job training programs geared toward the jobs that will exist five years from now, not just those we have today?
Unfortunately, Minneapolis is effectively a one-party city—the DFL—and that party seems locked in the orthodoxy of the past. It appears content to overlook fraud if the groups involved are aligned with favored programs. It also seems willing to act as though budgets can rise indefinitely and taxpayers will always be there to foot the bill.
Having worked in the nonprofit sector for many years as a finance/HR Director, I know there are nonprofits that adhere strictly to proper accounting and billing procedures which are complex and laborious. Nonprofits that adhere to best practices will retain experienced accounting staff, CPA's and grant managers; these are middle and upper management roles that can be well paid. Having said that, and experienced the work load of managing federal and state grants, I eventually came to the conclusion that taxpayer funded government agencies (city/county/state) are the appropriate places to manage and direct the work, not subcontracted nonprofits.
The nonprofit complex is redundant, with numerous nonprofits addressing the same social problems such as housing and hunger and each one needs to have an ED, upper management staff (like my role) and other roles like development/mission advancement. Each nonprofit has a board of business execs who enjoy the status and the networking of being on a non profit board.
So each nonprofit has to plan and organize board events, food, minute taking, etc. There is loads of work involved in managing a functional nonprofit. Let's say there are 10 nonprofits (at least) in the Twin Cities all working on affordable housing, and each ED is earning 100k/yr, that's 1 million a year, and this does not include all the other salaries. Now multiply all those personnel costs over decades...you can see quickly that this model is deeply flawed. Public workers could perform these tasks better and at a fraction of the costs, and the front line (lower paid) workers would be protected by unions, another benefit.
Terry - the idea of Universal Basic Income is one that is dear to my heart and to my brain. The research on this is pretty convincing, that there is a net positive impact on those people receiving these incomes - regardless of income levels. While having UBI does not mean that we can get rid of all of these other services - particularly as it relates to crime prevention, autism support, and other key services, it does create an environment that reduces poverty, typically improves health and well-being, improves education - including high-school attendance and performance, and does not reduce labor market participation (i.e., I will quit my job) or change consumption patterns to more indulgences such as alcohol or drugs.
Research from Stanford chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://basicincome.stanford.edu/uploads/Umbrella%20Review%20BI_final.pdf