The Minnesota Council of Nonprofits (MCN) filed an amicus brief in the matter of a former trustee of the Otto Bremer Trust (OBT) on July 24, 2023, one which argues that the court should uphold the removal of a charitable trustee for several instances of misconduct. MCN filed this brief in service of our over 2,200 nonprofit member organizations because we believe that charitable trustees should be held to high standards of responsibility, especially when dealing with nonprofit grantees. This brief declares and defends the standards of care necessary for productive work between nonprofits and funders in service of shared goals and public good.
Why MCN is Participating?
MCN recognizes OBT's important role as one of two foundations that contribute statewide to Minnesota's nonprofit sector. We are grateful for their support as a current grantee, as do many other nonprofits who rely on their support to meet community needs.
We believe in the responsible leadership of charitable trusts — a significant part of the over $2 billion in grants per year given by Minnesota foundations — have considerable implications for nonprofits. Because there exists an inherent power imbalance between institutional philanthropy and resource-dependent community organizations, on behalf of our member nonprofits and our sector, MCN supports the message that removal sends to trustees: there is no excuse for any misconduct that may harm nonprofit grantees, or any abuse of power that threatens the long-standing, positive relationship of trusts like OBT with Minnesota nonprofits.
In a case brought by the Minnesota Attorney General’s Office (AGO), the Ramsey County District Court ordered the removal of OBT trustee Brian Lipschultz for several instances of misconduct. Much of Lipschultz’s misconduct arises from a pattern of extraordinary behavior during a separate but related legal dispute with Bremer Financial Corporation (BFC) about whether and how to sell BFC (which is majority-owned by OBT). Lipschultz has now appealed to the Minnesota Supreme Court.
The district court originally found that Lipschultz:
- Behaved in an aggressive and vulgar manner when he disparaged another trustee and made statements about BFC president and CEO that the court said had “no place in the charitable world.”
- Engaged in self-dealing when he misused OBT assets for personal benefit — including staff time, postage, and office equipment.
- Breached his duty of information when he refused to identify his successor after an inquiry from the AGO.
- Abused his grantmaking authority by attempting to coerce or punish grantees he perceived to be disloyal to him in OBT’s ongoing legal dispute with BFC.
Highlights from MCN’s Brief
- Any amount of self-dealing by charitable trustees is unacceptable in the charitable sector.
- Self-dealing puts nonprofit grantees and the charitable sector at risk by eroding public trust.
- Delays in grantmaking can be extremely damaging to nonprofit grantees and goes beyond mere hostility.
- The courts should have broad discretion to scrutinize the conduct of charitable trustees to ensure their actions work toward to benefit of nonprofit grantees and the public.
If you have questions about MCN's brief, please contact Marie Ellis, MCN’s public policy director.
Special Note: Many thanks to MCN's summer legal fellow, Cole Edick, who did an incredible job understanding the extensive background of the case, laying out the arguments, and ultimately drafting the brief!