SF3647 (Legislative Session 94 (2025-2026))
Issuance of grants restriction under certain conditions
AI Generated Summary
Purpose
The bill Tightens how Minnesota agencies grant money by adding stricter review requirements before awarding certain grants. It aims to ensure a potential grantee can actually perform the duties the grant would fund and to verify the grantee’s financial health and legitimacy.
Main provisions
Preaward risk assessment for large grants
- For grants of $50,000 or more that are competitive or sole-source (including legislatively named single-source or sole-source grants), agencies must complete a preaward risk assessment before making an award.
- The assessment checks whether the potential grantee can perform the required duties and identifies potential risks to success.
Information the agency must review (as applicable)
- Grantee’s history with duties similar to those required by the grant.
- Whether the grant would require a significantly larger scale of work or major changes to the grantee’s operation.
- For nonprofit grantees: most recent Form 990 or Form 990EZ filed with the IRS. If not available or the grantee is newly formed, alternative financial documents and evidence of internal controls or information about the managing group.
- For for-profit grantees: most recent federal and state tax returns, current financial statements, confirmation that the business is not in bankruptcy, and disclosure of any liens on assets. If tax returns are not available, evidence of appropriate internal financial controls.
- Evidence of good standing with the secretary of state under chapter 317A (or other applicable law), including current registration as a charitable organization with the attorney general unless exempt.
- If the grantee is a charitable organization that must undergo an audit (per statute), the most recent independent audit report in accordance with GAAP.
- Certification that none of the grantee’s current principals (defined as public officials, board members, or staff with authority to access or decide how grant funds are used) have been convicted of a felony financial crime in the last ten years.
New prohibition on awarding grants
- A new subdivision (Subd.7)Adds a rule: an agency cannot award a grant to a potential grantee that cannot provide the required information, until all required information is supplied.
- This prohibition applies to the same set of grants described above, and the agency must rely on the information before moving forward.
Applicability and scope
- Applies to those large grants that meet the specified criteria and to grants subject to related sections (16B.97 and 16B.98).
Significant changes to existing law
- Adds a formal preaward risk assessment requirement for certain grants ($50,000+), including a detailed list of financial and organizational checks.
- Establishes a new prohibition (Subd.7) preventing grant awards until the required information is provided.
- Expands the information the agency may consider to determine a grantee’s ability to perform and comply with grant requirements.
How this affects the grants process
- Agencies will spend more time gathering and reviewing financial and organizational information from potential grantees before making awards.
- Potential grantees, especially nonprofits and for-profit organizations seeking large grants, must prepare and provide the specified documentation (tax returns, Form 990, audits, internal controls, etc.) to be eligible for funding.
- The emphasis is on reducing risk that a grantee cannot fulfill grant obligations and on ensuring good financial practices and compliance.
Potential considerations
- Some newly formed or smaller organizations may need additional help or guidance to assemble the required materials.
- The approach favors thorough due diligence to protect public funds.
Relevant Terms preaward risk assessment; grants; grantee; potential grantee; nonprofit; for-profit; Form 990; Form 990EZ; IRS; internal controls; board-reviewed financial statements; good standing; secretary of state; chapter 317A; charitable organization; attorney general; audit; GAAP; independent audit; public official; principal; felony financial crime; sole-source grant; singlesource; legislatively named grant.
Bill text versions
- Introduction PDF PDF file
Actions
| Date | Chamber | Where | Type | Name | Committee Name |
|---|---|---|---|---|---|
| February 19, 2026 | Senate | Action | Introduction and first reading | ||
| February 19, 2026 | Senate | Action | Referred to | Finance |
Citations
[
{
"analysis": {
"added": [
"Requires preaward risk assessment for grants of 50,000 or more.",
"Enumerates information the agency must review, including the grantee's history of performing similar duties, whether the grant would require significantly increased scale or changes to operations, and the grantee's organizational structure.",
"For nonprofit grantees: requires the most recent Form 990 or Form 990EZ filed with the IRS; if not applicable, requires board-reviewed financial statements and internal controls documentation; if no such board exists, requires documentation from the applicant's managing group.",
"For for-profit grantees: requires the most recent federal and state tax returns, current financial statements, certification that the business is not under bankruptcy proceedings, and disclosure of any liens; if no tax return is available, requires evidence of internal financial controls.",
"Requires evidence of good standing with the secretary of state under chapter 317A or other applicable law including but not limited to current charitable organization registration with the attorney general under section 309.52 (unless exempt).",
"If the grantee is charitable and must complete an audit under section 309.53, requires the most recent audit performed by an independent third party in accordance with GAAP.",
"Provides a definition of 'principal' as a public official, board member, or staff with authority to access funds or determine their use."
],
"removed": [],
"summary": "Amends Minnesota Statutes 2024 section 16B.981, subdivision 2 to require a preaward risk assessment for grants of 50,000 or more before awarding certain grants, and to specify the information the agency must review to determine the potential grantee's ability to perform.",
"modified": [
"Subd.2 is amended to implement a preaward risk assessment framework and to specify the information to be reviewed in evaluating grant eligibility."
]
},
"citation": "16B.981",
"subdivision": "2"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Cross-reference to Minnesota Statutes 2024 section 16B.97; referenced in relation to grants management considerations in the bill.",
"modified": []
},
"citation": "16B.97",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Cross-reference to Minnesota Statutes 2024 section 16B.98; referenced in relation to grants management considerations in the bill.",
"modified": []
},
"citation": "16B.98",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Cross-reference to Minnesota Statutes 309.52 regarding registration of charitable organizations with the attorney general; cited as a compliance prerequisite in the preaward information requirements.",
"modified": []
},
"citation": "309.52",
"subdivision": ""
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Cross-reference to Minnesota Statutes 309.53, subdivision 3, regarding audits of charitable organizations; used as a criterion within the preaward risk assessment.",
"modified": [
"Audit requirements for charitable organizations referenced as part of the risk assessment."
]
},
"citation": "309.53",
"subdivision": "3"
},
{
"analysis": {
"added": [],
"removed": [],
"summary": "Cross-reference to Minnesota Statutes chapter 317A concerning secretary of state registration and related requirements.",
"modified": []
},
"citation": "317A",
"subdivision": ""
},
{
"analysis": {
"added": [
"Prohibits awarding a grant to a potential grantee that cannot provide all required information; the agency must wait until all information is provided."
],
"removed": [],
"summary": "Adds Subdivision 7 to Minnesota Statutes 2024 section 16B.981 detailing conditions under which an agency is prohibited from awarding a grant.",
"modified": []
},
"citation": "16B.981",
"subdivision": "7"
}
]Progress through the legislative process
In Committee