The grants from the Otto Bremer Trust to the Ordway Center for Performing Arts, the Como Zoo and the Blake School have come under scrutiny in the early days of a trial that will determine whether leaders of the The St. Paul-based charity can keep their jobs.
The Minnesota Attorney General’s Office wants Ramsey County District Court Judge Robert Awsumb to replace the three directors after he tried in 2019 to sell the trust’s main asset, Bremer Financial Corp., which manages Bremer Bank. , Minnesota’s fourth largest bank.
In a hearing that began on Monday, state prosecutors have so far focused on the charity’s donations rather than directors’ conflict with officers and board members by Bremer Financial. The state called several current and former employees of the trust to discuss grants led by the three trustees that did not appear to meet the criteria for the trust.
Carol Washington, the assistant state attorney general in charge of the case, said administrators “have gradually shifted” trust from the public interest to their own. In some cases, she said administrators used a different process to approve grants when they often had personal connections, such as serving on the board of directors of recipient organizations.
Lawyer Mike Ciresi, who represents the trustees, argued that all of these grants fell within the objectives of the trust.
One of the witnesses, Diane Benjamin, who worked for the trust for about six years, said she and her colleagues were surprised when they learned that she had donated $ 1 million in 2014 to the Ordway, the performing arts center of downtown St. Paul.
“We didn’t fund the arts either, so that sort of came out as well,” Benjamin said, adding that she often refused or told other arts organizations not to bother. to apply. “It’s hard when you say no to people and there is that.”
Likewise, she said she was confused when she came across a grant, which she allegedly rejected, at the Como Zoo. Daniel Reardon, one of the three directors, served on the board of directors of Friends of Como Zoo.
Charlotte Johnson, who has been a director for 30 years and the only director to testify so far, said she knew Reardon had been on that board, although she cannot recall if he was on that board at the when he proposed the grant.
She also confirmed that she initially had reservations about the grant, wondering at first if it matched the trust’s mission, but ultimately voted to approve it.
An attorney for the trustees pointed out that the Como Zoo is one of the only free zoos in the country and is frequented by underprivileged children.
Regarding the Ordway grant, the attorney general’s office presented a letter that Johnson wrote in which she expressed her excitement about giving the grant, but wanted to make sure that the message surrounding her stated clearly that trust supported the project as the Ordway is an important “community and regional and not to give the impression that the Otto Bremer Foundation now funds the arts as such.”
Otto Bremer, a German immigrant, founded the trust in the 1940s to ensure that the profits of his banks flow back to the community. It’s now one of Minnesota’s largest philanthropic organizations, distributing around $ 50 million a year, and the only one in the country to own a bank.
The Trust’s guidance document, written by Bremer before his death in 1951, directs its funds toward poverty reduction, providing scholarships to students, helping hospitals with facilities and equipment, and promotion of citizenship.
Johnson said Thursday that the document was the trust’s “north star”, although she added that it also gives the trustees some discretion.
Benjamin said program officers also followed him closely and made sure the grant proposals fit into one of those specific categories or else they would eliminate them. Staff then reviewed requests, made occasional site visits and made recommendations to administrators, who decided if and how much to give.
But there was another type of grants that administrators called “strategic initiatives” that weren’t approved by staff members that way. These subsidies tended to be larger.
Johnson said strategic grants could be a “more complex” request and were a way for administrators to help “relieve” staff. But she said all of those beneficiaries still had to make a full application and go through the proper due diligence.
Benjamin, the former senior program officer, called the strategic grants “awkward.” In some cases, she discovered them during a site visit and an organization thanked her for the large grant she had received that she was not aware of.
Eyebrows were also raised about grants to Blake School, which the children of administrator Brian Lipschultz attended and where he served on the board of trustees. Benjamin said the trust generally does not provide grants to schools.
One of the directors’ lawyers pointed out that the grant was for LearningWorks, a program for low-income, high-performing students at Blake.
During her testimony, Johnson also acknowledged that she recommended a $ 500,000 strategic grant to the Friends of St. Paul College Foundation, where her husband served on the board of trustees, although she said that she couldn’t remember if he was still on the board at the time of the award.